2012 (5) TMI 730 - AT - Income Tax

Penalty u/s 271(1)(b) - Held that - Assessee attended the assessment proceedings from time to time and furnished the details as called for by the Assessing Officer by issuing notice under Section 142(1) of the Act and on the basis of those details, the income shown by him was accepted. In the light of this undisputed fact of the case, it cannot be said that the assessee did not comply with the notices served upon him by the Assessing Officer. We further find that the provisions of Section 271(1)(b) do not make it compulsory for the Assessing Officer to impose the penalty in such cases of technical lapse as the word used are may direct for imposition of penalty. Since, the Assessing Officer has discretion in the matter, we are of the considered opinion that the Assessing Officer should have exercised his jurisdiction and should not have imposed the penalty, as this is not a fit case for such imposition of penalty. - Decided in favour of assessee.

Summary

Issues:
Assessee's appeal against penalty under Section 271(1)(b) of the Income Tax Act for assessment year 2007-08.

Analysis:
1. The Assessing Officer imposed a penalty under Section 271(1)(b) of the Act, citing the assessee's habitual default in timely submission of required details. The AO noted that the assessee failed to comply with show cause letters and did not furnish necessary information, invoking the case law precedent of Gujarat Travancore Agency vs. CIT (1989) 177 ITR 455 to levy a penalty of Rs. 50,000.

2. The action of the Assessing Officer was upheld by the ld. CIT (A), leading to the assessee's appeal. During the hearing, an adjournment request by the assessee was rejected due to lack of a cogent reason, and the appeal proceeded.

3. Upon review of the assessment order, it was found that the assessee, represented by a CA, attended the proceedings, submitted required documents, and disclosed financial details. The total income of the assessee was computed based on the information provided, and the income shown was accepted by the authorities.

4. The Tribunal observed that the assessee cooperated during the assessment proceedings, responding to notices under Section 142(1) of the Act. Given the discretionary nature of imposing penalties under Section 271(1)(b), the Tribunal concluded that the Assessing Officer should have refrained from imposing the penalty in this case, as technical lapses did not warrant such action.

5. Consequently, the Tribunal decided to delete the penalty imposed by the Assessing Officer and upheld by the ld. CIT (A), ruling in favor of the assessee. The appeal was allowed, and the penalty was revoked, emphasizing that the Assessing Officer should have exercised discretion in this matter.

6. The judgment was pronounced in open court, with the penalty under Section 271(1)(b) for the assessment year 2007-08 being annulled in favor of the assessee.