2019 (3) TMI 641 - AT - Income Tax

Penalty u/s 271(1)(b) - mandation of compliance with notice u/s 142(1) - proof of failure of the assessee to comply with the notice under section 142(1) - HELD THAT - The contention of the assessee is found to be correct. Assessee s paper book with the copy of assessee s reply dated 19/10/2016 to the notice dated 07/10/2016 issued to the assessee under section 142(1) of the Act, a scanned copy whereof is reproduced herein below, bears the stamp of the Assessing Officer and signatures thereon. Assessing Officer has noted that again notice u/s 142(1) was issued on 31/10/2016 and date was fixed for compliance on 07/11/2016 but assessee did not file any reply or adjournment application by 08/11/2016. AO has further noted that show cause notice was issued on 08/11/2016 and date of compliance was fixed for 16/11/2016 and assessee filed explanation on 16/11/2016. In this respect we find that assessee had filed reply on 09/11/2016 instead of 07/11/2016 and again assessee had furnished explanation on 16/11/2016 which Assessing Officer himself has admitted. Therefore, it cannot be said that the assessee did not comply with the various notices issued under section 142(1). Since the assessee has duly complied with the notice, penalty under consideration is entire uncalled for. It is, accordingly, cancelled.- decided in favour of assessee.

Summary

Issues:
Assessment of penalty under section 271(1)(b) for non-compliance with notices under section 142(1) of the Income-tax Act, 1961.

Analysis:
The appeals were filed against orders of the CIT(A) for assessment years 2009-10 to 2015-16. The Tribunal decided to dispose of all appeals by a common order due to similar grounds raised and facts involved. The main issue revolved around the levy of penalty under section 271(1)(b) for alleged non-compliance with notices under section 142(1).

In one of the appeals, the assessee contended that compliance was made to the notice dated 07/10/2016 under section 142(1) by filing a reply on 19/10/2016. The Tribunal found the contention to be correct as the copy of the reply bore the stamp and signatures of the Assessing Officer. The Department failed to provide evidence to the contrary.

The Assessing Officer issued subsequent notices under section 142(1) on 31/10/2016 and 08/11/2016, alleging non-compliance by the assessee. However, the Tribunal observed discrepancies in the dates of replies and explanations filed by the assessee, ultimately concluding that the assessee had complied with the notices. Since penalty under section 271(1)(b) is attracted only on failure to comply with such notices and the assessee had complied, the penalty was deemed uncalled for and subsequently cancelled.

As a result of the findings in the aforementioned appeal, penalties in other appeals of the assessee with similar facts and circumstances were also deleted. Therefore, all seven appeals filed by the assessee were allowed by the Tribunal. The order was pronounced in open court on 08/03/2019.

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing the importance of compliance with statutory notices under the Income-tax Act to avoid penalties under section 271(1)(b). The judgment highlighted the necessity for authorities to consider all facts and circumstances surrounding a case before levying penalties, ensuring adherence to principles of natural justice.