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2014 (2) TMI 512 - AT - Income TaxPenalty u/s 271(1)(b) of the Act Held that - The penalty in these cases has been levied for failure of the assessee to comply with the notice u/s. 142(1) of the Act - there was reasonable cause for the failure of the assessee to comply with the notice on the specified date - assessee has sought 45 days time to comply with the notice in this regard - it can be construed as reasonable cause for failure on the part of the assessee to comply with the notice. Section 273B provides that that no penalty shall be imposable on the person or the assessee, for any failure referred to in the provisions if he proves that there was reasonable cause for the failure - there was reasonable cause for the failure on the part of the assessee - Relying upon Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. Assistant Director of Income Tax 2007 (8) TMI 386 - ITAT DELHI-G - assessment have been made under section 143(3) and not under section 144 of the IT Act - subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the AO - thus, the penalty u/s. 271(1)(b) could not be levied thus, the order of the CIT(A) set aside and the penalty set aside Decided in favour of Assessee.
Issues:
- Appeal against imposition of penalty under section 271(1)(b) of the I.T. Act. Analysis: 1. The appeals were consolidated as they were against a common order of the Ld. CIT(A) in different assessment years. The Revenue sought adjournment due to the ill health of the Departmental Representative, but the Tribunal dismissed the adjournment petition as the matter could be decided by hearing the assessee's counsel and perusing the records. 2. The common issue was the imposition of a penalty under section 271(1)(b) of the I.T. Act. The penalty was imposed due to the failure of the assessee to comply with the notice under section 142(1) issued by the Assessing Officer after a search and seizure operation. The AO levied a penalty of Rs. 10,000 for each assessment year, which the assessee contested. 3. The assessee argued that the delay in filing the return was unintentional and requested time to comply with the notice. The Ld. CIT(A) found the penalty for all years too harsh and deleted it for two years while confirming it for the remaining years. 4. The Tribunal considered the reasons for non-compliance, noting that the group was previously assessed in Nagpur, and all seized materials were there. The assessee had sought additional time to comply with the notice, which the Tribunal deemed as a reasonable cause for the delay. Section 273B allows for no penalty if there is a reasonable cause for failure. 5. The assessment orders were passed under section 153A with section 143(3) of the I.T. Act, indicating compliance during assessment proceedings. Citing the decision in Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust, the Tribunal held that subsequent compliance in assessment proceedings negated earlier defaults, making the penalty unjustified. 6. Referring to the Hindustan Steel case, the Tribunal emphasized that penalties should not be imposed for technical breaches or where there is a genuine belief of non-liability. As the assessee's conduct was not contumacious, the penalty was unwarranted. Consequently, the Tribunal set aside the Ld. CIT(A)'s orders and deleted the penalties in each case. 7. In conclusion, the appeals filed by the separate assessees were allowed, and the penalties under section 271(1)(b) were revoked.
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