ASHA THAYER,CHENNAI vs. ADIT, CHENNAI

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ITA 3102/CHNY/2014Status: DisposedITAT Chennai08 April 2015AY 2007-084 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the notice was not properly served on the assessee or her power of attorney, there was a reasonable cause for non-compliance. Therefore, the penalty levied for non-compliance was not sustainable.

What were the facts?

The assessee, a non-resident, failed to respond to a notice issued by the Assessing Officer under Section 142(1) of the Income-tax Act. The assessee claimed the notice was served on an employee of the power of attorney, who did not inform the power of attorney or the assessee.

What were the issues?

Whether there was a reasonable cause for the assessee's failure to comply with the notice under Section 142(1) and if penalty under Section 271(1)(b) was leviable.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 271(1)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY

For Respondent: Shri S. Das Gupta, JCIT
Hearing: 06.04.2015Pronounced: 08.04.2015

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-VII, Chennai, dated 10.09.2014, confirming the penalty levied under Section 271(1)(b) of the Income-tax Act, 1961 (in short 'the Act').

2.

Shri G. Seetharaman, the Ld. representative of the assessee submitted that the assessee is a non-resident. According to Ld. The Ld. representative further submitted that the notice issued by the Assessing Officer under Section 142(1) of the Act appears to have been served on the employee of the power of attorney.

However, the same was not brought to the notice of either the power of attorney of the assessee or the assessee herself.

Therefore, the assessee could not respond to the notice issued by the Assessing Officer under Section 142(1) of the Act. Therefore, according to Ld. representative, there was reasonable cause for not responding to the notice under Section 142(1) of the Act.

3.

On the contrary, Shri Das Gupta, the Ld. Departmental Representative submitted that the notice issued under Section 142(1) of the Act was not complied by the assessee. Therefore, penalty was levied under Section 271(1)(b) of the Act. Since there was no reasonable cause on the part of the assessee for not responding to the notice, according to Ld. D.R., the CIT(Appeals) has rightly confirmed the penalty levied by the Assessing Officer.

4.

We have considered the rival submissions on either side and perused the relevant material on record. The assessee’s claim is that she is a non-resident Indian and the notice was served on the employee of the power of attorney. The Department could not 3 controvert this contention of the assessee. The notice ought to have been served either on the assessee or on the power of attorney agent. In the absence of service of notice either on the power of attorney agent or on the assessee herself, this Tribunal is of considered opinion that failure of the assessee to comply with the notice under Section 142(1) of the Act cannot result in levy of penalty. In other words, there was reasonable cause on the part of the assessee for non-compliance of notice issued under Section 142(1) of the Act. Therefore, this Tribunal is of considered opinion that this is not a fit case for levy of penalty. Accordingly, the order of the lower authority is set aside and the penalty of `10,000/- levied by the Assessing Officer and confirmed by the CIT(Appeals) is deleted.

5.

In the result, the appeal of the assessee stands allowed.

Order pronounced on 8th of April, 2015 at Chennai.

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