2020 (12) TMI 1221 - AT - Income Tax

Penalty u/s 271(1)(b) - No response on the show cause issued u/s 274 - HELD THAT - Facts on record prove that the assessee has indeed replied on 19.11.2018 and explained that the notice dated 16.10.2018 has not been received by them and there was a noting of the Assessing Officer on the letter. Thus, the observation of the Assessing Officer that there was no compliance to the show cause was contrary to the findings on the record. Hence, the penalty levied is liable to be obliterated - Appeals of the assessee are allowed.

Summary

Issues:
Appeals against penalty u/s 271(1)(b) of the Income Tax Act, 1961 confirmed by CIT(A) - Non-compliance with notices u/s 142(1) and 274 - Compliance to notices - Justification of penalty imposition.

Analysis:
The appeals were filed against the penalty imposed under section 271(1)(b) of the Income Tax Act, 1961 by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The identical issues were involved across six assessment years from 2011-12 to 2016-17, leading to a common order for convenience. Notices were issued under section 153A and 142(1) on various dates, with show cause notices and penalties being levied due to non-compliance with these notices.

The AO issued multiple notices under section 142(1) and 153A, fixing hearings for compliance. However, the assessee failed to comply with these notices, leading to the imposition of penalties under section 271(1)(b) for non-attendance and non-filing of required documents. The assessee later explained during the hearing that they had responded to the notices and provided reasons for non-compliance, which were duly noted by the Assessing Officer.

During the proceedings, the arguments presented by both parties were considered, and the material available on record was examined. The Assessing Officer's rationale for imposing the penalty was based on the perception of non-compliance. However, it was observed that the assessee had indeed responded to the notices and provided explanations for the alleged non-compliance, contradicting the AO's findings. Consequently, the penalty imposition was deemed unjustified, and the appeals of the assessees were allowed.

In conclusion, the Tribunal found that the penalty levied by the AO under section 271(1)(b) was not warranted due to the assessee's compliance with the notices and explanations provided. The judgment highlighted the importance of considering all relevant facts and responses before imposing penalties for non-compliance with tax-related notices.