2015 (5) TMI 1055 - AT - Income Tax

Penalty u/s. 271(1)(b) - Held that - Neither the A.O. nor the Ld. C.I.T.(A) has made out a case for sustaining the penalties. Accordingly, the penalties in all these assessment years for all the assessees are cancelled. See Swarnaben M. Khanna vs. D.C.I.T. 2009 (12) TMI 669 - ITAT AHMEDABAD - Decided in favour of assessee.

Summary

Issues Involved:
Appeal against penalty under section 271(1)(b) of the Income Tax Act, 1961 based on non-compliance with notices u/s.142(1) during assessment proceedings.

Detailed Analysis:

Issue 1: Reasonable Cause
The appellant contended that the Assessing Officer's penalty imposition was unwarranted as the assessment proceedings were eventually participated in by the appellant, except for specific defaults. The appellant's representative was engaged in audit and limitation matters, leading to the non-attendance at the hearing. Citing a precedent where subsequent attendance at proceedings after initial default negated penalty imposition, the appellant argued against the penalty.

Issue 2: Compliance and Penalty Imposition
The Assessing Officer levied a penalty under section 271(1)(b) due to non-compliance with notices u/s.142(1). However, it was acknowledged that the assessment proceedings were initiated subsequently, and necessary details were furnished when requested. A precedent involving a similar scenario, Swarnaben M. Khanna vs. D.C.I.T., was cited where penalties were canceled based on the principles of natural justice. The Coordinate Bench emphasized the necessity of specific notices for compliance related to a particular assessment year, relevance to the assessment year in question, and providing adequate time for compliance. The Coordinate Bench's decision favored the appellant, leading to the cancellation of penalties for all assessment years and all assessees.

Conclusion
The Tribunal ruled in favor of the appellant, allowing the appeal and directing the Assessing Officer to delete the penalty. The decision was based on the lack of a case made by the Assessing Officer or the CIT (A) to sustain the penalties, following the principles of natural justice and the precedent set by the Coordinate Bench. The judgment highlighted the importance of specific notices, relevance to the assessment year, and providing adequate time for compliance before penalty imposition under section 271(1)(b) of the Income Tax Act, 1961.

Judgment Delivery:
The order was pronounced on the 15th day of May, 2015, by Shri Kul Bharat, Judicial Member, of the Appellate Tribunal ITAT Ahmedabad.