2016 (8) TMI 456 - AT - Income Tax

Levy of penalty u/s 271(1)(b) - Held that - While levying the penalty u/s 271(1)(b) of the Act the assessee was issued notice u/s 142(1) of the Act on 04/09/2012, fixing the compliance by the assessee on 10/09/2012. It has not been mentioned as to when the notice was served upon the assessee. It is also noted that during that period, as explained before us, the assessee was suffering from ailment, meaning thereby, sufficient time/opportunity for compliance was not provided to the assessee. This is clearly violation of principle of natural justice on the part of the Revenue. If we exclude the Saturday and Sunday, falling within the given time in the notice, time taken for dispatch and delivery of the notice hardly two or three days left with the assessee. It is noted that the ld. Assessing Officer has not made a good case for non compliance on the part of the assessee. Considering the totality of facts and the circumstances narrated before us, we direct the ld. Assessing Officer to delete the penalty, imposed upon the assessee. Thus, the impugned appeals are allowed in favour of assessee.

Summary

Issues:
- Challenge to penalty u/s 271(1)(b) of the Income Tax Act, 1961
- Non-compliance of notice u/s 142(1) dated 04.09.2012
- Adequacy of time provided for compliance
- Violation of principle of natural justice

Analysis:
1. Challenge to Penalty u/s 271(1)(b): The appeals were filed against the penalty imposed under section 271(1)(b) of the Income Tax Act. The Tribunal referred to a similar case and concluded that the penalty imposed by the Assessing Officer was unfair, factually incorrect, unjustified, and contrary to law and facts. The Tribunal directed the Assessing Officer to delete the penalty, stating that the action was unsustainable in the eyes of the law.

2. Non-Compliance of Notice u/s 142(1): The issue revolved around the alleged non-compliance of a notice u/s 142(1) dated 04.09.2012. The counsel for the assessee argued that the time provided for compliance was inadequate due to various reasons, including the company being a sick company approved by BIFR, lack of staff or infrastructure, and the short notice period. The Tribunal noted that the Assessing Officer failed to mention whether the notice was served to the assessee and that the company had subsequently provided the required details for assessment. The Tribunal found the penalty unjustified and directed its deletion.

3. Adequacy of Time Provided for Compliance: The Tribunal highlighted the lack of adequate time provided for compliance with the notice u/s 142(1). It was noted that excluding Saturday and Sunday, and accounting for the time taken for dispatch and delivery, the assessee was left with only two or three days to respond. The Tribunal considered this a violation of the principle of natural justice and emphasized that sufficient time/opportunity for compliance was not provided to the assessee.

4. Violation of Principle of Natural Justice: The Tribunal found that the Revenue's actions in issuing the notice with inadequate time for compliance amounted to a violation of the principle of natural justice. Citing previous judgments and legal principles, the Tribunal concluded that the penalty imposed was unjustified and directed the Assessing Officer to delete the penalty. The decision was based on the totality of facts and circumstances presented before the Tribunal.

In conclusion, the Tribunal allowed the appeals of the assessee, directing the Assessing Officer to delete the penalty imposed under section 271(1)(b) of the Income Tax Act, 1961. The judgment emphasized the importance of providing sufficient time for compliance and upholding the principles of natural justice in such proceedings.