2014 (3) TMI 287 - AT - Income Tax

Exparte order passed - Confirmation of penalty u/s 271(1)(b) - Non appearance before CIT(A) Held that - The assessee could not appear before the AO on both the occasions due to unavoidable circumstances, that on 14th July,2009 he was not in Mumbai and had met one advocate, that between 5th Aug. to 13th Aug,2009 he was sick - After considering the documents by the assessee and considering the facts and circumstances of the case under appeal, there was reasonable cause for the assessee for not appearing before the AO - It is also a fact that by not appearing before the authority harm is caused to the assesse - thus, the order of the FAA set aside Decided in favour of Assessee.

Issues:
1. Challenge to the order confirming penalty under section 271(1)(b).
2. Non-attendance on specific dates for hearings and reasons provided.
3. Levying penalty without giving a reasonable opportunity to be heard.

Analysis:

1. The appellant challenged the order confirming the penalty under section 271(1)(b) issued by the CIT(A)-34, Mumbai. The grounds of appeal included questioning the justification and upholding of the penalty by the Assessing Officer (AO) and the CIT(A). The appellant contended that there were errors in facts and law in confirming the penalty.

2. The issue of non-attendance on specific dates for hearings was raised by the appellant. The appellant provided reasons for non-appearance, citing legitimate causes such as the AR being at Palghar for a Civil Suit discussion, the presence of a white ant problem in the office, and the AR's illness with high temperature. The appellant argued that there were reasonable causes for non-attendance on the specified dates.

3. The appellant further contended that the penalty was levied without providing a reasonable opportunity to be heard. The appellant argued that only one opportunity was given to show cause as to why the penalty should not be levied, which was insufficient considering the principles of natural justice. The appellant claimed that there was a lack of reasonable opportunity to present their case before the penalty was imposed.

Judgment:

The AO had issued notices for hearings on specific dates, and upon non-appearance, a penalty was levied. The FAA upheld the penalty, stating that the appellant failed to provide sufficient evidence to justify non-attendance. However, during the appeal before the ITAT Mumbai, the AR presented documentary evidence supporting the reasons for non-appearance, including a certificate from a physician and a confirmation letter from an advocate.

After considering the submissions and evidence, the ITAT Mumbai found that there were valid reasons for the appellant's non-appearance on the specified dates. The tribunal noted the circumstances, such as the AR being out of Mumbai for a legitimate purpose and suffering from an illness during the relevant period. The ITAT Mumbai concluded that there was a reasonable cause for the appellant's non-appearance, overturning the FAA's decision and ruling in favor of the appellant.

In light of the above analysis, the ITAT Mumbai allowed the appeal filed by the appellant, thereby setting aside the penalty imposed under section 271(1)(b). The judgment emphasized the importance of providing a reasonable opportunity to be heard and considering valid reasons for non-appearance before levying penalties in income tax matters.

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