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2006 (11) TMI 149 - HC - Income TaxPenalty levied u/s 272A(2)(e)? - failure to file the returns within the time stipulated - charitable trust - granted registration u/s 12A by the CIT(A) - proves that there was reasonable cause for the said failure - HELD THAT:- In our view, in the facts of the present case, where the Department contends that notices were issued, and the assessee denies receiving such notices, the burden is on the Department to show that such notices were served on the assessee. There is no finding rendered by the CIT(A) or Tribunal that the notices in question were in fact served on the assessee. Therefore, the only conclusion that can be drawn is that the assessee was not served these notices and was consequently not afforded the opportunity of being heard before the penalties were imposed. In our view, this by itself is sufficient to set aside the orders imposing the penalty on the appellant for the assessment years in question. Respectfully adopting the reasoning of the Full Bench of this court in J. T. (India) Exports v. Union of India [2001 (9) TMI 10 - DELHI HIGH COURT] which was rendered in the context of the Imports and Exports (Control) Act, 1947, we are of the view that there is an implied requirement of the principles of natural justice that before imposing a penalty u/s 272A(2)(e) of the Act, notices are required to be both issued and served upon the assessee to enable it to defend itself in the penalty proceedings. It is trite that the imposition of any penalty has adverse civil consequences and has to be preceded by the affording of an opportunity of being heard to the assessee. Only then can the assessee urge factors relevant to the question of penalty and independent of the explanations offered during assessment proceedings. It affords a chance to the assessee to show why penalty should be either waived altogether or should be less than what is proposed by the Department. On the merits of the case, we find that the explanation offered by the appellant for not filing the returns within the time stipulated under the Act appears to be a plausible one. Thus, we are of the considered view that the appellant has proved that there was reasonable cause within the meaning of section 273B of the Act for the failure to file income-tax returns for the relevant assessment years within the time stipulated and, therefore, no penalty was required to be levied in terms of section 272A(2)(e) of the Act. Therefore, the impugned orders of the authorities below, i.e., the Assessing Officer, CIT(A) or the Tribunal are hereby set aside. The appeals are, accordingly, allowed with no orders as to costs.
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