Failure to respond to assessment notices: penalty deleted where reasonable cause, illness and change of professional representation established.

Tribunal addressed levy of penalty for failure to respond to assessment notices and applied the doctrine of reasonable cause and immunity under applicable law, finding that judicial discretion may decline penalty for technical or venial breaches or where bona fide belief exists. The tribunal accepted medical and familial hardship and a change of professional representation as sufficient cause, held that similar penalties in related years were deleted, and consequently directed deletion of the penalties imposed for the assessment year in dispute. Appeal by the taxpayer allowed and penalty relief granted.

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Issues: Whether the penalty imposed under section 271(1) for failure to respond to statutory notices in assessment proceedings for A.Y.2015-16 should be deleted on the ground of reasonable cause and immunity under section 273B.

Analysis: The Tribunal examined whether the assessee had a reasonable cause for non-compliance with notices issued under sections 143(2) and 142(1). The analysis addressed the protective scope of section 273B which provides immunity from penalty where a reasonable cause is shown, the quasi-criminal character of penalty proceedings under section 271(1) and the judicial discretion to refuse penalty in cases of bona fide or venial breaches. The Tribunal considered documentary evidence concerning serious illness and death in the director's family and a change of professional advisors, and treated those facts as sufficient to constitute a reasonable cause for non-response to the notices.

Conclusion: The penalty levied under section 271(1) for A.Y.2015-16 is deleted as the assessee is entitled to immunity under section 273B on the ground of reasonable cause; the appeal is allowed.

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