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2022 (10) TMI 396 - AT - Income TaxValidity of penalty levied u/s 271(1)(b) - Whether assessee has shown sufficient cause within the meaning of Section 273B in response to reply of show cause notice? - HELD THAT:- AO finalised the assessment order on 07/06/2021. While finalizing the assessment order, no variation in the returned income was made, thus accepted the return income. The assessment was completed under Section 143(3) r.w.s. 153C - AO before levying penalty issued notice u/s 274 r.w.s. 271(1)(b) dated 23/01/2021. In response to said show cause notice, the assessee specifically submitted that there is Covid-19 pandemic and everybody is doing work with safety measures and that his Accountant were busy in audit work. The reply of assessee was not accepted. AO levied penalty for non-compliance of notice dated 03/12/2020. The assessee has shown sufficient cause within the meaning of Section 273B in response to reply of show cause notice, therefore, no penalty u/s 271(1)(b) of the Act was leviable and the assessee is liable to succeed on this ground alone. The notice dated 03/12/2020 was issued to the assessee. In response to said notice, the assessee sought adjournment on 28/12/2020. The adjournment was allowed to assessee and on the request of assessee, the hearing of the case was fixed on 04/01/2021. Once the AO himself allowed adjournment, the cause of action for non-compliance was waived on that moment itself. CIT(A) while confirming the action of AO proceeded one step further and held that the assessee committed two defaults. In our view, the observation of ld. CIT(A) is contrary to the record and with the contents of order of penalty u/ 271(1)(b) of the Act. The assessee has shown sufficient cause for non-compliance, moreover, such non-compliance was done by granting adjournment by the AO himself. Considering the decision in various case laws relied by assessee wherein it was held that when the assessment was framed u/s 143(3), merely because the assessee could not make compliance for single hearing due to bonafide reason on the penalty u/s 271(1)(b) of the Act cannot be imposed on the assessee for such bonafide default due to reasons beyond his control - we direct the AO to delete the impugned penalty. In the result, ground of appeal raised by assessee is allowed.
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