The Income Tax Appellate Tribunal (ITAT), Pune Bench deleted the penalty for failure to comply with a notice.
The three appeals were filed by the assessee, M/s. Sun Infrastructure Pvt. Ltd against the confirmation of penalty of Rs.10,000/- each under section 271(1)(b) of the Income-tax Act, 1961 by the CIT(A) through his separate orders in relation to the assessment years 2007-08, 2008-09 and 2009-10.
A search and seizure action under section 132 of the Act. Notice under section 142(1) was issued seeking compliance on 21-08-2015. Since the assessee did not appear, the AO imposed a penalty of Rs.10,000/- under section 271(1)(b) of the Act. The CIT(A) echoed the penalty, which has brought the assessee before the Tribunal.
The coram of S.S.Viswanethra Ravi and R.S.Syal noted 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.
The ITAT said that there is no doubt that the assessee did not comply with the notice issued by the AO and thus, became liable for penalty under section 271(1)(b) of the Act.
However, the Tribunal held that section 273B states that wherever there is a reasonable cause in not complying with the requirements resulting in the imposition of penalty including section 271(1)(b) under consideration, the penalty needs to be deleted.
The ITAT found that there was a reasonable cause with the assessee in not complying with the requirements of the AO in such a short period. This being a reasonable cause has brought the case within the ambit of section 273B of the Act.
Therefore, the ITAT ordered to delete the penalty imposed by the AO and confirmed in the first appeal in respect of all the three years under consideration.
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