2014 (11) TMI 1208 - AT - Income Tax

Penalty u/s 271(1)(b) - no compliance was made by the assessee in response to the notice issued u/s 142(1) - HELD THAT - AO sought a reply to detailed questions No -34 giving only six days time to the assessee. The record does not show as to when notice issued on 19.11.2012 was actually served upon the assessee as the relevant information is found to be missing in the penalty order. A perusal of the assessment orders further shows that it is not a case of non-cooperation by the assessee with the AO during the assessment proceedings as the assessments are concluded u/s 143(3). In these circumstances being guided by the precedent laid down by the Co-ordinate Bench in Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs ADIT 2007 (8) TMI 386 - ITAT DELHI-G wherein it was held that in the case where assessments were made u/s 143(3) and not u/s 144, it means that subsequent compliance in assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the AO which view has been followed by Co-ordinate Benches of the ITAT in the orders relied upon by the assessee and brought to our notice. Considering the peculiar facts and circumstances and being satisfied by the explanation offered impugned orders deserved to be set aside and the penalty orders deserve to be quashed. The said order was pronounced in the open Court at the time of hearing in the presence of the parties. - Decided in favour of assessee.

Summary

Issues:
Penalty imposed under section 271(1)(b) for non-compliance with notice under section 142(1) of the Income Tax Act, 1961.

Analysis:
The seven appeals were filed against the penalty imposed under section 271(1)(b) for the assessment years 2005-06 to 2011-12. The penalty was confirmed by the CIT(A) based on the non-compliance of the assessee with the notice dated 19.11.2012 issued under section 142(1) of the Income Tax Act, 1961. The assessee failed to attend or provide the required information, leading to the imposition of a penalty of Rs. 10,000 for each year, which was upheld by the CIT(A).

The appellant argued that similar penalties imposed in connected cases were quashed by different Benches of the ITAT. They contended that the assessments were completed under section 143(3), and the short time given to respond to 34 questions was unreasonable. The appellant relied on various orders of Co-ordinate Benches to support their case.

After considering the submissions and the record, it was noted that the AO provided only six days to respond to detailed questions, and the actual service date of the notice was missing in the penalty order. As the assessments were completed under section 143(3), indicating cooperation with the AO, the non-compliance with the notice was viewed in light of previous assessments. Citing judicial precedent, it was held that subsequent compliance in assessment proceedings was considered good compliance, and the earlier defaults were ignored by the AO. Following the precedent set by Co-ordinate Benches, the impugned orders were set aside, and the penalty orders were quashed. The appeals of the assessee were allowed.

The judgment was pronounced on 28th November 2014 by the ITAT Delhi, with the penalty orders being set aside based on the peculiar facts and circumstances of the case and the legal precedent established by previous decisions.