2015 (5) TMI 1196 - AT - Income Tax

Penalty u/s. 271(1)(b) - non-compliance of notice u/s 142(1) - HELD THAT - We find that the Assessing Officer imposed the penalty u/s. 271(1)(b). However, it is not disputed that the assessment proceedings were initiated subsequently and the requisite details were filed as and when called for. The coordinate Bench-D Ahmedabad in the case of Swarnaben M. Khanna vs. D.C.I.T. 2009 (12) TMI 669 - ITAT AHMEDABAD we hold that neither the A.O. nor the Ld. C.I.T.(A) has made out a case for sustaining the penalties. Accordingly, the penalties in all these assessment years for all the assessee are cancelled decided the issue in favour of the assessee has decided the issue in favour of the assessee and against the Revenue

Summary

Issues:
1. Reasonable cause for non-compliance with notices u/s.142(1).
2. Applicability of penalty u/s. 271(1)(b) of the Income Tax Act, 1961.
3. Compliance requirements and penalty imposition.

Analysis:

Issue 1:
The appellant contested the CIT (A)'s decision on the grounds that the assessee had a reasonable cause for not complying with the notices u/s.142(1). The appellant argued that despite the defaults in question, the assessee participated in the assessment proceedings after the order u/s.143(3) was passed. The appellant's counsel highlighted that the assessee's representative was preoccupied with audit and limitation matters, leading to the non-attendance at the hearing. The appellant relied on a previous decision by a coordinate Bench to support their argument.

Issue 2:
The main contention revolved around the imposition of penalty u/s. 271(1)(b) by the Assessing Officer. The appellant challenged the penalty upheld by the CIT (A), emphasizing that the assessment proceedings were initiated subsequently, and the necessary details were provided as requested. The Tribunal referred to a similar case decided in favor of the assessee by a coordinate Bench, emphasizing the importance of specific notices for compliance with relevant assessment years and the need for adequate time for compliance.

Issue 3:
Upon careful consideration of the rival submissions and relevant reports, the Tribunal found that the penalty imposed by the Assessing Officer was not justified. Citing the decision of the Coordinate Bench in a related case, the Tribunal concluded that neither the Assessing Officer nor the CIT (A) had established a case for sustaining the penalties. The Tribunal canceled the penalties for all assessment years for the assessee, aligning with the principles of natural justice and reasonable opportunity for compliance.

In conclusion, the Tribunal allowed the ground of the assessee's appeal, directing the Assessing Officer to delete the penalty. The decision was pronounced in court on a specific date, providing a final resolution to the matter.