AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 792
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....Nageshwar Builder Private Limited. M/s Shivanandan Buildcon Private Limited is a company engaged in real estate, land trading and development M/s Shivagnesh Buildcon Private Limited is also a company engaged in real estate land trading and development, whereas M/s Nageshwar Builders Private Limited is a company engaged in the business of construction and sale of real estate properties. 2.1 A search was conducted at the premises of all the three companies on 31/01/2008 and assessment orders u/s 144 of the Act, consequent to orders u/s 264 of the Act passed by the Ld. CIT setting aside the original assessments were passed in case of all the three assessees. 2.2 Penalty proceedings u/s 271(1)(b) of the Act were also initiated in the case of all the three assesses for the failure on the part of the assesses to attend the assessment proceedings. The AO has observed in the penalty orders that the assessee/s had failed to attend the proceedings as and when it was required through different notices issued by the office from time to time. The AO has also noted that submissions were filed by the assessees in the dak and that the assessee/s preferred not to attend the assessment proceed....
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....onstitute 'reasonable cause' that prevented the appellant from complying with the aforementioned notices or filing letters to seek adjournment. Search had taken place in January 2008, following which 153A proceedings were inevitable. The revision petitions u/s 264 were moved by the appellant and the subsequent assessments were required to be completed by the AO before the limitation date, in respect of which also, as per the AO, the requisite details were not being filed. In considering the matter of penalty u/s 271(1)(b), that relates to non-compliance to a statutory notice, issued in the case of a specific assessee for a particular AY requiring attendance on the stated date, the pendency of a large number of other cases of the group is an irrelevant fact. Moreover, the burden of pendency of assessments was larger for the AO, who was required to examine each case, examine the seized materials, obtain the explanation of each assessee, carry out necessary verifications, afford opportunity to each of them in terms of the principle of natural justice, and thereafter pass the assessment order before the time barring date. Thus, the reasons cited in the written submission are rejected. ....
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....read with section 153A. It was submitted that there being a reasonable cause, no penalty could have been imposed. 4. The Ld. DR strongly relied upon the observations and findings of the Learned CIT (Appeals). 5. We have heard the rival submissions and have also perused the material on record. From a perusal of section 273B, we can understand that, notwithstanding anything contained in the provisions of clause (b) of Sub-section (1) of section 271, no penalty shall be imposed on the person or the assessee as the case may be, for any failure referred to in the said provision, if he proves that there was reasonable cause for the said failure. So it can be understood that penalty cannot be imposed, if the assessee is able to prove that there was reasonable cause for the said failure of not complying with the notice served on them under sub-section (1) of section 142 of the Act. 5.1 The meaning of reasonable cause has been stated in the case of Woodward Governor India P. Ltd. vs. CIT and Ors. (2002) reported in 253 ITR 745 (Delhi). Para 5 & 6 of the said judgment is reproduced below:- "Reasonable cause, as applied to human action is that which would constrain a person ....
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....y of penalty under section 271C is not automatic. Before levying penalty, the concerned officer is required to find out that even if there was any failure referred to in the concerned provision the same was without a reasonable cause The initial burden is on the assessee to show that there existed reasonable cause which gave the reason for the failure referred to in the concerned provision. Thereafter the officer dealing with the matter has to consider whether the explanation offered by the assessee or the person, as the case may be, as regards the reason for failure, was on account of reasonable cause. 'Reasonable cause" as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. It can be described as probable cause. It means an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do. The cause shown has to be considered and only if it is found to be frivolous, without substance or ....