2017 (1) TMI 1581 - AT - Income Tax

Levy of penalty u/s 271(1)(b) - non appearance on notice by assessee - assessment completed u/s 143(3) - Held that - The counsel regularly attended the proceedings and the assessments have been framed u/ s 143(3) and not u/ s 144. We find that this was the first notice for compliance and since the voluminous records and papers were required to be scrutinized and individually in each case, the appropriate replies were to be filed, the assessee prayed for the time to submit the reply and ultimately submitted all the necessary replies and cooperated with the Department. We are of the view that assessees had reasonable cause for non-appearance on that day. Therefore, there is no justification for levying the penalty u/s 271(1)(b) of the Act. Secondly, in this matter, the assessments have been completed u/s 143(3) of the Act, therefore, no penalty can be levied if the assessments have been completed u/s 143(3) and there is subsequent compliances in the assessment proceedings was considered as good compliances and default committed earlier were ignored. Therefore, penalty u/s 271(1)(b) was deleted by various Tribunals - Decided in favour of assessee.

Summary

Issues Involved:
Levy of penalty u/s 271(1)(b) of the Income Tax Act at ?10,000 in each assessment year due to non-compliance with notice u/s 142(1) dated 15.10.2015.

Detailed Analysis:

Issue 1: Non-compliance with Notice u/s 142(1)
The appeals were filed against orders confirming the penalty for non-compliance with notices issued by the AO under section 142(1) of the Income Tax Act. The AO had issued notices fixing the date for submission of information/documents but no submissions were made by the assessee. The AO subsequently levied penalties for non-compliance.

Issue 2: Confirmation of Penalty by CIT(A)
The CIT(A) upheld the penalties, stating that the assessee did not comply with the notice and deliberately delayed the assessment proceedings. The CIT(A) emphasized the duty of the assessee to facilitate the investigation process and complete assessment proceedings within the Act's limitations.

Issue 3: Arguments by Assessees
The assessees argued that subsequent compliance in assessment proceedings was considered good compliance, citing relevant case laws where penalties were deleted under similar circumstances. They highlighted that the assessments were completed under section 143(3) and requested time for filing details, indicating no deliberate delaying tactics.

Issue 4: Tribunal's Decision
After considering both parties' contentions, the Tribunal found that the assessments were completed under section 143(3) and the assessees had reasonable cause for non-appearance on the specified date. The Tribunal noted that subsequent compliance in assessment proceedings was sufficient and penalties were unjustified. Referring to relevant case laws, the Tribunal set aside the penalties, following previous decisions with similar facts.

Conclusion:
The Tribunal allowed all the appeals of the assessees, setting aside the penalties imposed under section 271(1)(b) of the Income Tax Act. The Tribunal's decision was based on the completion of assessments under section 143(3) and subsequent compliance in the assessment proceedings, which was considered satisfactory. The Tribunal's ruling aligned with previous judgments and established principles regarding penalties for non-compliance with notices under the Income Tax Act.