2014 (2) TMI 1364 - AT - Income Tax

Penalty u/s 271(1)(c) - assessee was not into existence - HELD THAT - Assessee itself was not in existence as the company was incorporated on 11.1.2007 only and assessee had specifically raised this ground before CIT(A) but CIT(A) without looking into the facts passed the orders in these two years also as in all other years. Therefore, the penalty order for these years does not stand as the assessee was not into existence in these years. Regarding other years also we find that facts and circumstances exactly are same as in the order referred to above and therefore respectfully following the order of coordinate Benches we also delete the penalties imposed by the AO and confirmed by CIT(A). - Appeals filed by the assessee are allowed.

Summary

Issues:
Upholding of penalty under section 271(1)(b) of the Income Tax Act, 1961.

Analysis:
The judgment involves two groups of appeals filed by different assessees against penalties imposed under section 271(1)(b) of the Income Tax Act, 1961. The key issue in all these appeals is the upholding of a penalty of Rs. 10,000 each in each year. In specific cases for assessment years 2005-06 and 2006-07, the assessee raised a ground challenging the order's legality due to the non-existence of the assessee during those years. The appellant argued that penalties imposed in similar circumstances were deleted by various Benches of the ITAT Delhi and requested the same outcome for these appeals.

The Tribunal noted that the notice under section 142(1) was issued for a hearing on the same day in all cases, providing insufficient time for the assessee to respond. Additionally, there was no mention of non-cooperation by the assessee with the Assessing Officer in the assessment orders. Citing similar cases where penalties were deleted due to these reasons, the Tribunal found the penalties in question not justified and deleted them. The Tribunal also observed that for the years where the assessee was not in existence, penalties could not be upheld. Following the precedent set by coordinate Benches, the penalties imposed by the Assessing Officer and confirmed by the CIT(A) were deleted for all relevant years.

In conclusion, the appeals filed by the assessee were allowed, and the penalties under section 271(1)(b) of the Income Tax Act, 1961 were deleted. The order was pronounced in open court on February 14, 2014.