M/S. M.M. BUILDCON PVT. LTD.,NEW DELHI vs. DCIT, NEW DELHI

Facts are similar in all these four appeals and, therefore, decided by a common order. The question involved in these four appeals is relating to the sustainability of the penalty of Rs.20,000/- for each year, u/s 271(1)(b) of the Income Tax Act, 1961 (in short “Act”) for the failure of the assessee to attend the proceedings as and when required by way of notice issued by the AO. The plea taken by the assessee before the AO and Ld.CIT(A) was that there was a search conducted in MDLR Group in January 2008, detention in judicial custody of one Sh. Gopal Goyal, key person in taking care of the affairs of the group of companies, poor turn out of the employees at work place and large number of pending assessments u/s 153A of the Act, requiring preparation of the voluminous details - the cumulative effect of which prevented the assessee from entry appearance appropriate stage. However, both the authorities rejected the plea of the assessee and sustained the penalty.

At the outset, it is submitted by the Ld.AR that in a number of cases relating to the companies of MDLR Group, authorities levied penalty u/s 271(1)(b) of the Act but after considering the plea of the assessee on facts, the Tribunal found that the detention of Sh. Gopal Goyal who was entrusted with the income tax matters and was looking after the entire working of the group in judicial custody, initiation of about 300 group assessments in the way of search proceedings, poor turn out of the employees resulting in the delayed compliance being made through post do constitute reasonable cause falling within the scope and ambit of section 273B of the Act and on that ground, the Tribunal deleted the penalty. Copies of the orders dated 28.08.2017 & 29.08.2017 in to 4434/Del/2015 are filed. Ld. DR placed reliance on the orders of the authorities below.

We have carefully gone through the record and the orders filed by the Ld.AR and found that under similar circumstances, a Co-ordinate Bench of this Tribunal considered the facts pleaded by the assessee at length and held that the reasons pleaded by the assessee, which are similarly pleaded now, constitute reasonable cause within the meaning of Section 273B of the Act and deleted the penalty levied against the assessee. While respectfully following the pg. 2 same, we hold that the assessee was prevented by reasonable cause from compliance with the notice, and on that ground we delete the penalty levied u/s 271(1)(b) of the Act.

In the result, the appeals of the assessee are allowed.