2015 (10) TMI 1474 - AT - Income Tax

Penalty u/s 271(1)(b) - non comply with the notice of the AO u/s 142(1) - Held that - The assessing officer issued notice on 8.11.2010 fixing the date 15.11.2010 and assessee by way of written application requested for adjournment to January, 2011 it was dismissed and the assessing officer pass the assessment order on 31.12.2010 under Section 144 of the Act. DR has no dispute on this fact that the AR submitted an application for adjournment on the fix date of hearing i.e. 15.11.2010. Hence, it cannot be presumed that the assessee did not comply with the notice of the AO u/s 142(1) of the Act. Under this facts and circumstances, the assessee cannot be held guilty of non-complying with the notice issued u/s 142(1) of the Act and penalty u/s 271(1)(b) of the Act is not sustainable and the AOs directed to delete the penalty. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against penalty order under section 271(1)(b) of the Income Tax Act, 1961.
2. Compliance with notice u/s 142(1) - Reasonableness of time allowed for compliance.
3. Imposition of penalty for non-compliance with notice u/s 142(1).

Analysis:

Issue 1: Appeal against penalty order under section 271(1)(b) of the Income Tax Act, 1961
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) upholding the penalty of Rs. 10,000 imposed under section 271(1)(b) of the Income Tax Act, 1961 for the assessment year 2009-10. The assessee challenged the legality, jurisdiction, and factual correctness of the penalty order.

Issue 2: Compliance with notice u/s 142(1) - Reasonableness of time allowed for compliance
The assessee contended that the time provided by the assessing officer for compliance with the notice issued under section 142(1) was insufficient, being less than 10 days. Citing precedents, the assessee argued that penalties under section 271(1)(b) were not justified when inadequate time was given for compliance. The Tribunal agreed that the short period provided was unreasonable, leading to the deletion of the penalty.

Issue 3: Imposition of penalty for non-compliance with notice u/s 142(1)
The assessing officer issued a notice under section 142(1) fixing a hearing date, which the assessee requested to adjourn. Despite the adjournment request, the assessing officer proceeded with the assessment and imposed the penalty under section 271(1)(b). The Tribunal found that the assessee's request for adjournment indicated cooperation, and the penalty was unjustified. The Tribunal directed the deletion of the penalty, ruling in favor of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the importance of reasonable time for compliance with notices under the Income Tax Act and highlighting the necessity of cooperation in assessment proceedings to avoid unwarranted penalties.