The Pune Bench of The Income Tax Appellate Tribunal (ITAT) canceled the penalty imposed for failure to comply with the notice.
The Assessee, M/s. Sun Infrastructure Pvt. Ltd filed three appeals in opposition to the confirmation/verification of penalty of Rs.10,000/- each as per section 271(1)(b) of the Income-tax Act, 1961 imposed by the CIT(A) in relation to the assessment years 2007-08, 2008-09 and 2009-10.
Earlier, notice under section 142(1) was issued that was seeking compliance on 21-08-2015. However, the AO put a penalty of Rs.10,000/- under section 271(1)(b) of the aforesaid Act. The reason being, the assessee did not appear.
Thereafter, The CIT(A) echoed the aforesaid penalty, which finally brought the assessee “M/s. Sun Infrastructure Pvt. Ltd” before the Tribunal. The Coram consisting of R.S.Syal and S.S.Viswanethra Ravi stated that it was troublesome for the assessee to gather different records from the scattered places and that too in a short period of four days that was at the disposal of the assessee for obeying the requirements of the AO.
“The Income Tax Appellate Tribunal (ITAT) stated that there is no doubt about the fact that the assessee did not obey the notice issued by the AO and is consequently liable for penalty under section 271(1)(b) of the Act. Nevertheless, the Tribunal held that section 273B reveals that when there is a reasonable cause in not obeying the requirements, the penalty needs to be deleted.”
The ITAT found the fact that the assessee had a reasonable cause in not obeying the necessary requirements of the AO in such a short period. Consequently, this has brought the case within the domain of section 273B of the Act.
In consequence, the ITAT ordered for the deletion of the penalty that was ordered by the AO and that was confirmed in the first appeal with respect to all three years.
