2017 (8) TMI 1341 - AT - Income Tax

Penalty u/s 271(1)(b) - failure to comply with the statutory notices - Held that - As the key person of the group aware with the tax matters was in legal custody during the period of compliance of notices and voluminous submission in more than 300 assessments in the group cases etc. it constitute reasonable cause for non-compliance. See case of Jawala Prashad Aggarwal 2017 (12) TMI 349 - ITAT DELHI . - Decided in favour of assessee

Summary

Issues:
Levy of penalty under section 271(1)(b) of the Income-tax Act for non-compliance with statutory notices.

Analysis:
The judgment by the Appellate Tribunal ITAT Delhi involved appeals against orders passed by the Commissioner of Income-tax (Appeals) regarding the penalty proceedings under section 271(1)(b) of the Income-tax Act, 1961. The common issue in all the appeals was the levy of a penalty of ?20,000 under section 271(1)(b) for failure to comply with statutory notices. The Tribunal heard the appeals together as they arose from the same set of facts and circumstances. Both parties agreed that the issue was covered by a previous decision of the Tribunal in a similar case. The Assessing Officer had imposed the penalty for non-compliance with statutory notices, rejecting the assessee's claim of having a reasonable cause for non-compliance. The CIT-(A) also did not agree with the assessee's contention that the absence of the key person responsible for tax matters due to being in legal custody constituted a reasonable cause for non-compliance.

Upon reviewing the relevant material, the Tribunal found that the facts and circumstances of the instant appeals were similar to a previous case where the Tribunal had deleted the penalty under section 271(1)(b). The Tribunal emphasized the importance of specific and unambiguous penalty notices to allow the assessee to respond adequately. It noted that while there may have been delays in compliance, the necessary details for assessment had been provided through various replies filed by the assessee. The Tribunal considered the reasons presented by the assessee, including the key person being in judicial custody, ongoing court proceedings, and the volume of assessments, as constituting a reasonable cause for non-compliance. It also highlighted that the demand in the quantum proceedings had been reduced to nil, indicating technical and venial non-compliance, which should not attract a penalty.

Referring to a similar case, the Tribunal directed the Assessing Officer to delete the penalty of ?20,000 imposed under section 271(1)(b) in all the appeals. The decision was based on the precedent set by previous judgments and the specific circumstances of the cases. Ultimately, the Tribunal allowed all the appeals of both assessees, emphasizing the importance of reasonable cause and the overall conduct of the assessee in penalty proceedings related to non-compliance with statutory notices.