2014 (7) TMI 250 - AT - Income Tax

Penalty u/s 271(1)(b) of the Act Opportunity of being heard Held that - The notices u/s 142 (1) of the Act were issued on 19.11.2012, for 26.11.2012, giving a very short time of only six days - the notices were served, rather as to whether such notices were served at all, does not find mention in the penalty orders - the assessee was not provided sufficient time to respond to the notice - there is no mention of any non-cooperation by the assessee with the AO during the assessment proceedings - there was no case for the imposition of penalty u/s 271(1)(b) of the Act Decided in favour of Assessee.

Summary

Issues:
Appeals against penalty u/s 271(1)(b) of IT Act for Assessment Years 2005-06 to 2011-12 due to lack of reasonable opportunity and cooperation during assessment proceedings.

Analysis:
The appeals were filed by the Assessee challenging the penalty imposed under section 271(1)(b) of the IT Act for various Assessment Years. The main contention was that the Ld. CIT (A) erred in confirming the penalty without granting a reasonable opportunity to the assessee for being present during the hearing and considering the cooperation extended during the assessment proceedings.

The penalty order for the Assessment Year 2005-06 was based on a notice issued under section 142(1) of the IT Act, with a short period given for compliance. However, on the scheduled date, neither the assessee nor the required information was presented. Subsequently, a show cause notice for penalty was issued, and the assessee explained the absence of the Accountant due to illness. Despite the explanation, a penalty was imposed, which was upheld by the Ld. CIT (A).

The counsel for the assessee argued that the short notice period for compliance was unreasonable, and since there was no default in appearing before the Assessing Officer during the assessment proceedings, the penalty was unjustly imposed. On the other hand, the Ld. DR supported the penalty orders.

Upon reviewing the material on record, it was noted that the notices under section 142(1) were issued with insufficient time for response, and there was no mention of non-cooperation by the assessee in the assessment orders. Consequently, the Tribunal found that the penalties under section 271(1)(b) were not justified as the assessee was not provided adequate time to comply and had cooperated during the assessment proceedings. Therefore, the penalties were deleted for all the cases, as the facts were similar across the appeals.

In conclusion, the Tribunal allowed all the appeals of both assesses, ruling in favor of the assessee by deleting the penalties imposed under section 271(1)(b) of the IT Act for the respective Assessment Years.