2016 (9) TMI 510 - AT - Income Tax

Penalty u/s 271(1)(b) - non comply with notice u/s 142(1) - Held that - The assessee was given show cause notice u/s 142(1) was issued alongwith detailed questionnaire on 19.11.2012, requiring the assessee to furnish in writing some specified information on or before 29.11.2012. On the said date, the assessee did not attend the proceedings nor filed the request of adjournment. The AO has given show cause notice on 01.02.2013, as to why the penalty of ₹ 20,000/- should not be levied upon the assessee for non-compliance of statutory notice u/s 142(1) of the Income-tax Act, 1961. As per the assessee s version before the appellate authority and also in the written submission that on the said date the assessee s counsel was not available as he had gone to I.T.A.T., Indore Bench, Indore, for hearing and moreover, the details were still awaited to be taken out from the records, which were to be submitted before the AO and which was to be received from 50 District Offices all over Madhya Pradesh. The Officer incharge Mr. Lalit Chaturvedi had verbally informed the AO and requested for adjournment. Thus, it is seen that the counsel of the assessee was preoccupied with hearing before Tribunal, hence, the assessee could not appear before the AO on specified date. Further, the information was to be collected from 50 locations spread all over M.P. State, hence, it could not be produced on the stipulated date. It is also noticed that in subsequent hearing the assessee has furnished all information as required and assessment was to be framed u/s 143(3) of the Act. Therefore, following the principle enunciated in the decision of Apex Court in the case of Hindustan Steel Limited vs. State of Orissa, 1969 (8) TMI 31 - SUPREME COURT , we are of the view that there was no deliberate defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. In the light of these facts and circumstances, the failure of the assessee to comply with such notice cannot be said to be a default which may justify the levy of penalty u/s 271(1)(b) of the Act. - Decided in favour of assessee

Summary

Issues:
Imposition of penalty under section 271(1)(b) of the Income-tax Act for non-compliance with notice u/s 142(1) - Reasonable cause for failure to comply with notice.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income-tax (Appeals) and pertained to the assessment year 2005-06. The main ground of appeal was the upholding of the penalty order under section 271(1)(b) without considering all facts.

2. The case involved a Government of M.P. Undertaking where the AO imposed a penalty due to non-compliance with notices under section 142(1). Despite multiple notices and opportunities, the assessee failed to respond or provide any explanation for non-attendance, leading to the penalty imposition.

3. The assessee argued before the CIT(A) that all necessary information was submitted during assessment proceedings, and the non-compliance was unintentional due to genuine reasons. However, the CIT(A) upheld the penalty, prompting the appeal to the ITAT.

4. During the hearing, the Authorized Representative of the assessee was absent but provided written submissions. The Departmental Representative supported the lower authorities' orders.

5. The ITAT considered the provisions of Section 273B, emphasizing the requirement of proving reasonable cause for failure to avoid penalties. The burden of proof shifted to the taxpayer to show reasonable cause for non-compliance.

6. Referring to judicial precedents, the ITAT highlighted that reasonable cause means a cause beyond the assessee's control, preventing compliance under normal circumstances without negligence. The penalty under section 271(1)(b) requires deliberate defiance, and penalties should not be imposed for technical breaches or bona fide beliefs.

7. In this case, the ITAT found that the assessee's failure to comply with the notice was not deliberate defiance but due to genuine reasons. The counsel's unavailability and the extensive data collection process justified the non-compliance, aligning with the principles established by the Supreme Court.

8. Consequently, the ITAT set aside the CIT(A)'s order and deleted the penalty, ruling in favor of the assessee based on the absence of deliberate defiance or contumacious conduct.

9. The appeal was allowed, and the penalty under section 271(1)(b) was removed, considering the genuine reasons for non-compliance with the notice.

This detailed analysis of the judgment comprehensively covers the issues involved and the ITAT's decision based on legal provisions and precedents.