ASHA THAYER,CHENNAI vs. ADIT, CHENNAI

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').

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.

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.

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.

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