SMT. BARNALI BANERJEE,KOLKATA vs. INCOME TAX OFFICER, WARD-31(1), KOLKATA, KOLKATA

These three appeals by the assessee are directed against separate orders of Commissioner of Income Tax (Appeals)-XIX, by different dated 22.10.2013 & 24.10.2013. Assessment was framed by ITO Ward-31(1), Kolkata u/s 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 28.12.2007 for assessment year 2005-06. Penalty levied by Assessing Officer u/s 271(1)(b) of the Act vide his order dated 24.06.2008 First we take up (AY 05-06) 2. Solitary ground raised by the assessee per its appeal as under:-

The facts in brief are that assessee in the present case is an individual and has declared her income from other source for an amount of ₹99,500/-. Thereafter the case was selected for scrutiny under CASS module and accordingly notices were issued u/s 143(2) and 142(1) of the Act.

Aggrieved, assessee preferred an appeal before Ld. CIT(A), whereas assessee submitted that investment in RBI bond was made out of money received from her husband ( working in USA) through banking channel and in A.Y. 2005-06 Barnali Banerjee vs. ITO Wd-31(1) Kol. Page 3 support of her claim she submitted her bank statement of both the accounts but Ld. CIT(A) rejected the plea of assessee and upheld the action of AO by observing as under:- “7.5 Here also the appellant could not satisfactorily explain the source of her investment and making after thought strategy to avoid the legitimate tax. Even she could not produce the financial statement in the shape of balance sheet, cash flow statement whatsoever it justify her disclosed investment and the source thereof. Therefore, the addition made by AO amount to ₹8,00,000/- is hereby confirmed.” Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us.

Before us Ld. AR filed paper book comprising pages from 1 to 27 and stated that assessee has been filing her IT return in Bangalore as it was her jurisdictional Income Tax office for the last three years. This fact was also duly communicated to Department. However, for the year under consideration, the return was filed at Kolkata address but all the relevant documents were at Bangalore address. The assessee being lady was on the advanced stage of pregnancy and stayed in her parental house, Kolkata till the birth of second child which happened on dated 12.12.2007. All the supporting papers regarding aforesaid investment were lying in her Bangalore. Ld. AR in support of assessee’s claim has submitted the doctor’s prescription, birth certificate, which are placed on 4 and 5 of the paper book. He also submitted that annual income of assessee’s husband earned in $ 1.25 lakh and submitted the annual salary certificate which is placed on pages 6 and 7 of the paper book. Ld. AR further submitted that the cheque issued and deposited in the Indian Bank a/c which are placed on pages 8 to 13 of the paper book along with bank statement. Ld. AR in this regard drew our attention on page 16 of the paper book where the copy of RBI bond was placed for ₹ 8 lakh which is in the name of assessee and her husband. The ld. AR prayed that order of Authorities Below may be quashed. -56/Kol/2013 A.Y. 2005-06 Barnali Banerjee vs. ITO Wd-31(1) Kol. Page 4 On the other hand, Ld. DR vehemently relied on the order of Authorities Below.

We have considered the rival contentions of both the parties as well as relevant material available on record. We have also carefully perused the materials brought to our notice. From the foregoing discussion, we find that assessee failed to produce her documentary evidence in support of investment made in RBI bond amounting to ₹ 8 lakh. As a result the addition was made by AO and subsequently confirmed by Ld. CIT(A). From the submission of Ld. AR we find that assessee has received a sum of ₹ 8.50 lakh in an account maintained jointly with her husband. The bank statement and salary details of assessee’s husband have been duly furnished. In our considered view the source of investment has been duly explained by submitting the documents in the form of paper book. Considering the details of the facts of the present case, we find that source of investment has been duly explained by assessee at the appellate stage and in rebuttal Ld. DR also failed to bring anything contrary to the argument of Ld. AR. Hence, we are inclined to reverse the order of Authorities Below and allow assessee’s ground. AO is directed accordingly.

In the result, assessee’s appeal is allowed. Coming to

Sole issue raised by assessee is that Ld. CIT(A) erred in confirming the action of Assessing Officer by sustaining the penalty of ₹10,000/- u/s 271(1)(b) of the Act on account of failure on the part of assessee to compliance the notice issued by AO.

At the outset, it was observed that in the present case assessee was residing in Bangalore but came to Kolkata (her parental house) during the period of her pregnancy. As a result, assessee failed to comply the notice issued by AO. The necessary details has already been discussed by us in para-7 & 8 of this order. In view of above, we are inclined to quash the penalty imposed by A.Y. 2005-06 Barnali Banerjee vs. ITO Wd-31(1) Kol. Page 5 AO u/s 271(1)(b) of the Act in terms of provision of Sec. 273B, which reads as under:- [273B. Penalty not to be imposed in certain cases Notwithstanding anything contained in the provisions of [clause (b) of sub- section (1) of] [section 271, section 271A, [section 271AA] section 271B, [section 271BA] [section 271F,] [section 71FA,] [section 271FAB,] [section 271FB,] [section 271G,] [section 271GA,] [section 271GB,] [section 271H,] [section 271-I,] clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA] or [section 272B, or] [sub- section (1) [or sub-section (1A) of section 272BB or] [sub-section (11) of section 272BBB or] clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.] From a plain reading of the above Sec. 273B of the Act, we find that no penalty shall be levied upon assessee if it is proved that there was a reasonable cause for the non- compliance of notice. In the facts of case, as assessee, a female was on the advanced stage of pregnancy and at that time came to Kolkata, in her parental house from Bangalore for the purpose of giving birth to her second issue. Considering the totality of the fact, we find that there was sufficient reasonable cause which prevented assessee to compliance said notice and in this view of the matter, we quash the penalty imposed by AO. This ground of assessee is allowed.

In the result, assessee’s appeal is allowed. Coming to ITA No.2656/Kol/2013 13. Grounds raised

For that in the facts and circumstances of the case the Learned Commissioner of Income Tax Appeals erred in upholding the penalty u/s. 271(1)(c) of the IT Act 1961 on the addition of Rs.800,000. The Penalty u/s. 271(1)(c) of the IT Act 1961 was uncalled for an unwarranted and thus the same be cancelled.

For that in the facts and circumstances the penalty order u/s. 271(1)(c) of the IT Act 1961 was barred by limitation and hence bad in law and be quashed. 4. For that in the facts and circumstances the penalty order u/s. 271(1)(c) of the IT Act 1961 was without jurisdiction and hence bad in law and be quashed.

In the result, assessee’s appeal is dismissed as infructuous.