2017 (3) TMI 1756 - AT - Income Tax

Penalty u/s. 271(1)(b) - non-compliance to notice u/s 142(1) - reasonable cause for non-appearance - assessment order was passed u/s 143(3) and not u/s. 144 - HELD THAT - Assessment in this case was made under section 143(3) of the Act, which means that there was subsequent compliance to the notices issued by the authorities. We also noted that Ld. counsel also attended before the AO on 17.12.2015 and filed replies in all the cases including the case of the assessee. AO verbally agreed but counsel s presence was not recorded. We are of the view that the assessee has a reasonable cause for non-appearance on that day. 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) due to subsequent compliances in the assessment proceedings, which was considered as good compliances and default committed earlier were ignored. As decided in in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. ADIT 2007 (8) TMI 386 - ITAT DELHI-G wherein it was held that where the assessee had not complied with notice u/s 142(1) but assessment order was passed u/s 143(3) and not u/s. 144, that meant that subsequent compliance in assessment proceedings was considered as good compliance and defaults committed earlier were ignored by the Assessing Officer, therefore levy of penalty u/s. 271(1)(b) of the Act was not justified. - Decided in favour of assessee.

Summary

Issues:
Assessment of penalty under section 271(1)(b) of the Income Tax Act, 1961 for non-compliance with notice u/s 142(1) dated 30.09.2015 for assessment years 2008-09 to 2014-15.

Analysis:
1. The appeals were filed by the assessee against the order of the Commissioner of Income tax (Appeals) confirming the penalty of ?10,000/- levied under section 271(1)(b) of the Income-tax Act, 1961, for assessment years 2008-09 to 2014-15. The penalty arose from non-compliance with the notice u/s 142(1) dated 30.09.2015 for the hearing on 15.10.2015.

2. The AO issued notices to the assessee for non-compliance with the notice u/s 142(1) dated 30.09.2015, warning of a penalty of ?10,000/-. Despite multiple opportunities, the assessee failed to provide the required information/documents. Consequently, the penalty was levied on 04.01.2016 for each assessment year from 2008-09 to 2014-15.

3. The CIT (A) upheld the penalty, noting the lack of compliance by the assessee on the specified date and the absence of any valid reasons or explanations for non-compliance. The CIT (A) found the case laws cited by the assessee contradictory and not supportive of their position, leading to the confirmation of the penalty.

4. The assessee appealed to the Tribunal, arguing that subsequent compliance with the assessment proceedings under section 143(3) should be considered as good compliance, rendering the earlier defaults irrelevant. The assessee relied on legal precedents such as Hindustan Steel Ltd. and presented cases like Hotel Blue Moon and Ashok Chaddha in support of their argument.

5. The Tribunal considered the submissions, noting that subsequent compliance was observed in the assessment under section 143(3). The Tribunal highlighted the presence of the assessee's counsel on 17.12.2015 and the filing of replies, indicating a reasonable cause for non-appearance on the earlier date. Citing the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. ADIT, the Tribunal concluded that the penalty under section 271(1)(b) was not justified and set aside the orders of the Revenue Authorities, thus deleting the penalty.

6. The Tribunal found that the subsequent compliance in the assessment proceedings constituted good compliance, and the defaults committed earlier were disregarded. Relying on legal precedents and the circumstances of the case, the Tribunal allowed the appeals of the assessee, leading to the deletion of the penalty under section 271(1)(b) for the assessment years in question.