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2010 (8) TMI 1126 - AT - Income Tax

Issues involved: Appeal against penalty imposed u/s 271(1)(b) of the IT Act for AY 2005-06.

Summary:
The Appellate Tribunal ITAT Delhi heard an appeal filed by the assessee against the penalty imposed u/s 271(1)(b) of the IT Act for AY 2005-06. The penalty was imposed for seven non-compliances during the assessment proceedings. The CIT(A) deleted the penalty for five non-compliances as no show cause notice was issued for notice u/s 143(2), and also noted that penalty exceeding &8377; 20,000/- required prior approval of JCIT. The penalty of &8377; 70,000/- was reduced to &8377; 20,000/- by the CIT(A). The assessee further appealed against this reduction. The Revenue did not appeal against the deletion of penalty amounting to &8377; 50,000/-.

Upon review, the Tribunal found that various notices were issued by the AO within short intervals. The AO issued a notice u/s 143(2) on 28.2.2007, served on 1.3.2007 for a date on 5.3.2007, but the partner assumed it was inadvertently issued and did not appear. Similar situations occurred with other notices. The assessment was finally completed u/s 143(3) on 17.12.2007. Referring to a previous case, the Tribunal noted that where assessment was done u/s 143(2) and not u/s 144, subsequent compliance was considered good compliance, and earlier defaults were ignored. As the assessment in this case was completed u/s 143(3), the Tribunal held that it was not a fit case for penalty u/s 271(1)(b).

In conclusion, the appeal of the assessee was allowed, and the decision was pronounced on 31st August, 2010.

 

 

 

 

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