2018 (9) TMI 778 - AT - Income Tax

Penalty u/s 271(1)(b) - failure to comply with the notices issued under section 148 and 142(1) - Held that - As decided in SHRI CHOUTH MAL SHARMA VERSUS THE INCOME TAX OFFICER, WARD 7 (4) , JAIPUR 2018 (7) TMI 378 - ITAT JAIPUR other than the default committed by the assessee specified in the clause (b) of section 271(1) the non compliance to the other notices or directions would not attract the penalty under section 271(1)(b) of the Act. Accordingly, the penalty levied under section 271(1)(b) for non compliance of notice under section 148 is not valid and the same is deleted. As regards the penalty levied for non compliance of notice under section 142(1), we find that the assessee was not served with any of the notices issued by the AO due to the change of address and since the assessee has not filed any return of income, therefore, the AO was not having the present address of the assessee. Hence when the notice issued under section 142(1) was not served upon the assessee, and the AO has not conducted further enquiry regarding the current address of the assessee then in the facts and circumstances of the case that the assessee had already furnished the current address in the quantum proceedings, the reasons explained by the assessee are bonafide and reasonable. We delete the penalty imposed under section 271(1)(b) of the Act for non compliance of section 142(1). - Decided in favour of assessee

Summary

Issues:
1. Penalty imposed under section 271(1)(b) for non-compliance with notices under sections 148 and 142(1) of the Income Tax Act for AY 2009-10.

Analysis:
The appeals were filed against the order passed by the Ld. CIT (Appeals) for penalty under section 271(1)(b) of the Act. The case involved a common issue, and the lead case challenged the penalty of ?20,000 imposed for failure to comply with notices. The AO initiated penalty proceedings due to non-compliance with notices issued under sections 148 and 142(1) of the Act. The appellant contested the penalty before the CIT (A), but the penalty was upheld. The CIT (A) found the appellant's non-compliance with notices as a violation of the rule of law, rejecting the argument of illiteracy as the appellant had signed the appeal memo. The AO imposed the penalty based on non-compliance with notices, leading to the appeal challenging the penalty imposition.

The appellant argued that penalty under section 271(1)(b) can only be imposed for non-compliance with specific sections, excluding section 148 notices. The appellant cited the shifting of residence as the reason for non-receipt of notices under section 142(1). Referring to previous tribunal decisions, the appellant sought the cancellation of the penalty. On the contrary, the Revenue contended that repeated notices were ignored by the appellant, justifying the penalty imposed by the AO. The Revenue relied on the orders of the lower authorities to support the penalty imposition.

In a similar case, the Tribunal had deleted the penalty under section 271(1)(b) for non-compliance with notices. The Tribunal found that the penalty for non-compliance with section 148 notices was not valid under section 271(1)(b). The Tribunal also considered the appellant's change of address as a valid reason for non-receipt of notices. Consequently, the penalty under section 271(1)(b) for non-compliance with notices was deleted. Following this decision, the penalty in the present case was also deleted, and the appeals of the assessees were allowed. The Tribunal's decision in this case was applied to other similar cases, leading to the deletion of penalties in those cases as well.

In conclusion, the Tribunal ruled in favor of the assessees, deleting the penalties imposed under section 271(1)(b) for non-compliance with notices under sections 148 and 142(1) of the Income Tax Act for AY 2009-10.