TMI Blog2017 (11) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 31-10-2017 - SHRI G.D. AGRAWAL, HON BLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Appellant : Shri Satish Aggarwal, CA For The Respondent : Shri Atiq Ahmad, Sr. DR ORDER PER BENCH: Both these appeals have been preferred by the assessee. ITA No. 5742 has been filed against the order passed by the Ld. Commissioner of Income Tax (Appeals) 17, New Delhi, wherein vide order dated 11/08/2015, the Ld. first appellate authority has confirmed the imposition of penalty of ₹ 2,60,420/- imposed under section 271(1)(c) of the Income Tax Act, 1961. ITA No. 5743 has been preferred against the order passed by the Ld. Commissioner of Income Tax (Appeals) 17, New Delhi wherein, vide order dated the 11/08/2015, the Ld. first appellate authority has confirmed the imposition of penalty of ₹ 40,000/- imposed under section 271 (1) (b) of the Income Tax Act, 1961. Both the appeals pertain to assessment year 2008 09. Both the appeals were heard together and for the sake of convenience they are being disposed of through this consolidated order. 2. The brief facts of the case are that the assessee, during the year under appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has grossly erred in confirming the penalty levied under section 271(l)(c) of the Act by the Assessing Officer on deeming addition of ₹ 7,66,163/- made under section 68 of the Act. 4) That the Learned CIT (Appeals) has grossly erred in quoting out of context the observations made in judicial precedents quoted by him to confirm the levy of penalty. That the appellant craves leave to add, alter or delete the above grounds of appeal at the time of hearing. 2.2 Further, the AO has also proceeded to impose penalty of ₹ 40,000 under section 271 (1) (b) of the Income Tax Act vide order dated 30/03/2014 for non-compliance of notice under section 143 (2) dated 29/09/2010, non-compliance of notice under section 142 (1) dated 29/09/2010, non-compliance of notice issued under section 142 (1) dated 15/11/2010 and noncompliance of notice under section 143 (1) dated 10/12/2010. While imposing the penalty, the AO has noted that the show cause notices were issued to the assessee and duly served upon the assessee before the imposition of the penalty but the assessee had not filed any reply in this regard. 2.3 On appeal, the penalty under section 271 (1) (b) was also confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the fact that the counsel had stopped attending proceedings before the assessing officer till the receipt of show cause notice proposing to make the assessment and fixing the date of hearing for 20/12/2010. It was also submitted that the assessee himself attended the hearing before the assessing officer on 20/12/2010. It was submitted that there was a valid and reasonable cause for the assessee failing to attend the proceedings which was bona fide and, therefore, the penalty deserved to be deleted. Our attention was also drawn to affidavit dated 07/08/2015, submitted by the assessee, in which the facts as submitted before us have been incorporated. It was submitted that the penalty imposed under section 271 (1) (b) be deleted. 4. In response, the Ld. Senior Departmental Representative vehemently argued that both the penalties had rightly been imposed and prayed that the same should be upheld. 5. We have heard the rival submissions and have perused the material on record. As far as the penalty under section 271 (1) (c) is concerned, the Hon ble Supreme Court, in the case of Hindustan Steel Ltd. v. State of Orissa 83 ITR 26, had laid down the position of law by holding that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n an attempt to ascertain whether the assessee concealed his income or furnished inaccurate particulars. Thus, under penalty proceedings assessee can discharge his burden by relying on the same material on the basis of which assessment is made by contending that all necessary disclosures were made and that on the basis of material disclosed there cannot be a case of concealment of income or furnishing inaccurate particulars of income. Further, if there is any material or additional evidence which was not produced during assessment proceedings same can be produced in penalty proceedings as both assessment and penalty proceedings are distinct and separate. 5.5 In CIT vs. M/s Sidhartha Enterprises 184 Taxman 460 (P H), it was held by the Hon ble Punjab Haryana High Court that the judgment in Dharmendra Textile cannot be read as laying down that in every case where particulars of income are inaccurate, penalty must follow. Even so, the concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default. 5.6 On the specific facts of the present case, it is seen that the penalty order is woefully s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rudence. The expression reasonable is not susceptible of a clear and precise definition; for an attempt to give a specific meaning to the word not space. It can be described as rational according to the dictates of reason and is not excessive or immoderate. The word reasonable has in law the prima facie meaning of reasonable with regard to those circumstances of which the actor, called on to act reasonably, knows or ough6t o know (see In re, A Solicitor (1945) KB 368 (CA).Reasonable cause can be reasonably said to be a cause which prevents a man of average intelligence and ordinary produce, acting under normal circumstances, without negligence or inaction or want of bona fides. 5.9 In the case of Azadi Bachao Andolan v. Union of India 252 ITR 471 (Delhi), the Hon'ble High Court held as under:- Section 273B starts with a non obstante clause and provides that notwithstanding anything contained in several provisions enumerated therein including section 271C, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions, if he proves that there was reasonable cause for the said f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequences follow The above being the position, the Commissioner's nonconsideration of the plea raised by the assessee about the existence of reasonable cause vitiated the order On that score, we find the order passed by the Commissioner to be non- maintainable. 5.10 Reverting to the facts present case, it has been submitted that assessment proceedings before the AO were earlier being taken care of by the tax counsel, who, however, stopped attending the proceedings without intimating the assessee as differences had developed between the assessee and the counsel. An affidavit to this effect has also been placed on record which has not been contested by the Ld. Senior Departmental Representative. It is our considered opinion that the failure of the assessee s counsel to attend the assessment proceedings without informing the assessee was a reasonable cause which would fall within the exception as provided in section 273B and, therefore, under the circumstances the penalty imposed under section 271 (1) (b) deserves to be deleted. Accordingly, we set aside the order of the Ld. CIT (Appeals) and direct the AO to delete the penalty imposed under section 271(1)(b) of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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