Reasonable cause defeats penalty for notice non-compliance under the Income-tax Act, with server failure accepted as explanation.

Penalty for failure to comply with a notice under section 133(6) of the Income-tax Act, 1961 was deleted because the assessee showed reasonable cause for the delay. The explanation that the branch computer server had failed was accepted in the penalty proceedings, and on those facts the default fell within the protection of section 273B. As reasonable cause was established, penalty under section 272A(2)(c) could not be sustained. The stated ratio is that where a taxpayer proves reasonable cause for non-compliance, section 273B bars imposition of the corresponding penalty.

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Issues: Whether the penalty imposed for failure to comply with notice under section 133(6) of the Income-tax Act, 1961 was exigible in view of the assessee's explanation showing reasonable cause under section 273B.

Analysis: The assessee explained that the delay in furnishing the required information was caused by failure of the branch computer server, and this explanation was recorded in the penalty proceedings. On the facts, the explanation constituted reasonable cause for the default. Once reasonable cause is established, section 273B bars imposition of penalty for the failure covered by section 272A(2)(c).

Conclusion: The penalty was not leviable and was deleted.

Final Conclusion: The appeal succeeded because the statutory protection for reasonable cause applied and the impugned penalty could not be sustained.

Ratio Decidendi: Where the assessee establishes reasonable cause for failure to comply with a notice, penalty under section 272A(2)(c) of the Income-tax Act, 1961 cannot be imposed by reason of section 273B.

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