2014 (1) TMI 1816 - AT - Income Tax

Levy of penalty u/s 271(1)(b) - assessee did not comply with the notices issued during the assessment proceedings - assessment in all these appeals was completed u/s 143(3) r/w section 153A - Held that - From the assessment orders, we clearly observe that Shri Dinesh Jain, CA and authorized representative of the assessee attended the assessment proceedings and also filed necessary details and documents as per requirement of the Assessing Officer. In this situation, mere single instance of absence which occurred due to outstation visit of the AR to Mumbai does not attract penalty u/s 271(1)(b). From the assessment and penalty orders, we also observe that the Assessing Officer has not recorded any finding of fact that the assessee was habitual of non-compliance of notices issued by the department and moreover, we also observe that the assessments were completed on 27.12.2011 on the returned document without making any disallowance or addition. In this situation, we are inclined to hold that the authorities below wrongly imposed and confirmed the penalty u/s 271(1)(b) - Decided in favour of assessee.

Summary

Issues:
Levy of penalty under section 271(1)(b) of the Income Tax Act.

Analysis:
The appeals were filed against the order of the Commissioner of Income Tax confirming the penalty under section 271(1)(b) of the Act. The search and seizure operation conducted covered the assessee's companies under section 132/130A of the Act. Notices were issued during assessment proceedings, but on a specific date, neither the assessee nor the authorized representative attended, leading to the imposition of a penalty of Rs. 10,000 in each case. The Assessing Officer initiated penalty proceedings under section 271(1)(b) for non-compliance with the notice. The Commissioner of Income Tax upheld the penalty order, prompting the assessee to appeal before the Tribunal.

During the proceedings, the authorized representative of the assessee argued that the attendance was regular except for one instance, where the representative had to attend professional commitments in Mumbai. It was contended that the penalty should not apply as the assessments were completed without any disallowances, and the non-compliance was an isolated incident. The Department, on the other hand, argued that attendance at assessment proceedings is mandatory, and failure to comply justifies the penalty under section 271(1)(b).

Upon careful consideration, the Tribunal noted that the authorized representative attended the assessment proceedings diligently, and the Assessing Officer did not find any habitual non-compliance by the assessee. The assessments were completed without any additions or disallowances, further supporting the argument that the penalty was unjustified. Ultimately, the Tribunal allowed the appeals, setting aside the penalty orders and confirming that the penalty under section 271(1)(b) was wrongly imposed and upheld by the authorities below.

Therefore, the Tribunal held that the penalty under section 271(1)(b) of the Act was unjustified in this case, and all the appeals were allowed in favor of the assessee.