2019 (2) TMI 167 - AT - Income Tax

Penalty u/s 271(1)(b) - reopening of assessment - non comply with the notice issued u/s 142(1) - Held that - We find that assessee during the assessment proceedings did not comply with the notice issued u/s 142(1) therefore, the authorities below have imposed penalty u/s 271(1)(b). We find that finally the assessee did appear during the assessment proceedings and assessment was completed u/s 147/143(3) of the Act. Under similar circumstances I.T.A.T. Lucknow Bench of the Tribunal in the case of Smt. Reeta Patel vs Income Tax Officer 2018 (1) TMI 1433 - ITAT LUCKNOW assessee during the assessment proceedings did not comply with the notices issued u/s 142(1) on various dates which learned CIT(A) and Assessing Officer have noted in their order and therefore, the authorities below have imposed penalty u/s 271(1)(b). However, we find that finally the assessee did appear before the assessment proceedings and assessment was completed u/s 143(3) and thereafter, the matter travelled upto Tribunal, which vide order dated 30/01/2017 allowed the appeal of the assessee for statistical purposes. - Decided in favour of assessee.

Summary

Issues:
1. Imposition of penalty under section 271(1)(b) of the Income Tax Act.
2. Compliance with notice u/s 142(1) during assessment proceedings.
3. Abatement of proceedings under section 153A due to search u/s 132.
4. Applicability of penal provisions u/s 271(1)(b) post assessment u/s 153A.

Detailed Analysis:
1. The appeal was filed against the order of the CIT(A) regarding the imposition of a penalty of ?10,000 under section 271(1)(b) of the Income Tax Act for the assessment year 2014-15. The crux of the appeal was the sustenance of the penalty by the CIT(A) which was initially imposed by the Assessing Officer.

2. Proceedings were initiated under section 147 by issuing a notice u/s 148, followed by a notice u/s 142(1) for compliance. However, no attendance or written submissions were made by the assessee on the specified date. Consequently, the Assessing Officer imposed the penalty under section 271(1)(b) for non-compliance with the notice u/s 142(1).

3. The appellant contended that the proceedings under section 153A were abated due to a search conducted under section 132, and thus, there was no non-compliance on the part of the assessee. It was argued that since the assessment u/s 153A was completed, penal provisions u/s 271(1)(b) should not have been invoked.

4. The Departmental Representative relied on the lower authorities' orders, emphasizing that the penalty was justified due to the non-compliance with the notice u/s 142(1) during the assessment proceedings.

5. The Tribunal noted that although the assessee initially did not comply with the notice u/s 142(1), they eventually participated in the assessment proceedings, which were completed under sections 147/143(3) of the Act. Citing a similar case precedent, the Tribunal held that the penalty was not warranted in such circumstances and referred to a previous decision where the penalty was deleted under comparable facts. Consequently, the Tribunal allowed the appeal, reversing the decision of the CIT(A) and deleting the penalty.

In conclusion, the Tribunal allowed the appeal of the assessee, overturning the penalty imposed under section 271(1)(b) of the Income Tax Act for non-compliance with the notice u/s 142(1) during the assessment proceedings.