2017 (9) TMI 466 - AT - Income Tax

Levy of penalty under section 271(1)(b) - non compliance to notice under section 143(2)/142(1) - Held that - It appears that assessee has disclosed the reasonable cause for failure to comply with the statutory notice and on the same reasoning the Ld. CIT(A) cancelled the penalty under section 271(1)(b) of the I.T. Act for two years in both the appeals. Therefore following the rule of consistency the Ld. CIT(A) should have cancel the penalty in this year as well. We accordingly set aside the orders of the Ld. CIT(A) and cancel the penalty. Accordingly the grounds of the assessee are allowed.

Summary

Issues:
Challenge of penalty under section 271(1)(b) of the I.T. Act, 1961 for A.Ys. 2005-06, 2006-07, and 2007-08 due to non-compliance with notices.

Analysis:
The appeals by the assessee contested the penalty imposed under section 271(1)(b) of the I.T. Act, 1961 for the mentioned assessment years. The Ld. CIT(A) observed that the A.O. issued notices for hearing on specific dates, but the assessee failed to attend. The penalty of ?10,000 for each year was levied due to non-compliance despite follow-up notices.

The assessee explained before the Ld. CIT(A) that family members were hospitalized on the dates of the notices, leading to non-compliance. However, the Ld. CIT(A) noted that these reasons were not presented to the A.O. timely. The Ld. CIT(A) acknowledged procedural deficiencies but found merit in upholding the penalty, although it was considered harsh for three years compared to the other four years where penalties were deleted.

In the absence of the assessee during the proceedings, the Ld. D.R. supported the lower authorities' decisions. Upon reviewing the facts and submissions, the Tribunal found a precedent in favor of the assessee in similar cases where penalties were canceled due to valid reasons for non-compliance with notices.

The Tribunal concluded that the assessee provided reasonable causes for non-compliance, consistent with previous decisions canceling penalties in similar circumstances. Therefore, the Tribunal set aside the Ld. CIT(A)'s orders and canceled the penalties for all three assessment years under appeal, aligning with the principle of consistency in such matters.

In summary, the appeals by the assessee challenging the penalty under section 271(1)(b) for non-compliance with notices were allowed by the Tribunal, following a precedent where penalties were canceled due to valid reasons presented by the assessee, leading to the cancellation of penalties for all three assessment years in question.