2016 (3) TMI 1099 - AT - Income Tax

Penalty u/s 271(1)(b) - failure in complying to scrutiny notices u/s. 142(1) r.w.s. 143(2) - Held that - It emerges from the assessment order that the assessee had filed part details on 30-11-2007 in furtherance to notice dated 11-11-2007. Neither of the lower authorities rebut this factual position. There is further no dispute that assessee has expressed his inability to produce the relevant records sought for because of non-availability thereof. The Assessing Officer framed assessment u/s. 143(3) r.w.s 144 of the act. He added the bank deposit amount in assessee s hands. We hold in these facts that this assessment is u/s. 143(3) and does not fall strictly to the category of best judgment assessment u/s. 144 of the Act. We notice in these facts and circumstances a coordinate bench of the tribunal in Akhil Bartiya Prathmik Shmshak Sangh Bhawan Trust vs. ACIT 2007 (8) TMI 386 - ITAT DELHI-G deletes an identical penalty for non-compliance scrutiny notices by holding that an assessment order passed u/s. 143(3) of the Act is a sufficient compliance of scrutiny notices. We draw support therefrom and accept assessee s argument in challenging the impugned penalty. The Revenue s submission supporting the same stands rejected accordingly - Decided in favour of assessee

Summary

Issues: Impugned penalty under section 271(1)(b) of the Income Tax Act, 1961 for non-compliance with scrutiny notices.

Analysis:
1. Background: The appeal pertains to the assessment year 2006-07, challenging a penalty of Rs. 1,10,000 imposed under section 271(1)(b) of the Income Tax Act, 1961. The assessee, engaged in money lending business, initially filed a return stating income of Rs. 99,850, which was subsequently scrutinized by the Assessing Officer.

2. Scrutiny Proceedings: The Assessing Officer issued multiple notices under section 142(1) r.w.s. 143(2) of the Act, focusing on cash deposits and other financial transactions. The assessee responded partially to the notices, citing non-availability of relevant documents like slip books and cheque books. The Assessing Officer proceeded to add cash deposits to the assessee's income, leading to the initiation of penalty proceedings.

3. Quantum Appeal: The assessee appealed the quantum assessment, which was partially accepted by the CIT(A), resulting in the determination of total taxable income as Rs. 5,13,243. The quantum proceedings concluded with this assessment.

4. Penalty Proceedings: In the penalty proceedings, the assessee contended that the Assessing Officer should have completed the assessment instead of issuing further notices due to the unavailability of necessary documents. The Assessing Officer, however, imposed the penalty under section 271(1)(b) for non-compliance with scrutiny notices.

5. Appellate Tribunal's Decision: Both the CIT(A) and the Assessing Officer upheld the penalty. However, the Appellate Tribunal noted that the assessment was conducted under section 143(3) and not as a best judgment assessment under section 144. Referring to a previous tribunal decision, the Tribunal ruled that an assessment under section 143(3) constitutes sufficient compliance with scrutiny notices. Consequently, the penalty of Rs. 1,10,000 was deleted, accepting the assessee's argument against non-compliance.

6. Conclusion: The Appellate Tribunal allowed the assessee's appeal, emphasizing that the assessment conducted under section 143(3) adequately addressed the scrutiny notices, leading to the deletion of the penalty. The decision was pronounced on 09-03-2016 by the Appellate Tribunal in Ahmedabad.

This analysis provides a detailed overview of the issues involved in the legal judgment, the proceedings, and the final decision rendered by the Appellate Tribunal ITAT Ahmedabad regarding the impugned penalty under section 271(1)(b) of the Income Tax Act, 1961.