2016 (7) TMI 1517 - AT - Income Tax

Levy of penalty u/s 271(1)(b) - assessee not complied with the notice u/s 142(1) - HELD THAT - Where the assessee had not complied with the notice u/s 142(1) but the assessment order was passed u/s 143(3) and not u/s 144 of the Act, that meant the subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the AO and therefore, the levy of penalty u/s 271(1)(b) was not justified. Considering the same as well as respectfully following the decision of AKHIL BHARTIYA PRATHMIK SHIKSHAK SANGH BHAWAN TRUST. VERSUS ASSISTANT DIRECTOR OF INCOME-TAX. 2007 (8) TMI 386 - ITAT DELHI-G and also following the principle of consistency, we are of the opinion that these are not the fit cases for invoking the provisions of section 271(1)(b) of the Act. Accordingly, grounds raised by the assessee in all the seven appeals are allowed.

Summary

Issues involved:
Levy of penalty u/s 271(1)(b) of the Act for assessment years 2008-2009.

Analysis:

1. Common Issue of Penalty:
The judgment involves seven appeals concerning the levy of penalty u/s 271(1)(b) of the Act for assessment years 2008-2009. The assessees, part of the Jai Crop Group, faced challenges due to simultaneous assessments for seven years and a search action u/s 132 of the Act on the group. The workload pressure, audit requirements, and time constraints led to delays in complying with notices u/s 143(2) and 142(1) of the Act. However, the assessees eventually cooperated, and assessments were completed without ex-parte proceedings.

2. Assessee's Defense:
The assessees argued that the delays were due to work pressure and time management issues, not deliberate non-compliance. They contended that the belated compliance should not warrant penalties. Citing precedents like Shri Ramesh Kumar Jain vs. ACIT and Akhil Bharatiya Prathmik Shmshak Sangh Bhavan Trust vs. ADIT, the assessees sought relief based on the principle of subsequent compliance being considered as good compliance.

3. Judgment and Reasoning:
After considering the factual matrix and the cited precedents, the Tribunal found the assessees eligible for relief. The Tribunal emphasized that subsequent compliance during assessment proceedings, leading to the issuance of orders u/s 143(3) instead of u/s 144, indicated good compliance. The AO's decision to ignore earlier defaults and pass the assessment order under section 143(3) was crucial in determining that penalties under section 271(1)(b) were unwarranted. The Tribunal, following the principle of consistency and the cited decisions, ruled in favor of the assessees, allowing all seven appeals.

4. Final Decision:
The Tribunal pronounced the order on 20th July 2016, allowing all seven appeals filed by the assessees. The judgment highlighted the importance of subsequent compliance in assessment proceedings and the significance of considering the circumstances leading to delays in compliance with notices issued by the AO.