2016 (5) TMI 1495 - AT - Income Tax

Penalty u/s 271(1)(c) - failure to comply with the notice issues under section 142(1) - HELD THAT - It is not comprehensible to us as to how the assessee could have complied with the notice under section 142(1) of the Act and the questionnaire enclosed thereto by filing such voluminous data called for on 26 items, some in prescribed format etc. by 10.30 a.m. on 17.10.2013 when the said notice/questionnaire had been received by the assessee only on 17.10.2013. It was impossible for the assessee to have complied with the requirements of filing the aforesaid details by 10.30 a.m. on 17.10.2013 required by the notice under section 142(1) of the Act, as there was no time available to the assessee to do so. Inspite of this, the assessee vide letter dated 18.10.2013 has filed part details of purchases for A.Y. 2006-07 before the AO. In this factual matrix of the case, we are of the considered opinion that since compliance with the requirements of the notice under section 142(1) of the Act dated 11.10.2013/ questionnaire annexed thereto was not humanly possible, this constituted and established that the assessee had reasonable cause, as envisaged in section 273B r.w.s. 271(1)(b) of the Act for failure to comply with the requirements called for by the notice under section 142(1) dated 11.10.2013 and the questionnaire attached thereto. we delete the penalty levied on the assessee under section 271(1)(b) - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of the penalty levied under Section 271(1)(b) of the Income Tax Act, 1961.
2. Reasonable cause for non-compliance with the notice under Section 142(1) of the Act.

Detailed Analysis:

1. Legality of the Penalty Levied Under Section 271(1)(b) of the Income Tax Act, 1961:

The appellant was penalized under Section 271(1)(b) for failing to comply with a notice issued under Section 142(1) of the Act. The Assessing Officer (AO) issued this notice on 11.10.2013, requiring the appellant to furnish detailed information by 17.10.2013. The appellant received the notice only on 17.10.2013 and could not comply in time, leading to a penalty of ?10,000 for each assessment year from 2006-07 to 2012-13. The appellant argued that the notice was received late, and it was impossible to comply within the stipulated time due to the voluminous nature of the information requested.

The CIT(A) upheld the penalty, stating that the appellant did not provide substantial details over two months, and heavy workload could not be considered a reasonable cause for non-compliance. The CIT(A) also noted that it is the AO's jurisdiction to prioritize the information required.

2. Reasonable Cause for Non-Compliance with the Notice Under Section 142(1) of the Act:

The appellant contended that the notice was received on the same day as the hearing, making it impossible to comply. The appellant had submitted partial details on 18.10.2013 and argued that the delay was due to the festive season, staff shortages, and the simultaneous handling of other assessments and audits. The appellant also highlighted that no penalty was levied in similar cases involving other group members.

The Tribunal analyzed the provisions of Section 271(1)(b) and Section 273B of the Act, which state that no penalty shall be imposed if the assessee proves a reasonable cause for failure. The Tribunal found that the appellant received the notice on 17.10.2013, making it impossible to comply by the same day. The Tribunal noted that the appellant had filed part details on 18.10.2013 and concluded that the appellant had a reasonable cause for non-compliance.

Conclusion:

The Tribunal held that the appellant had a reasonable cause for not complying with the notice under Section 142(1) due to the late receipt of the notice and the voluminous nature of the information requested. Consequently, the penalty levied under Section 271(1)(b) for each of the assessment years from 2006-07 to 2012-13 was deleted. The appeals for these assessment years were allowed.