2020 (2) TMI 974 - AT - Income Tax

Penalty u/s 271(1)(b) - default on the part of the assessee for not complying with the notices issued by the AO under section 142(1) - HELD THAT - Since there was no compliance by the assessee to the said notice, therefore, again a notice under section 142(1) was issued on 12th July, 2017. Similarly, the AO again issued two more notices under section 142(1) on 25.07.2017 and 11.08.2017. All these notices under section 142(1) were issued by the AO seeking the same information from the assessee, therefore, once the assessee has committed a default of non-compliance of the information sought by the AO then issuing repeated notices by the AO seeking same information would not multiply the default. Even if the AO issued 4 notices under section 142(1) but the information sought in all these notices was the same, then it would constitute only one default. As regards the explanation of the assessee for explaining the cause of non-compliance, we find that except the last notice dated 11.08.2017, the earlier 3 notices issued by the AO under section 142(1) were issued prior to the date of alleged transfer on 03.08.2017. Therefore, the said explanation of the assessee is without any substance or merits. Hence we restrict the penalty levied under section 271(1)(b) of the Act to one default as against 4 defaults treated by the AO. - Decided partly in favour of assessee.

Summary

Issues:
1. Penalty levied under section 271(1)(b) of the I.T. Act for the assessment year 2010-11.
2. Non-compliance of notices under section 142(1) by the assessee.

Analysis:

Issue 1: Penalty under section 271(1)(b) of the I.T. Act
The appeal was against the penalty imposed under section 271(1)(b) for the assessment year 2010-11. The assessee did not appear for the hearing but submitted written submissions. The grounds of appeal challenged the arbitrariness and legality of the penalty, arguing for a reasonable cause due to the transferable job of the assessee. The AO had initiated penalty proceedings due to non-compliance with notices under section 142(1) after issuing a notice under section 148 and framing an ex-parte assessment. The CIT (A) upheld the penalty. The assessee explained the non-compliance was due to being transferred from Alwar to Amroha, but the Department argued that most notices were issued before the transfer. The Tribunal found that repeated notices seeking the same information constituted one default, reducing the penalty to ?10,000 from ?40,000 imposed by the AO.

Issue 2: Non-compliance of notices under section 142(1)
The AO issued multiple notices under section 142(1) seeking the same information, to which the assessee did not respond. The Tribunal noted that while the assessee's transfer was cited as the reason for non-compliance, most notices were issued before the transfer date. Therefore, the explanation provided lacked merit. The Tribunal considered the sequence of notices and found that despite multiple issuances, the failure to comply with the same information request constituted a single default. Consequently, the penalty was reduced to ?10,000 for this single default. The appeal was partly allowed, and the penalty was modified accordingly.

This judgment highlights the importance of timely compliance with tax notices and the impact of reasonable causes on penalty imposition under the Income Tax Act.