2023 (1) TMI 409 - AT - Income Tax

Levy of penalty u/s. 271(1)(b) - Non compliance requirement in respect of special audit u/s. 142(2A) -reasonable cause within the meaning of section 273B - HELD THAT - As decided in SHRI ASHESH AGARWAL case 2022 (12) TMI 1223 - ITAT LUCKNOW relevant ledgers for all the years under consideration were impounded by the Ld. AO in the course of assessment itself which has prevented the assessee in making compliance to the requirements of the special auditors for getting the special audit u/s. 142A of the Act completed. Where the law creates a duty or charge and the party is disabled to perform it, without any default in him and has no remedy over it, there the law will, in general, excuse him. Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the person interested had no control, the circumstances will be taken as a valid excuse. Assessment proceedings furnished by the Ld. Counsel, it is evidently demonstrated that there exists a reasonable cause within the meaning of section 273B of the Act which prevented the assessee in meeting the compliance requirement in respect of special audit u/s. 142(2A) of the Act. - Levy of penalty directed to be deleted. Decided in favour of assessee.

Summary

Issues involved:
Appeals against penalty orders under section 271(1)(b) of the Income-tax Act, 1961 for failure to comply with statutory requirements.

Analysis:

1. Background and Consolidated Appeals:
The appeals were filed against orders of Ld. CIT(A) for penalty under section 271(1)(b) of the Act. The appeals were consolidated due to identical facts and belonging to the same group. The assessees challenged the penalty of Rs. 10,000/- for each of the seven years involved.

2. Previous Case Reference:
The present appeals were similar to another case involving Ashesh Agrawal, part of the same group. The findings in the Ashesh Agrawal case were applied to the present appeals due to identical facts.

3. Non-Compliance and Penalty Imposition:
The assessment revealed non-compliance by the assessee with statutory requirements, leading to penalty proceedings under section 271(1)(b) of the Act. The onus was on the assessee to show reasonable cause for non-compliance.

4. Arguments and Considerations:
The assessee's counsel argued the existence of a reasonable cause for non-compliance based on impoundment of ledgers by the Assessing Officer during assessment proceedings. The legal provisions of section 273B were crucial in determining the imposition of penalties.

5. Tribunal's Decision:
After considering all submissions and legal provisions, the Tribunal found a reasonable cause for non-compliance as demonstrated by the assessee. The penalty under section 271(1)(b) was directed to be deleted, and all appeals were allowed. The Tribunal emphasized the importance of proving reasonable cause as per section 273B.

6. Judgment and Conclusion:
The Tribunal allowed the appeals based on the existence of a reasonable cause for non-compliance with statutory requirements. The decision was in line with the findings in the Ashesh Agrawal case, and the penalty under section 271(1)(b) was deleted for the assessees in the present appeals. The Tribunal's decision was pronounced in an open court in December 2022.