2013 (9) TMI 127 - AT - Income Tax

Penalty u/s 271(1)(b) - Default by assessee - Held that - There is no dispute to the fact that the notices issued by the AO to the assessee u/s 142(1)/143(2) were received by assessee and the assessee repeatedly avoided the compliance thereof - on behalf of the assessee adjournment application was filed, but the AO indicated to the concern persons who filed the adjournment application, to file authority letter - it is not one occasion, but there are three occasions, no authority letter was filed by concern person who sought adjournments in respect of which the AO indicated to file the authority letter - there is deliberate defiance on the part of the assessee to comply with the statutory notices and to furnish requisite details. The contention of the assessee before the authorities below that there is no mens rea on the part of the assessee, we agree with the ld. CIT(A) that there is nothing in section 271(1)(b) of the Act which requires that mens rea must be proved before the penalty can be levied. Hence, mens rea is not an essential element for imposing penalty for non compliance of notices issued by AO. Considering the repetitive failure and the lackadaisical approach of the assessee, we hold that ld. CIT(A) has rightly held that it cannot be said to be a reasonable cause for failure to comply with the notices issued by AO u/s 143(2)/142(1) of the Act - It cannot be said that if no fine is levied on account of committing the offence by one person, the other person should also not be fined for committing the same offence - Penalty confirmed - Decided against assessee.

Summary

Issues Involved:
1. Legality of the penalty levied under Section 271(1)(b) of the Income Tax Act, 1961 for non-compliance with notices issued under Sections 143(2) and 142(1).
2. Requirement of mens rea (guilty mind) for imposing penalty under Section 271(1)(b).

Detailed Analysis:

1. Legality of the Penalty under Section 271(1)(b):

The appeals were filed by the assessee against the order of the CIT(A) confirming the AO's penalty of Rs. 10,000/- for each assessment year from 2003-04 to 2008-09 under Section 271(1)(b) of the Income Tax Act, 1961. The facts reveal that the assessee did not comply with the notices issued under Sections 143(2) and 142(1) despite repeated service of notices. The AO noted that the adjournment requests were filed by M/s Malpani and Associates without any letter of authority, which was not considered valid.

The CIT(A) upheld the penalty, stating that the assessee failed to show any reasonable cause for non-compliance. The CIT(A) emphasized that the assessee and his representatives did not furnish the required details or attend the proceedings, and no letter of authority was filed before the AO or the CIT(A).

2. Requirement of Mens Rea for Imposing Penalty:

The CIT(A) rejected the argument that mens rea is required for imposing a penalty under Section 271(1)(b). The CIT(A) cited several Supreme Court rulings, including K.P. Madhusudhanan vs. CIT and Union of India vs. Dharmendra Textile Processors, which clarified that mens rea is not necessary for civil penalties under the Income Tax Act. The CIT(A) noted that the penalty under Section 271(1)(b) is a civil liability and does not require proof of willful concealment or mens rea.

The Tribunal, after considering the submissions and the facts, upheld the CIT(A)'s decision. It was noted that the assessee's repeated non-compliance and lackadaisical approach indicated deliberate defiance of statutory notices. The Tribunal agreed that mens rea is not an essential element for imposing a penalty under Section 271(1)(b) and that the penalty was justified due to the assessee's failure to comply with statutory notices.

The Tribunal also distinguished the present case from a similar case involving the assessee's wife, where the penalty was deleted, stating that each case must be considered on its own facts and circumstances.

Conclusion:

The Tribunal dismissed the appeals, confirming the penalty of Rs. 10,000/- for each assessment year from 2003-04 to 2008-09 under Section 271(1)(b) of the Income Tax Act, 1961, due to the assessee's repeated non-compliance with statutory notices and the lack of requirement for mens rea in imposing such penalties.