Penalty under section 271(1)(b) for non-response to notices; exemption under section 273B granted due to director's illness and bereavement

Penalty for failure to respond to assessment notices was assessed under tax penalty provisions; tribunal found that illness of the director and bereavement constituted a reasonable cause, and that a change of professional contributed to non-response. The tribunal applied the principle that penalty proceedings are quasi-criminal and should be imposed only for deliberate, contumacious, dishonest, or consciously disregarding conduct, allowing judicial discretion to refuse penalty for technical or venial breaches or bona fide beliefs. Applying these standards, the tribunal held the assessee entitled to immunity from penalty and allowed the appeal, setting aside the penalty order.

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Issues: Whether the penalty imposed under section 271(1)(b) of the Income-tax Act, 1961 should be deleted in view of the assessee's claim of reasonable cause and immunity under section 273B.

Analysis: The Tribunal considered the legal framework that penalty proceedings under section 271(1)(b) are quasi-criminal in nature and that the authority must exercise judicial discretion, taking into account whether there was a reasonable cause for non-compliance. Section 273B provides for immunity from penalty where reasonable cause exists. The Tribunal examined the facts relevant to the exercise of discretion, including the director's serious family medical emergency, the death of the director's mother, the change of professional advisers, and the supporting medical and death documentation which were not disputed as false. The Tribunal applied the principles that penalty should not ordinarily be imposed where breach is bona fide, venial, or arises from genuine circumstances that prevented compliance, and that even where penalty is permissible, the authority may legitimately decline to impose it upon consideration of relevant circumstances.

Conclusion: The Tribunal concluded that the assessee established sufficient reasonable cause and is entitled to immunity under section 273B; the penalty under section 271(1)(b) is deleted in favour of the assessee.

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