2014 (1) TMI 1714 - AT - Income Tax

Penalty u/s 271(1)(b) - non-compliance of notice u/s 142(1) - Held that - As seen in Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. Assistant Director of Income Tax, (2007 (8) TMI 386 - ITAT DELHI-G ) assessment have been made under section 143(3) and not under section 144 of the IT Act. It means that subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignoring by the AO. Hence, the penalty u/s. 271(1)(b) could not be levied. We find considerable cogency in the Ld. Counsel of the assessee s submission that the show cause notice does not mention about the noncompliance of notice on which penalty has been levied. Hence, assumption of jurisdiction is not proper. We further find that in these cases the AO has asked explanation of questions and assessee was given only 7 days time. In these circumstances, in our considered opinion, the assessee was not given proper opportunity - Decided in favour of assessee

Summary

Issues involved:
- Confirmation of penalty under section 271(1)(b) of the Income Tax Act for non-compliance of notice u/s 142(1) dated 19.11.2012.

Detailed Analysis:

1. The Assessing Officer (AO) imposed a penalty of Rs. 10,000 under section 271(1)(b) for non-compliance of a notice issued on 19.11.2012. The AO stated that despite issuing a show cause notice, the assessee failed to attend or provide necessary information, citing the accountant's illness as the reason. The AO found the explanation unsatisfactory, alleging intentional avoidance of compliance, leading to the penalty imposition.

2. The Commissioner of Income Tax (Appeals) upheld the penalty, citing the default committed by the assessee. The penalty of Rs. 10,000 was confirmed by the CIT(A) for the non-compliance of the notice issued by the AO.

3. The assessee appealed the decision, arguing that the AO did not properly assume jurisdiction as the penalty was levied for non-compliance with a notice different from the one mentioned in the show cause notice. The assessee contended that the AO did not provide a reasonable opportunity for compliance within the short 7-day period given.

4. The Tribunal considered the submissions and found merit in the assessee's argument. It noted that the show cause notice did not align with the penalty imposed, questioning the AO's assumption of jurisdiction. Referring to a previous case, the Tribunal emphasized the importance of providing sufficient time for compliance with notices, indicating that insufficient time could not justify penalty imposition.

5. Additionally, the Tribunal highlighted that since the assessments were completed under section 143(3) of the IT Act, subsequent compliance should have been considered adequate. Citing a Supreme Court decision, the Tribunal emphasized that penalties should not be imposed for technical breaches or when there is a genuine belief in non-liability.

6. Considering the legal principles and precedents, the Tribunal set aside the CIT(A)'s orders and deleted the penalty levied on the assessee, ultimately allowing all the appeals filed by the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, overturning the penalty imposed by the AO and confirmed by the CIT(A) based on jurisdictional issues, inadequate opportunity for compliance, and legal principles regarding penalty imposition.