SMT. USHA GUPTA,DELHI vs. ACIT, NEW DELHI

First we will deal with the appeal in 2007-08. Following grounds have been raised in this appeal:

“That, on the facts and circumstances of the case, initiation of penalty proceedings against the assessee under section 274 read with section 271(1)(b) and imposition of penalty of Rs. 10,000/- upon the assessee under section 271(1)(b) is illegal and unjustified and, therefore, penalty imposed should be deleted.”

Facts of the case in brief are that the assessee in response to notice u/s 153A/153C of the Income Tax Act, 1961 (hereinafter referred to as the Act) filed the return of income on 13.02.2012. Subsequently, notices u/s 143(2)/142(1) of the Act were issued on 19.09.2012 fixing the case for hearing on 09.10.2012. On the said date nobody attended, nor any reply had been received from the assessee. The AO considered the same as the violation of the provisions of Section 271(1)(b) of the Act. Accordingly, penalty notice u/s 271(1)(b) of the Act was issued to the assessee on 29.01.2013, asking him to explain as to why penalty under the said section may not be 6371 to 6374, 3 6376, 6377, 6379 & 6380/Del/2014 Usha, Satya Prakash & Ghanshyam Gupta levied. The so cause notice was fixed for hearing on 04.02.2013. On the said date also nobody attended, therefore, the AO held that the assessee had no explanation for the default. He, therefore, levied the penalty of Rs. 10,000/- u/s 271(1)(b) of the Act.

Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that Mrs. Anju Gupta, sister-in-law of the assessee was suffering from severe disease and had to be hospitalized on 06.10.2012. Thereafter on 09.10.2012, Mr. Satya Prakash Gupta head of the family and father-in-law of the assessee had to be hospitalized due to heart attack and the whole family was disturbed, therefore, there was no compliance for the notices of hearing on 09.10.2012.

The ld. CIT(A) after considering the submissions of the assessee observed that the assessee did not give any such reply before the AO. However, he had taken note of this fact that the assessee had duly replied to the letters of the AO on subsequent dates. The ld. CIT(A) also observed that the assessment proceedings were time barring in nature, therefore, the AO was in race against time, but the details required by him had not been filed and if the AO was to get all the details at the 11th hour, it would not be appropriate for completing the assessment. According to the ld. CIT(A) the reasons given by the assessee did not explain the total non-compliance. However, the ld. 6371 to 6374, 4 6376, 6377, 6379 & 6380/Del/2014 Usha, Satya Prakash & Ghanshyam Gupta CIT(A) held that levying the penalty for 7 years would be harsh on the assessee. He, therefore, considered it appropriate if the penalties of Rs. 10,000/- each only for 3 years out of the 7 assessment years involved were to be confirmed. He accordingly confirmed the penalty to the extent of Rs. 10,000/- each for the assessment years 2005-06 to 2007- 08 and deleted the penalties for the assessment years 2008-09 to 2011-12.

Now the assessee is in appeal for the assessment year 2007-08. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that there was a reasonable cause for non-appearance on 09.10.2012 and the assessee explained properly as required u/s 273B of the Act. It was also submitted that even the ld. CIT(A) considered the explanation of the assessee for 4 years i.e. assessment years 2008-09 to 2011-12 as plausible and for remaining 3 years, he considered that there was no explanation for the total non-compliance, which was contradictory. He requested to delete the penalty because it was beyond the control of the assessee to appear for hearing on 09.10.2012, since head of the family was hospitalized on the same date due to heart attack. 8. In his rival submissions the ld. DR submitted that the assessee was willful defaulter and never cooperated, therefore, there was a default as per the provisions u/s 271(1)(b) of the Act and the penalty ITA Nos. 6368, 6371 to 6374, 5 6376, 6377, 6379 & 6380/Del/2014 Usha, Satya Prakash & Ghanshyam Gupta was rightly levied. It was contended that the ld. CIT(A) was not justified in deleting the penalty.

I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it appears that the AO levied the penalty for non- appearance of the assessee on 09.10.2012, for the said date notices were issued u/s 143(2)/142(1) of the Act. The explanation of the assessee before the ld. CIT(A) was that her sister-in-law Mrs. Anju Gupta was suffering from severe disease and had to be hospitalized on 06.10.2012. Thereafter on the date of hearing i.e. 09.10.2012, Sh. Satya Prakash Gupta “head of the family” and “father-in-law” of the assessee became ill and had to be hospitalized due to heart attack. In my opinion there was a reasonable cause for non-appearance for the hearing fixed on 09.10.2012, as such the confirmation of penalty levied by the AO u/s 271(1)(b) of the Act was not justified. In the present case, it appears that the AO levied the penalty for 7 assessment years running from 2005-06 to 2011-12 and the ld. CIT(A) deleted the penalty for the 4 assessment years i.e. the assessment years 2008-09 to 2011-12, considering the explanation of the assessee as plausible. However, the same explanation was not considered as proper for the remaining assessment years i.e. assessment years 2005-06 to 2007-08. , 6371 to 6374, 6 6376, 6377, 6379 & 6380/Del/2014 Usha, Satya Prakash & Ghanshyam Gupta In my opinion, the stand taken by the ld. CIT(A) was not justified particularly when he was satisfied that there was a proper and plausible explanation for the 4 out of the 7 assessment years for which penalty was levied by the AO u/s 271(1)(b) of the Act. I, therefore, considering the totality of the facts delete the penalty levied by the AO and sustained by the ld. CIT(A).

The other appeal of the assessee i.e. for the assessment year 2007-08 is defective and duplicate so it is dismissed. In the case of the other assessee i.e. Sh. Satya Prakash Gupta in ITA Nos. 6372 to 6374/Del/2014 for the assessment years 2005-06 to 2007-08, the cases are on more strong footing because the said assessee himself was admitted in the hospital on 09.10.2012 due to heart attack, so it was not possible for him to be present on the said date. In the case of Sh. Ghanshyam Gupta, the facts are similar as were involved in the case of Smt. Usha Gupta, the only difference is that the assessee filed duplicate appeals for the assessment years 2006- 07 & 2007-08, therefore, the duplicate appeals in ITA No. 6379 & 6380/Del/2014 are infructuous. In view of the aforesaid discussion, it is held that the findings given in the case of Smt. Usha Gupta in 2007-08 are applicable with the same force in the case of other assessees. In that view of the ITA Nos. 6368, 6371 to 6374, 7 6376, 6377, 6379 & 6380/Del/2014 Usha, Satya Prakash & Ghanshyam Gupta matter the penalties levied by the AO u/s 271(1)(b) of the Act and sustained by the ld. CIT(A) are deleted.

In the result, the appeals in 6372 to 6374/Del/2014 and 6376 & 6377/Del/2014 of the assessees are allowed while ITA Nos. 6371/Del/2014 and 6379 & 6380/Del/2014 are dismissed. (Order Pronounced in the Court on 04/11/2015)