2012 (5) TMI 714 - AT - Income Tax

Penalty u/s.271(1)(b) - conduct of the assessees or their Chartered Accountant in the proceedings - Held that - On the careful perusal of the assessment order it is seen that nowhere any grievance is raised by the A.O. that the assessees or their Chartered Accountant were non-cooperative or made any conscious defiance of noting dt. 14.10.09. As stated above, in fact, it is seen that the assessee s responded on all the dates as required by the A.O. Merely because on 20.10.2009 the Chartered Accountant of these assessees has not appeared or filed some details as asked by the A.O., the extreme step is taken to penalise these assessees by levying the penalty u/s.271(1)(b). In the present cases, nowhere it is alleged that the conduct of the assessees or their Chartered Accountant in the proceedings was deliberate defiance of law on their part. There was no justification on the part of the A.O. to levy penalty on all these assessees for the non-compliance by filing the details on 20.10.2009. Therefore, allow all these appeals filed by the assessees and delete all the penalties levied by the A.O. u/s.271(1)(b) of the Act.

Summary

Issues:
Penalty under section 271(1)(b) for non-compliance with notice.

Detailed Analysis:

1. Background: The appeals were filed by various assessees challenging penalty orders under section 271(1)(b) confirmed by the CIT (A) for failure to comply with notices. The facts and penalties were identical, leading to a consolidated order for convenience.

2. Search and Seizure Action: Assessees were covered in a search and seizure operation under section 132 of the Income-tax Act, 1961. Returns of income were filed post the operation, and assessments were completed under section 143(3) r.w.s. 153A.

3. Levy of Penalty: The Assessing Officer (A.O.) levied a penalty of Rs. 10,000 per assessment year for non-compliance with a hearing on 20.10.2009. The A.O. issued notices for non-compliance, leading to the penalty imposition under section 271(1)(b).

4. Arguments: Assessees challenged the penalties, arguing no default was committed under section 271(1)(b) or that the default was for good reasons. The CIT (A) upheld the penalties, emphasizing the importance of compliance with Income-tax Act notices.

5. Judicial Review: The Tribunal considered the A.O.'s reasons for penalty imposition, which were based on non-compliance by the Chartered Accountant with filing details on a specified date. The A.O. invoked section 271(1)(b) for the penalty.

6. Legal Provision: Section 271(1)(b) outlines penalties for failure to comply with specified notices under the Income-tax Act.

7. Tribunal's Findings: The Tribunal noted that the A.O. did not cite any other defaults in compliance except for the specific instance on 20.10.2009. The Chartered Accountant had cooperated in assessment proceedings, and there was no deliberate defiance of law.

8. Precedent: Referring to Hindustan Steel Ltd. vs State of Orissa, the Tribunal highlighted that penalties should not be imposed for technical breaches or when there is a bona fide belief of non-liability.

9. Decision: The Tribunal found no justification for the penalties imposed solely for non-compliance on 20.10.2009. Consequently, all appeals were allowed, and the penalties under section 271(1)(b) were deleted.

10. Conclusion: The Tribunal ruled in favor of the assessees, emphasizing the importance of judicial discretion in penalty imposition and the need for deliberate defiance or contumacious conduct for penalty enforcement.

This detailed analysis covers the issues involved in the legal judgment concerning penalties under section 271(1)(b) for non-compliance with notices, providing a comprehensive understanding of the case and its implications.