2014 (12) TMI 1102 - AT - Income Tax

Tribunal overturns penalties under Income-tax Act, emphasizes reasonable causes for compliance delays

The Tribunal allowed all appeals, setting aside penalties imposed under section 271(1)(b) of the Income-tax Act for the relevant assessment years, ... Penalty u/s 271(1)(b) - Delay in filing return - Search and seizure of premises - Held that:- It is noticed from the impugned order that the assessee submitted before the ld. CIT(A) that adjournments were requested on the ground that search and seizure operation had taken place and it was not possible to furnish the necessary details as all the documents and computer hard discs etc. were seized/impounded at the time of search operations. The assessee further submitted that several requests were made to the AO to release certain documents, but to no avail. These findings have not been controverted by the ld. DR with any cogent evidence. From the above recording of the factual position obtaining in this case, it is crystal clear that the assessee was prevented by a reasonable cause in not complying with the directions of the AO which led to the imposition of penalty u/s 271(1)(b) of the Act. The cause pleaded by the assessee before the ld. CIT(A) which led to the commission of default u/s 271(1)(b) of the Act constituted a reasonable cause. The delay in filing the information/documents etc. called for by the AO would be naturally delayed when a person has been subjected to search and documents are with the Department. As the assessee proved a reasonable cause for failure to comply with the directions of the AO which culminated into the imposition of the instant penalty, we are of the considered opinion that this penalty cannot be upheld. We, therefore, set aside the impugned order and order for deletion of this penalty. - Decided in favour of assesse. Issues Involved:Penalty imposed under section 271(1)(b) of the Income-tax Act, 1961 for the assessment years 2004-05 to 2010-11.Detailed Analysis:1. Common Issue in Multiple Appeals:The judgment involves 19 files concerning two assessees facing penalties under section 271(1)(b) of the Income-tax Act, 1961 for the years 2004-05 to 2010-11. The appeals are consolidated for efficiency due to a common issue.2. Case of Shalini Goyal for AY 2009-10:The judgment focuses on the appeal of Shalini Goyal for the assessment year 2009-10. The assessee was part of a search and seizure operation on 7.01.2010. Despite notices, the return was not filed timely, leading to a penalty under section 271(1)(b), upheld by the CIT(A).3. Reasonable Cause for Delay:The assessee cited reasons for the delay, including the seizure of documents during the search operation, hindering compliance with the AO's directions. The AO imposed the penalty without considering the reasonable cause presented by the assessee.4. Legal Analysis of Section 271(1)(b) and 273B:Section 271(1)(b) allows penalties unless a reasonable cause is shown by the assessee, as per section 273B. The judgment highlights that the delay in compliance due to the search operation and document seizure constituted a reasonable cause, warranting the deletion of the penalty.5. Deletion of Penalty and Similar Cases:Based on the above analysis, the Tribunal ordered the deletion of the penalty imposed on Shalini Goyal and extended this decision to other similar cases with comparable circumstances, as the facts were alike.6. Final Decision and Outcome:The Tribunal allowed all the appeals, setting aside the penalties imposed under section 271(1)(b) for the relevant assessment years. The judgment was pronounced on 20.06.2014, emphasizing the importance of considering reasonable causes for delays in compliance with tax regulations.