2017 (12) TMI 349 - AT - Income Tax

Penalty proceedings u/s 271(1)(b) - non-compliance of statutory notices - reasonable cause - Held that - The main planks for reasonable cause pleaded by the assessee has been that, firstly, the key person/group head, Shri Gopal Kumar Goyal who was entrusted with income tax matters and was looking after the entire working of the group was in judicial custody in some criminal proceedings and the entire group and family members were engaged in ongoing court proceedings for his early release and various employees were leaving the group further accentuating the problems; secondly, more than 300 group assessments were initiated in the wake of search proceedings which were simultaneously going on, therefore, it was difficult to comply to the various notices on short dates; lastly, it has been strongly pleaded before us, that the compliances had been made through replies filed through dak or registered post though belatedly. These facts have not been controverted by the AO or CIT (Appeals). All these facts and circumstances under any prudence do constitute reasonable cause falling within the scope and ambit of section 273B and accordingly, we are of the considered opinion that failure to comply with certain notices on a particular date was due to reasonable cause as highlighted by the assessee not only during the course of the assessment proceedings but also before the Assessing Officer and Learned CIT(Appeals) in the impugned penalty proceedings and hence penalty cannot be levied in such circumstances. - Decided in favour of assessee

Summary

Issues:
Levy of penalty under section 271(1)(b) for failure to comply with statutory notices for AYs 2002-03 to 2008-09.

Analysis:
The appeals were filed against a common order related to penalty proceedings under section 271(1)(b) for multiple assessment years. The issues were heard together due to the same facts. The penalty was imposed on the assessee for non-compliance with statutory notices on specific dates. The assessee argued that the penalty notice was vague and that all notices were eventually complied with, albeit belatedly, due to various reasons including the detention of a key person. The Assessing Officer and CIT(Appeals) upheld the penalty, stating that the reasons provided by the assessee were not valid for non-compliance. They emphasized that the burden of compliance was on the taxpayer, and no reasonable cause was proven for the delays.

The Tribunal observed that the penalty notice lacked specificity, and the assessee did not attend proceedings on certain dates. However, most compliances were made through replies sent via dak or registered post. The main reasons for non-compliance were the detention of a key person, ongoing court proceedings, and the high number of group assessments. The Tribunal found these reasons to constitute a reasonable cause under section 273B, leading to the conclusion that the penalty could not be justified. Additionally, the demand in quantum proceedings was reduced to nil, indicating technical and venial non-compliance, further supporting the deletion of the penalty.

The Tribunal allowed the appeal, directing the deletion of the penalty for all the assessment years in question. The decision was based on the reasonable cause for non-compliance presented by the assessee and the technical nature of the alleged breaches. The findings were applicable to all the years under appeal, leading to the final decision to delete the penalties imposed under section 271(1)(b) for the specified assessment years.