2022 (6) TMI 1316 - AT - Income Tax

Levy of penalty u/s.271(1)(b) - absence in the initial period before the ld. AO - In the course of re-assessment proceedings though initially the assessee did not secure its presence in person or through her authorised representative before the ld. AO, finally appeared before the ld. AO in person and even furnished a statement u/s.131 of the Act before the ld. AO by filing the requisite details - HELD THAT - The assessee explained before the ld. AO that she got married during the course of re-assessment proceedings and that she was under the confusion as to who was handling her income tax matters i.e. whether it is being handled by her father or by her in-laws. In view of this confusion, there was some absence in the initial period before the ld. AO but later on once the confusion was resolved, she started appearing in person before the ld. AO and furnished all the requisite details that were called for. Ultimately, the assessment was completed u/s.143(3) of the Act by the ld. AO, which goes to prove that the earlier absence of the assessee has been duly condoned by him No penalty u/s.271(1)(b) of the Act could be levied when an assessment has been completed u/s.143(3) of the Act, wherein the ld. AO is deemed to have condoned the absence of the assessee or his authorised representative on earlier occasions when subsequently, the details were furnished by him and the assessments were ultimately completed u/s.143(3) of the Act. Hence, we deem it fit that this is not a fit case for levy of penalty u/s.271(1)(b) of the Act. We direct the ld. AO to delete the said penalty. Accordingly, the grounds raised by the assessee are allowed.

Summary

Issues:
Whether the levy of penalty u/s.271(1)(b) of the Income Tax Act, 1961 was justified in the case of the assessee for A.Y. 2014-15.

Analysis:
The appeal in ITA No.1971/Mum/2021 for A.Y.2014-15 was based on the order by the ld. Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC) Delhi regarding the imposition of penalty u/s.271(1)(b) of the Income Tax Act, 1961. The main issue to be decided was whether the ld. CIT(A) was correct in confirming the penalty in the given circumstances.

The assessee, an individual, initially faced issues with her income tax matters due to confusion regarding who was handling them, her father or in-laws. Despite the initial absence before the ld. AO, the assessee later appeared in person and provided all required details. The assessment was completed u/s.143(3) of the Act, indicating condonation of the earlier absence by the ld. AO. Citing relevant case laws, it was established that when assessments are completed u/s.143(3) of the Act after furnishing details, penalty u/s.271(1)(b) cannot be imposed. The Tribunal concluded that this was not a suitable case for the penalty, directing the ld. AO to delete it, and consequently, the appeal of the assessee was allowed.

In summary, the Tribunal found that the initial absence of the assessee before the ld. AO was justified due to confusion, which was later resolved when the assessee appeared and provided the necessary details. Relying on relevant case laws, it was determined that the penalty u/s.271(1)(b) was unwarranted in this case, leading to the allowance of the assessee's appeal.