2021 (5) TMI 172 - AT - Income Tax

Penalty u/s.271(1)(b) - proceedings u/s.263 - AO initiated instant assessment proceedings for which notice u/s.142(1) was issued which was served upon the assessee - HELD THAT - The relevant records were frequently moved from Nashik, Pune and Nagpur depending upon the necessity where these were required. In view of this peculiar situation, we find that it was difficult on the part of the assessee to collect different records from the scattered places in a short period of four days, which was at the disposal of the assessee for complying with the requirements of the AO. There is no doubt that the assessee did not comply with the notice issued by the AO and thus, became liable for penalty u/s.271(1)(b) of the Act. Section 273B states that wherever there is a reasonable cause in not complying with the requirements resulting into imposition of penalty including section 271(1)(b) under consideration, the penalty needs to be deleted. Adverting to the facts of the instant case, we find that there was a reasonable cause with the assessee in not complying with the requirements of the AO in such a short period for the reasons discussed hereinabove. This being a reasonable cause has brought the case within the ambit of section 273B of the Act. We, therefore, order to delete the penalty imposed by the AO and confirmed in the first appeal in respect of all the three years under consideration. - Decided in favour of assessee.

Summary

Issues:
Confirmation of penalty u/s.271(1)(b) of the Income-tax Act, 1961 for the assessment years 2007-08, 2008-09, and 2009-10.

Analysis:
The appeals by the assessee challenged the penalty of ?10,000/- each imposed u/s.271(1)(b) by the ld. CIT(A) for the three assessment years. The Tribunal consolidated the appeals due to common grounds. The factual matrix began with a search and seizure action in a group, followed by a penalty imposition for non-appearance based on a notice u/s.142(1). The ld. CIT(A) upheld the penalty, leading to the appeals before the Tribunal for all three years.

The Tribunal proceeded ex parte as the assessee did not appear despite notice. The records showed that the assessee maintained audited accounts and underwent assessments post a search. The ld. CIT set aside assessment orders u/s.263, leading to fresh assessment proceedings initiated by the AO. The notice for compliance was issued, but the assessee faced challenges due to the records being scattered across different locations, necessitating time for collection and submission.

The Tribunal noted that the assessee faced genuine difficulties in complying within the short notice period due to the records being in various places. Despite non-compliance leading to penalty imposition, the Tribunal invoked section 273B, which allows penalty deletion in case of a reasonable cause for non-compliance. Considering the circumstances, the Tribunal found a reasonable cause for the delay in compliance, falling within the ambit of section 273B, and thus ordered the deletion of the penalty for all three years.

In conclusion, the Tribunal allowed all the appeals, ordering the deletion of the penalties imposed by the AO and confirmed by the ld. CIT(A) for the assessment years in question. The judgment was pronounced in the Open Court on 16th March, 2021.