2013 (12) TMI 534 - AT - Income Tax

Penalty u/s 271(1)(b) Non appearance or non-compliance of two notices - Held that - The Authorized Representative of the assessee had attended the proceedings on 14th December, 2009 when he was told that a detailed show cause notice is being issued - It is not a case where the assessee did not willfully comply with the notice issued by the Department - This contention of the assessee is further substantiated with the show cause notice issued by the AO on 16th December, 2009 for which the reply was sought to be filed within five days - The assessee also had filed the reply on 29th December, 2009 - Sustenance of penalty for default of notice u/s 143(2) dated 8th December, 2009 is unjustified Decided in favour of assessee.

Summary

Issues:
Appeal against penalty under section 271(1)(b) of the Income Tax Act for non-compliance with notices in various assessment years falling in the block period.

Analysis:
The appeals were filed by the assessee against the penalty imposed under section 271(1)(b) of the Income Tax Act for non-compliance with notices in the block period covering assessment years 2002-03 to 2008-09. The penalty was contested before the CIT(Appeals) for each assessment year. The penalty was imposed for defaults related to notices issued under sections 143(2) and 142(1) of the Act. The CIT(Appeals) deleted penalties for certain years based on the contentions raised by the assessee.

In the case of a notice issued under section 142(1) dated 10th December 2009, the penalty was deleted as the assessee successfully argued that no such notice was issued. The CIT(Appeals) also deleted penalties for assessment years 2002-03, 2005-06, and 2008-09. However, penalties were sustained for defaults related to notices issued under section 143(2) dated 8th December 2009.

The assessee contended that the delay in responding to the show cause notice was due to reasonable cause and that the assessee was not at fault. The CIT(Appeals) upheld the penalty for the default related to the notice under section 143(2). However, the Tribunal found that the assessee's Authorized Representative had attended the proceedings on 14th December 2009 and was informed about the detailed show cause notice to be issued. Subsequently, the reply was filed within a reasonable period, and the penalty for this default was unjustified.

The Tribunal, after considering the submissions and evidence, found that the penalty for the default related to the notice under section 143(2) dated 8th December 2009 was not justified. The sustenance of the penalty was deemed unjustified and was required to be deleted for all the relevant assessment years. The Tribunal allowed all the appeals filed by the assessee, deleting the penalties imposed under section 271(1)(b) for the specified defaults.

In a final note, a typographical error in the order of the CIT(Appeals) regarding the assessment year was corrected, and the Tribunal allowed all the appeals filed by the assessee against the penalties imposed for non-compliance with notices in the specified assessment years falling within the block period.