2019 (2) TMI 1820 - AT - Income Tax

Levy of penalty u/s 271(1)(b) - assessee did not comply with the various statutory notices - Assessment has been completed u/s 143(3) - HELD THAT - A perusal of the assessment order shows that the order has been passed u/s 143(3) on 10.11.2016. Further the Assessing Officer in the body of the assessment order has mentioned that the assessee has complied with the statutory notices issued u/s 142(1) and the information/details asked for have been furnished which were discussed and placed on record. He has further mentioned that the assessment proceedings were attended by Shri Sanjay Jain CA with whom the case was discussed. Since the assessee has furnished requisite details for completion of assessment by compliance of statutory notices issued by the Assessing Officer and the assessment has been completed u/s 143(3) therefore under the facts and circumstances of the case it is not a fit case for levy of penalty u/s 271(1)(b) of the Act. Therefore set aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty so levied. The grounds raised by the assessee are accordingly allowed.

Summary

Issues:
Levy of penalty under section 271(1)(b) of the IT Act.

Detailed Analysis:

Issue 1: Levy of penalty under section 271(1)(b) of the IT Act
The case involved an appeal against the order of the CIT(A) regarding the levy of a penalty of ?10,000 under section 271(1)(b) of the IT Act for non-compliance with statutory notices. The Assessing Officer had imposed the penalty, which was upheld by the CIT(A). The primary contention of the assessee was that the assessment had been completed under section 143(3), and all requisite details were provided to the Assessing Officer. The assessee argued that since compliance was made during the assessment proceedings, the penalty should be cancelled. The counsel referred to a previous Tribunal decision where a similar penalty was deleted under identical circumstances. The Assessing Officer and CIT(A) maintained their stance, emphasizing non-compliance.

Analysis:
The Tribunal analyzed the assessment order and noted that it was completed under section 143(3), with all necessary details furnished by the assessee. The order highlighted that the statutory notices under section 142(1) were complied with, and discussions were held with the authorized representative. Considering these facts, the Tribunal concluded that the penalty under section 271(1)(b) was unjustified. The Tribunal referred to the earlier decision where penalties were cancelled in comparable situations. Therefore, the Tribunal set aside the order of the CIT(A) and directed the Assessing Officer to revoke the penalty. The grounds raised by the assessee were allowed, and the appeal was deemed successful.

This judgment illustrates the importance of compliance during assessment proceedings and the significance of completing statutory requirements to avoid penalties under the IT Act. The decision emphasizes the need for thorough assessment procedures and the impact of such procedures on penalty imposition.