M/S CHANDUR L. SIPAHIMALANI,KOLKATA vs. ITO, WD-29(2), KOLKATA, KOLKATA

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding the levy of penalty u/s 271(1)(b) of the Act in the facts and circumstances of the case.

The brief facts of this issue is that the ld. AO observed that the assessee had complied with the statutory notices issued u/s 142(1) of the Act on 6.7.2007 and 1.10.2007 fixing date of hearing on 18.7.2007 and 8.10.2007 respectively for the Asst. Year 2005-06. Accordingly the ld. AO initiated penalty proceedings u/s 2 I.T.A.No.604/Kol/2014 Assessment Years: 2005-06 M/s. Chandur L. Sipahimalani 271(1)(b) of the Act and served the said notice on the assessee fixing the hearing on 14.5.2008. There was no compliance for this penalty hearing also. Accordingly the ld. AO levied penalty u/s 271(1)(b) of the Act at the rate of Rs 10,000/- for each failure i.e. on 18.7.2007 and 8.10.2007 and levied penalty of Rs 20,000/- thereon. The assessee replied before the ld. CIT(A) that he had completely entrusted the entire job of handling his income tax assessments before the ld. AO to his authorized representative. On receipt of scrutiny notice and various statutory notices u/s 142(1) of the Act, all the details called for by the ld. AO were prepared and produced before her authorized representative together with supporting evidences. She stated that she was totally dependent on her authorized representative as she was totally off from outside work since November 2005 due to her ill health and suffering from acute diabetes, hypertension and poor eye vision (60 to 70% of vision was already lost) . It was also pleaded that there was nobody to look after except her husband who was 74 years old. and also suffering from old. age disease and since they were issueless, they were both passing unpleasant and restless life. It was pleaded that she has been filing her income tax returns for the past 45 years and had always complied with the quasi judicial proceedings and was totally dependent on her authorized representative for representation before the judicial authorities. It was pleaded that despite her genuine predicaments, all the details called for by the ld. AO were duly filed and had co-operated in smooth completion of the assessment proceedings. The ld. CIT(A) however did not appreciate these contentions and upheld. the levy of penalty u/s 271(1)(b) of the Act. Aggrieved, the assessee is in appeal before us on the following grounds:- “1. That the Ld. A.O. imposed a penalty of Rs.20,000/-u/s 271(1)(b) of the Income Tax Act, 1961 without going through the facts and circumstances of 3 I.T.A.No.604/Kol/2014 Assessment Years: 2005-06 M/s. Chandur L. Sipahimalani the case which is unjust, bad in law, craves deletion and against the natural law of justice.”

None appeared on behalf of the assessee. The ld. DR vehemently relied on the orders of the lower authorities.

We have heard the ld. DR. We find from the facts stated hereinabove, the assessee had explained that she was dependent on her authorized representative for appearance before the ld. AO on various occasions and that she had fully produced the necessary details with documentary evidences to her authorized representative and she was not aware of the fact that the representative had not appeared before the ld. AO. We find that the assessee was suffering from ill health and considering all old. age and her then family circumstances and more particularly in view of the fact that the assessee had eventually died, we , in our considered opinion, feel that reasonable cause has been duly adduced by the assessee in this regard and hence immunity u/s 273B of the Act is to be granted to the assessee. Hence we have no hesitation in directing the ld. AO to cancel the levy of penalty u/s 271(1)(b) of the Act in the facts and circumstances of the case. Accordingly, the grounds raised