2014 (1) TMI 1688 - AT - Income Tax

Penalty levied under Section 271(1)(b) - non-compliance of the notice under Section 142(1)/143(2) - Held that - We find that assessee has been given only 8-9 days to make compliance. The reason for non-compliance has been given to be occupation of the concerned consultants. We find that no other notice was given. In our considered opinion, this cannot be treated as willful default. Accordingly, the penalty is cancelled. - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(b) for non-compliance with statutory notice under section 142(1) - Adequacy of time given for compliance.

Analysis:

1. The appeal was filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals-II), New Delhi, sustaining a penalty of Rs. 10,000 under section 271(1)(b) for non-compliance with a statutory notice issued under section 142(1) dated 8.11.2010 for the assessment year 2009-10.

2. The Assessing Officer (AO) considered the non-compliance as willful default and imposed the penalty. The Ld. CIT(A) confirmed the penalty upon the Assessee's appeal.

3. During the appeal before the ITAT Delhi, the Assessee argued that they were given only 8-9 days to comply with the notice, contending that it was inadequate time. The Assessee cited a similar case where the tribunal had deleted a penalty under similar circumstances due to insufficient time provided for compliance.

4. The tribunal noted that the Assessee had been given inadequate time for compliance and that the reason for non-compliance was the unavailability of concerned consultants. The tribunal found that no other notice was issued and concluded that this could not be considered willful default.

5. Citing the decision in Hindustan Steel vs. State of Orissa, the tribunal emphasized that a penalty should not be imposed unless there is deliberate defiance of law or contumacious conduct. The tribunal highlighted that the authority must exercise discretion judicially and consider all relevant circumstances before imposing a penalty.

6. In light of the above considerations and legal principles, the tribunal set aside the orders of the authorities below and deleted the penalty levied on the Assessee, allowing the appeal.

7. The tribunal pronounced the order in open court on 23/1/2014, concluding the hearing and allowing the appeal filed by the Assessee.