2016 (3) TMI 1100 - AT - Income Tax

Penalty levied u/s.271(1)(b) - non-appearance of assessee in response to notices issued u/s.142(1) - Held that - In the present case, we find that the assessment has been framed u/s.143(3) of the Act and further the income returned by the assessee has been accepted by A.O. without making any additions. We further find that the Co-ordinate Bench in case of Priyank K. Shah vs. ITO (2013 (7) TMI 1023 - ITAT AHMEDABAD) has held that when assessment order is passed u/s. 143(3) of the Act and not u/s. 144 of the Act, then non-compliance of notice u/s.142(1) of the Act is deemed to have been waived. Before us, Revenue has not placed any contrary binding decision. Thus in the present case, since, assessment order has been framed u/s. 143(3) of the Act and not u/s. 144 and therefore, non-compliance of notice u/s.142(1) of the Act is deemed to have been waived and therefore, the levy of penalty u/s. 271(1)(b) of the Act would not be required. - Decided in favour of assessee.

Summary

Issues:
Levy of penalty u/s.271(1)(b) of the Act for non-compliance with notices u/s.142(1) of the Act.

Analysis:
The appeal was filed against the order of CIT(A)-XVI confirming the penalty u/s.271(1)(b) of the Act for the assessment year 2008-09. The assessee, engaged in the business of plastic bags, had filed the return of income declaring total income. The AO framed the assessment u/s.143(3) noting non-compliance with notices u/s.142(1) and imposed a penalty. The CIT(A) upheld the penalty, leading the assessee to appeal. The grounds raised were related to the reasonable cause for non-compliance and the deletion of the penalty under IT Act.

During the hearing, the AR argued that the assessee had partially complied with the notice by appearing before the AO and providing some replies. The AR cited a relevant case and contended that the penalty should be deleted. The DR supported the AO and CIT(A) orders.

The tribunal analyzed the issue of penalty imposition for non-appearance in response to notices u/s.142(1) of the Act. Since the assessment was conducted u/s.143(3) without additions to the returned income, the non-compliance with the notice was deemed waived based on precedents. Referring to a specific case law, the tribunal concluded that in cases of assessments under u/s.143(3) and not u/s.144, non-compliance with notice u/s.142(1) is considered waived. As no contrary binding decision was presented by the Revenue, the tribunal allowed the appeal and directed the deletion of the penalty.

In the final order, the tribunal allowed the appeal, stating that the penalty u/s.271(1)(b) of the Act was not required due to the deemed waiver of non-compliance with the notice u/s.142(1) in the present case of assessment under u/s.143(3) of the Act.

The judgment was delivered by the tribunal on 10-03-2016.