2016 (10) TMI 1260 - AT - Income Tax

Levy of penalty u/s 271(1)(b) - alleged failure to comply with the notice issues under section 142(1) - delay on the part of the assessee in complying with the information called for finalizing the assessment - HELD THAT - The assessments for all the captioned assessment years have been completed under section 143(3) r.w.s.153A of the Act and, therefore, the initial non-compliance with the notice issued under section 142(1) of the Act can be understood to be made-up subsequently and, therefore, the levy of penalty under section 271(1)(b) of the Act is not justified. See AKHIL BHARTIYA PRATHMIK SHIKSHAK SANGH BHAWAN TRUST. VERSUS ASSISTANT DIRECTOR OF INCOME-TAX. 2007 (8) TMI 386 - ITAT DELHI-G - Decided in favour of assessee.

Summary

Issues Involved:
1. Levy of penalty under section 271(1)(b) of the Income Tax Act, 1961 for assessment years 2006-07 to 2012-13.
2. Reasonable cause for non-compliance with notices under section 142(1) of the Act.
3. Parity of reasoning with a similar case (M/s. Unity Infraprojects Ltd.).

Detailed Analysis:

1. Levy of Penalty under Section 271(1)(b):
The primary issue in these appeals is the imposition of a penalty of ?10,000/- for each assessment year from 2006-07 to 2012-13 under section 271(1)(b) of the Income Tax Act, 1961. The penalty was levied due to the assessee’s delay in complying with the information requested by the Assessing Officer (AO) for finalizing the assessment. The CIT(A) upheld the penalty, leading to the assessee's appeal before the Tribunal.

2. Reasonable Cause for Non-Compliance:
The assessee argued that the delay in compliance was due to receiving the notice under section 142(1) only on 17/10/2013, just two days before the scheduled hearing on 19/10/2013. The assessee sought an adjournment and subsequently provided partial details on 29/10/2013. The AO, however, was not satisfied with the explanation and imposed the penalty for non-compliance.

3. Parity of Reasoning with M/s. Unity Infraprojects Ltd.:
The assessee pointed out that in a similar case involving M/s. Unity Infraprojects Ltd., the Tribunal had deleted the penalties under identical circumstances. The Tribunal in that case noted that the compliance was made in a piecemeal manner and ultimately, the assessments were completed under section 153A r.w.s. 143(3) of the Act based on the material and submissions provided by the assessee.

Tribunal’s Findings:

Assessment of Reasonable Cause:
The Tribunal acknowledged that the notice under section 142(1) was received by the assessee only on 17/10/2013, making it practically impossible to comply with the extensive questionnaire by the hearing date on 19/10/2013. The Tribunal found that the assessee had a reasonable cause for the delay, as envisaged under section 273B of the Act, which provides that no penalty shall be imposed if the assessee proves a reasonable cause for the failure.

Compliance and Subsequent Developments:
The Tribunal noted that the assessee had provided part details on 18/10/2013 and that the assessments for all the years were eventually completed under section 143(3) r.w.s. 153A of the Act, indicating that the initial non-compliance was subsequently rectified.

Consistency with Previous Tribunal Decisions:
The Tribunal referred to its earlier decision in the case of Kripa Realtors Ltd., where it was held that subsequent compliance mitigates the rigors of penalty under section 271(1)(b) if the assessment is completed under section 143(3) and not under section 144 of the Act. The Tribunal emphasized the principle of consistency and applied the same reasoning to the present case.

Conclusion:
The Tribunal concluded that the levy of penalty under section 271(1)(b) was not justified due to the reasonable cause for the delay and the subsequent compliance by the assessee. Consequently, the penalties for all the assessment years from 2006-07 to 2012-13 were deleted.

Order:
The penalty levied under section 271(1)(b) of the Act for all the assessment years is hereby deleted, and all the appeals are allowed. The order was pronounced in the open court on 21/10/2016.