M/S ACME AUTO (P) LTD.,,NEW DELHI vs. ACIT, NEW DELHI

The AO has imposed penalty u/s 271(1)(b) of the Act for the assessee not appearing before him on two days i.e. 24.10.2011 and 31.10.2011 of Rs.10,000/- for each absence and thus for two absence before him i.e. Rs.20,000/-. The ld. CIT (A) has deleted Rs.10,000/- after taking note of the before the AO, so he deleted Rs.10,000/-. However, he confirmed penalty of Rs.10,000/- imposed for the default for not appearing before the AO on 31.10.2011. Ld. AR for the assessee took our attention to page 8 of the paper book, which is the adjournment application for the said date i.e. 31.10.2011 which we take note that has been duly endorsed by the department with date stamp endorsing the date 31.10.2011 on which date the adjournment application has been filed before the AO. The ld. AR took our attention to the noting made by the Authorized Representative of the assessee on the adjournment application i.e. “AO is on leave, so no adjournment.” However, the ld. CIT (A) while refusing to delete penalty for failure of the assessee to comply with the notice u/s 142(1) of the Act has reasoned that the assessee could not prove that the AO was on leave on that particular date, therefore, he confirmed the penalty.

On the other hand, the ld. DR has pointed out that the penalty has been imposed on 09.11.2011 and the assessment order has been passed later on 30.12.2011. This goes on to show that the AO got fed up with the assessee as initiate 271(1)(b) proceedings before the assessment order was passed to bring the assessee on line. According to him, after the penalty was imposed, then only the assessee cooperated which clearly goes on to show that the assessee was trying to delay its participation in the entire assessment proceedings.

We have heard both the sides on the issue and perused the material. We find that the AO had issued notice u/s 142(1) of the Act to the assessee to appear on 31.10.2011 but, according to the assessee, the Group CFO and AR, Shri Ram Avtar Agarwal had filed an adjournment application dated 31.10.2011 seeking adjournment for that date and sought a week’s time, a copy of which is seen placed at page 8 of the paper book with endorsement of the Department evidencing that it had received it and duly date stamped that of 31.10.2011. The ld. DR could not controvert the fact as to whether the date stamp affixed on the adjournment application is not of that office of the Income-tax Department, to be more precise the veracity of the adjournment application filed and as to whether it is stamped in the office of the Assistant Commissioner, CC-IX, New Delhi could not be controverted before us. It should be remembered that for non-compliance of section 271(1)(b) notice does not mandate penalty unless the assessee deliberately adopts delay tactics. As per section 273B under the heading ‘Penalty not to be imposed in certain cases’, which is an overriding section 271, penalty is not imposable for any failure referred to in the said provision, if the assessee is able to prove that there was reasonable cause for the said failure. Here, we find the Authorized Representative, Shri Ram Avtar Agarwal has duly applied for adjournment on that day (i.e. 31.10.2011) when the case was fixed for hearing and sought adjournment for a week’s time. Since the genuineness of the said application before us is not controverted, we are of the considered opinion that penalty is not warranted. Moreover, we find that the assessee had later on cooperated and assessment order has been passed on 30.12.2011. Therefore, we direct deletion of the penalty of Rs.10,000/- in all the assessment years which are before us. We order accordingly.

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