2017 (10) TMI 1596 - AT - Income Tax

Penalty u/s 271(1)(b) - non-compliance in attending hearing - ignorance to notice issued for hearing - assessment orders in the present cases have been passed by the AO u/s. 153A read with section 143(3) - HELD THAT - In the instant case the notice issued for hearing on 20.12.2012 stood complied with, as the AR of the assessee attended the proceedings on this date and submitted reply/details which he had in possession. DR also could not refute the contention of the assessee that all the information/details stood filed with the department before receipt of show cause notice of penalty on 31.01.2013. In the cases of assessee the AO appears to have levied the penalty for seven assessment years , i.e., from 2005-06 to 2011-12 and the ld. CIT(A) deleted the penalty for the 4 assessment years i.e. the assessment years 2008-09 to 2011-12, considering the explanation of the assessee as plausible. However, the same explanation was not considered as proper for the remaining assessment years i.e. assessment years 2005-06 to 2007-08. In our opinion, the stand taken by the ld. CIT(A) was not justified particularly when he was satisfied that there was a proper and plausible explanation for the 4 out of the 7 assessment years for which penalty was levied by the AO u/s 271(l)(b) of the Act. No cogent reason to observe any willful default on the part of the assessee or non-cooperative attitude with the department. Therefore, we find no justification to sustain the penalty imposed u/s. 271(1)(c) of the Act. Accordingly, the appeal of the assessee deserves to be allowed.

Summary

Issues:
Penalty imposition under section 271(1)(b) of the Income Tax Act, 1961 for assessment years 2005-06, 2006-07, and 2007-08.

Analysis:

1. Background of the Case:
The appeals were filed against the penalty imposed under section 271(1)(b) of the Income Tax Act, 1961 for the assessment years 2005-06, 2006-07, and 2007-08. The common ground was that the penalty was illegal and not justified based on the facts and circumstances of the case.

2. Assessee's Arguments:
The assessee contended that there was no willful default on their part regarding compliance with the penalty notice. They highlighted that they had submitted partial information as requested, attended hearings, and sought time for submission of remaining information. The assessee also faced challenges due to non-availability of seized records and stated that they had been preparing and filing information before the Assessing Officer in phases as required.

3. Department's Position:
The Department argued that the assessee had not complied with the notice fixing the date of the hearing in the assessment proceedings, leading to the imposition of the penalty.

4. Tribunal's Decision:
Upon reviewing the submissions and the penalty order, the Tribunal found discrepancies in the Assessing Officer's rejection of the assessee's explanation. The Tribunal noted that the assessee had previously requested seized material, which was not considered by the authorities. Additionally, the Tribunal referred to a relevant decision and concluded that since the assessment orders were passed under specific sections, no penalty under section 271(1)(b) could be sustained.

5. Conclusion:
The Tribunal ruled in favor of the assessee, stating that there was no willful default or non-cooperative attitude demonstrated. The Tribunal found no justification to uphold the penalty imposed under section 271(1)(b) of the Income Tax Act, 1961. Consequently, all three appeals of the assessee were allowed, emphasizing that similar findings applied to all the appeals due to the consistent nature of the facts.

6. Final Verdict:
The Tribunal pronounced the order in favor of the assessee, allowing all three appeals and rejecting the penalty imposed under section 271(1)(b) for the assessment years in question. The decision was based on the lack of evidence supporting willful default or non-compliance by the assessee.