2017 (8) TMI 1339 - AT - Income Tax

Penalty levied u/s 271(l)(b)- non-compliance of statutory notices - Held that - We find that in the case of Jawala Prashad Aggarwal, which is also one of the cases of the MDLR Group, the Tribunal has deleted the penalty u/s 271(1)(b) of the Act wherein also due to non-compliance of statutory notices on two occasions penalty under section 271(1)(b) Act was levied by the Assessing Officer in each of the assessment years from 2002-03 to assessment year 2008-09. In the said case also the assessee submitted reasons of non- compliance as more than 303 group assessments conducted during short span of five months and therefore it was difficult to comply with all the notices on the appointed dates. Also it was submitted that main controlling person of the group, Sh. Gopal Goyal was detained in judicial custody since August, 2012 and he was entrusted with all the decisions and was aware of the tax matter and documents and therefore there was a delay in collecting information and consequently making compliances. Tribunal deleted the penalty mainly on the ground that facts and circumstances of the case constituted reasonable cause being under the scope and ambit of sections 273B of the Act. The Tribunal also held that that in view of the demand in quantum proceeding reduced to nil, the alleged breach or non-compliance is merely technical and venial in nature and therefore penalty should not be levied for such venial breach. In the instant case also the facts and circumstances are identical and thus, respectfully following the finding of the Tribunal (supra), levy of penalty under section 271(1)(b) of the Act is directed to be deleted. - Decided in favour of assessee.

Summary

Issues Involved:
1. Levy of penalty under section 271(1)(b) of the Income-tax Act, 1961.
2. Reasonable cause for non-compliance with statutory notices.
3. Contradictory assertions by the appellant.
4. Adequacy of opportunity and principles of natural justice.
5. Comparison with similar cases and precedents.

Detailed Analysis:

1. Levy of Penalty under Section 271(1)(b) of the Income-tax Act, 1961:
The primary issue revolves around the levy of a penalty of ?20,000 under section 271(1)(b) of the Act due to the assessee's failure to comply with statutory notices during assessment proceedings for the years 2002-03 to 2008-09. The penalty was imposed by the Assessing Officer (AO) for non-compliance on two specific dates, with ?10,000 levied for each default.

2. Reasonable Cause for Non-Compliance with Statutory Notices:
The assessee argued that non-compliance was due to circumstances beyond their control, including the detention of the key person of the group and the voluminous nature of submissions required for 303 group assessments within a short span. The CIT-(A) rejected these reasons, stating that the burden of pendency of assessments was irrelevant and that the appellant could have requested adjournments timely.

3. Contradictory Assertions by the Appellant:
The CIT-(A) noted contradictory assertions in the appellant's submissions, weakening their case. On one hand, the appellant cited reasons for non-compliance, while on the other, they asserted that they appeared before the AO on the specified dates. The CIT-(A) concluded that there was no compliance with the statutory notices on the mentioned dates.

4. Adequacy of Opportunity and Principles of Natural Justice:
The appellant contended that the penalty was confirmed without providing a fair and reasonable opportunity, violating principles of natural justice. The CIT-(A) dismissed this argument, stating that adequate opportunities were given, and the penalty was imposed after due application of mind.

5. Comparison with Similar Cases and Precedents:
The appellant cited a similar case of Jawala Prasad Aggarwal, where the Tribunal deleted the penalty under section 271(1)(b) due to similar circumstances. The Tribunal in the present case found the facts and circumstances identical to those in the Jawala Prasad Aggarwal case. It concluded that the reasons provided by the assessee constituted a reasonable cause under section 273B of the Act, and thus, the penalty should not be levied.

Conclusion:
The Tribunal, after considering the rival submissions and relevant materials, followed the precedent set in the Jawala Prasad Aggarwal case. It held that the facts and circumstances in the present case constituted a reasonable cause for non-compliance with statutory notices. Consequently, the levy of penalty of ?20,000 under section 271(1)(b) was directed to be deleted for all the assessment years from 2002-03 to 2008-09. All seven appeals of the assessee were allowed, and the decision was pronounced in the open court on 30th August 2017.