2015 (9) TMI 1285 - AT - Income Tax

Penalty u/s 271(1)(b) - bonafide belief - CIT(A) deleted penalty in part - Held that - CIT(A having been satisfied to quash penalty in two out of the 7 years infact should have quashed the penalty proceedings in all the years. When the admitted facts are that the seized documents were common to all the group cases numbering 120 in all and at the relevant point of time the cases were partially in Nagpur and partially in Delhi and the counsels infact were facilitating in the process of centralizing the entire group of cases at Delhi from Nagpur the occasion to willfully default does not arise. In fact there is more than sufficient evidence on record to hold that the penalty u/s 271(1)(b) in these admitted facts was not warranted. We have seen that the assessments are concluded u/s 143(3)/153A thereby meaning that shortcoming if any was made good in the assessment proceedings. Thus we quash the penalty of ₹ 10,000/- imposed u/s 271(1)(b) for each of the years and allow the appeals of the assessee. - Decided in favour of assessee.

Summary

Issues:
Appeals challenging penalty u/s 271(1)(b) for assessment years 2007-08 to 2011-12 based on bonafide belief of no willful default by the assessee.

Analysis:
1. The appeals were filed challenging the penalty u/s 271(1)(b) imposed by CIT(A) for the assessment years 2007-08 to 2011-12. The assessee relied on legal precedents like Hindustan Steel Ltd. vs. State of Orissa and Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. ADIT to contest the penalty imposition, claiming a bonafide belief in the absence of willful default.

2. During the hearing, no representation was made on behalf of the assessee. The tribunal proceeded ex-parte based on the material available on record and the submissions of the CIT DR, Dr. Sudha Kumari, who presented the case on behalf of the revenue.

3. The case involved a search & seizure operation on the assessee, known as Shiv Vani Group, leading to the issuance of notice u/s 153A and subsequent assessment of NIL income for the relevant years. However, penalty proceedings u/s 271(1)(b) were initiated due to the assessee's failure to respond within the prescribed time, resulting in a penalty of Rs. 10,000 imposed for each year.

4. The CIT(A) partially upheld the penalty, reducing it to 5 out of 7 years, considering various factors such as the centralized nature of group cases, the location of counsels, and the compliance with assessment proceedings. The assessee's submissions emphasized their cooperation with the department over the years, citing legal principles that penalty should not be imposed in the absence of deliberate defiance of the law.

5. The tribunal, upon reviewing the facts and submissions, found that the penalty imposition was unwarranted given the circumstances. The commonality of seized documents among group cases, ongoing centralization efforts, and compliance with assessment procedures indicated no willful default on the part of the assessee. The tribunal quashed the penalty of Rs. 10,000 imposed u/s 271(1)(b) for each year, allowing the appeals of the assessee.

In conclusion, the tribunal allowed the assessee's appeals, emphasizing the lack of willful default and the cooperation shown by the assessee during the assessment proceedings. The judgment highlighted the importance of considering all relevant circumstances before imposing penalties and upheld the principle that penalties should not be imposed in cases of honest and genuine beliefs.