2014 (1) TMI 1131 - AT - Income Tax

Penalty u/s 271(1)(b) - Held that - The alleged notice was in fact in the name of Mafatlat individual not Mafatlal HUF (assessee) and on the date fixed reply was filed in that case - It was further submitted that the assessee was still ready to provide the required details - It is not a case where the assessee without any reasonable cause had failed to comply with the notices issued under section 143(2) and 142(1) of the Income Tax Act - The revenue has not placed any copy of the alleged notice which was issued and served in the name of the assessee - The assessee had given the reply that though no notice under sections 143(2) and 142(1) of the Income Tax Act was served upon it, yet it was ready to submit the required details - But in this case, the AO simply rejected the explanation given by the assessee without rebutting the same - The ld. CIT(A) also upheld the levy of penalty in a mechanical manner without correctly appreciating the facts - The assessee in the subsequent proceedings produced the relevant material in response to the fresh notices issued by the AO under section 143(2) and 142(1) and the assessment proceedings were completed - It is not the case where the assessment proceedings were completed ex-parte or where the assessee had not produced the relevant material/evidences during the assessment proceedings - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of penalty under section 271(1)(b) of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals).
2. Failure of the assessee to comply with notices under sections 143(2) and 142(1) of the Income Tax Act.

Analysis:
1. The appeals filed by the assessee contested the order of the Commissioner of Income Tax (Appeals) confirming the penalty of Rs.10,000 under section 271(1)(b) of the Income Tax Act, 1961. The Commissioner upheld the penalty, citing the failure of the assessee to comply with notices and emphasizing that mens rea is not required to prove penalty under this section. The Commissioner linked the non-compliance with the material found during a search and the assessee's avoidance of proceedings. The Tribunal noted the Commissioner's reliance on legal precedents to justify the penalty imposition without proving mens rea. The Tribunal, however, found that the penalty order did not accurately reflect the facts, and the assessee's explanation for non-compliance was not properly considered.

2. The Tribunal delved into the details of the notices served on the assessee and the subsequent actions. The assessee argued that the notice was in the name of an individual, not the assessee, and that they were prepared to provide the required details. The Tribunal observed that the Revenue did not produce a copy of the notice issued to the assessee. The Tribunal found that the assessee's explanation for non-compliance was summarily rejected by the Assessing Officer without proper rebuttal. Additionally, the Tribunal highlighted that the subsequent conduct of the assessee, where they provided relevant material in response to fresh notices, indicated a willingness to cooperate. Drawing distinctions from legal precedents cited by the Revenue, the Tribunal concluded that the penalty imposition was unwarranted in this case and ordered the deletion of penalties in all appeals.

In conclusion, the Tribunal allowed the appeals filed by the assessee, overturning the penalty imposition under section 271(1)(b) of the Income Tax Act, 1961.