2018 (10) TMI 182 - AT - Income Tax

Penalty u/s 271(1)(b) - non compliance of a consolidated notice issued u/s 142(1) - non specification of reasons - Held that - It is seen that in Swarnaban M. Khanna 2009 (12) TMI 669 - ITAT AHMEDABAD , it has been laid down that before levying penalty u/s 271(1)(b) of the Act, there must be a specific notice to the assessee for specific assessment requirements to be complied with; that the compliance must have relevance to the assessment year in question; that it must have apparent in question; that it must have apparent nexus with the assessment of the assessment year to be framed, and that the statutory provision for levy of penalty is not for mere technical non-compliance, but for actual or habitual defaulters. Referring to Akhil Bhartiya Prathmik Sangh Bhawan Trust Vs. Assistant DIT 2007 (8) TMI 386 - ITAT DELHI-G , it was observed that if the assessment order is passed u/s 145(3) of the Act and not u/s 144 thereof, then the non-compliance is deemed to have been waived off. No contra decision has been cited to counter the above ratio decidendi of Swarnaben M. Khanna (Supra), obviously, only one penalty can be levied for one default. As such, the grievance of the assessee is found to be justified. Shri Khrishna Bihari Agarwal (Supra), relied on by the Ld. CIT(A) is of no consequence. The assessee has not been shown to be a heavily defaulter. - Decided in favour of assessee

Summary

Issues Involved:
1. Sustaining of penalty imposed under section 271(1)(b) of the Income Tax Act.
2. Non-compliance with the notice issued under section 142(1) of the Income Tax Act.
3. Imposition of multiple penalties for a single default.

Issue-wise Detailed Analysis:

1. Sustaining of Penalty Imposed Under Section 271(1)(b) of the Income Tax Act:
The assessee contended that the penalty imposed by the Assessing Officer (AO) and sustained by the Commissioner of Income Tax (Appeals) [CIT(A)] was unjustified and against the law. The AO had levied seven penalties, each of ?10,000, under section 271(1)(b) for non-compliance with a consolidated notice issued under section 142(1) for the assessment years (A.Ys.) 2008-09 to 2014-15. The CIT(A) confirmed these penalties. The assessee argued that the CIT(A) did not appreciate the facts and submissions made before him. The CIT(A) maintained that the appellant committed defaults under the provision of 271(1)(b) and failed to show reasonable cause for such defaults.

2. Non-compliance with the Notice Issued Under Section 142(1) of the Income Tax Act:
The AO issued a notice under section 142(1) dated 28.08.2015, which required compliance by 15.09.2015. The assessee neither attended nor submitted any written reply. Consequently, a show cause notice under section 271(1)(b) was issued for non-compliance. The assessee argued that they had attended the office and requested the supply of certain seized documents, and an oral adjournment was allowed by the AO. However, there was no record of this attendance. The CIT(A) noted that the notice was duly served, and no adjournment was sought by the appellant, leading to the confirmation of the penalties.

3. Imposition of Multiple Penalties for a Single Default:
The assessee contended that the AO imposed seven penalties for a single default of non-compliance with the notice dated 28.08.2015. The assessee argued that as per section 271(1)(b), only one penalty could be imposed for each default, and since there was only one default, only one penalty should be maintained. The CIT(A) rejected this argument, stating that the default of non-compliance was for each assessment year from 2008-09 to 2014-15, and hence, multiple penalties were justified. However, the ITAT found that only one penalty could be levied for one default, referencing the case of 'Swarnaben M. Khanna vs. DCIT', which established that penalties should not be imposed for mere technical non-compliance but for actual or habitual defaulters.

Conclusion:
The ITAT concluded that the penalties imposed were unjustified. It was held that only one penalty could be levied for one default, and the reliance on 'Shri Krishna Bihari Agarwal Vs. DCTT' by the CIT(A) was not applicable. Consequently, all the penalties imposed were cancelled, and the appeals were allowed.