State Bank of India branches win appeal on compliance delay, emphasizing need for reasonable cause consideration in penalty assessments.

The Income Tax Appellate Tribunal (ITAT) allowed the appeals of State Bank of India branches for statistical purposes, remanding the matter to the Assessing Officer (A.O.) to provide the assessees with an opportunity to present evidence justifying the delay in compliance with notices under section 133(6) of the Income Tax Act. The ITAT found that the assessees were not given adequate opportunity to demonstrate reasonable cause for the delay, emphasizing the importance of considering such factors in penalty assessments for non-compliance.

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Issues:
Penalty under section 272A(2)(c) for non-compliance with notices under section 133(6) of the Income Tax Act.

Analysis:
The judgment involves two appeals by different branches of State Bank of India against penalties imposed by the Assessing Officer (A.O.) under section 272A(2)(c) for non-compliance with notices under section 133(6) of the Act. The penalties were confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)], albeit with different outcomes for each branch.

In the case of NTPC Branch, the CIT(A) restricted the penalty from Rs. 1,05,300 to Rs. 35,100. The CIT(A) considered factors like willfulness, deliberate avoidance, and circumstances beyond control. Despite the delayed compliance, the penalty was reduced due to the submission of information albeit late, and the absence of willful non-compliance.

Conversely, in the case of Metpalle Branch, the CIT(A) upheld the full penalty of Rs. 1,05,300 imposed by the A.O. The assessees challenged these decisions before the Income Tax Appellate Tribunal (ITAT).

During the appellate proceedings, the assessees argued that the delay in furnishing information was due to the need for software support and permission from the Head Office/Regional Office. They contended that the delay was not intentional and penalties were unjustified. The CIT(A) considered these submissions along with the material on record before making the decisions.

The ITAT, after hearing arguments from both sides, found merit in the assessees' contentions. It observed that the assessees were not given sufficient opportunity to produce evidence supporting their case of reasonable cause for the delay. Consequently, the matter was remanded to the A.O. to allow the assessees to provide relevant documentary evidence, such as correspondence and emails with the Head Office/Regional Office, to substantiate their claims.

Ultimately, the ITAT allowed the appeals of the assessees for statistical purposes, indicating a favorable outcome for the assessees in terms of the penalty imposed. The judgment emphasizes the importance of considering reasonable causes for non-compliance and providing adequate opportunities for assessees to present supporting evidence in such cases.

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