2016 (10) TMI 315 - AT - Income Tax

Penalty u/s. 271(1)(b) - assessees have not complied with the notices issued u/s.142(1) - assessments made for several assessment years u/s.153A - Held that - We find from the assessment orders in this group of appeals that assessments were made for several assessment years u/s.153A of the Act. The Assessing Officer in all these cases has passed the orders u/s. 143(3)/153A of the Act. In the assessment order of J.S. Walia, in para 2 the Assessing Officer has mentioned that the authorized representative of the assessee attended by time to time and furnished written submissions with supporting documents which were perused and placed on the record. Seized books of accounts, documents and material were duly confronted to the assessee in the course of assessment proceedings. Regular books of accounts were produced and checked with the seized documents. This shows that the assessee has made full compliance of the notices issued u/s. 142(1) though with some delay but this is not the case of noncompliance of notices. Relying upon the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. ITO 2007 (8) TMI 386 - ITAT DELHI-G has held that in the absence of recording satisfaction, mere initiation of penalty will not confer jurisdiction on the Assessing Officer to levy the penalty . It was further held that assessment having made u/s 143(3) means that subsequent compliance in the assessment proceedings was considered as good compliance and defaults committed earlier were condoned hence penalty cannot be levied u/s. 271(1)(b). We have gone through the orders of the learned CIT(A) and find that the learned CIT(A) has held that though the notice u/s 142 was not received by the assessee but he has participated in the proceedings. Therefore, the assessee has reasonable cause for noncompliance and as such the penalty cannot be levied. Moreover, the penalty has been levied without issuing show cause notice i.e. without giving specific opportunity as contemplated u/s 274 of the Act. Thus penalties deleted - Decided in favour of assessee

Summary

Issues:
Appeals against penalties under section 271(1)(b) for non-compliance with notices u/s.142(1) of the Act.

Detailed Analysis:
1. Penalty Imposition:
The Assessing Officer imposed penalties under section 271(1)(b) on the assessees for non-compliance with notices issued u/s.142(1) of the Act. The penalties were imposed for the assessment years 2007-08 to 2013-14 based on the grounds of failure to attend hearings and submit required documents despite multiple notices.

2. Assessees' Arguments:
The assessees contended that the notices were sent to incorrect addresses, leading to delays in receiving them. They argued that compliance was eventually made, albeit belatedly, due to the incorrect address issue. The assessees cited past judgments where subsequent compliance in assessment proceedings was considered as good compliance, and penalties were not justified.

3. Appellate Proceedings:
The appeals were made before the CIT(A), who confirmed penalties for some years but deleted them for others. The assessees then appealed to the ITAT, presenting their case based on the delayed compliance due to incorrect address issues and citing legal precedents supporting their argument.

4. ITAT Decision:
The ITAT analyzed the assessment orders and found that the assessees had made full compliance with the notices, albeit with delays. Referring to legal precedents, including decisions by the ITAT and High Courts, the ITAT concluded that subsequent compliance was considered adequate, and penalties were not justified. The ITAT emphasized that penalties were levied without issuing a show cause notice, as required by the law.

5. Final Verdict:
Considering the facts and legal principles, the ITAT ruled in favor of the assessees, deeming the sustained penalties by the CIT(A) unjustified. Consequently, all penalties imposed under section 271(1)(b) for all assessment years in the cases of the assessees were deleted. The appeals of the assessees were allowed, and the judgment was pronounced on 3rd August 2016.