2020 (9) TMI 152 - AT - Income Tax

Penalty u/s 271(1)(b) - failure to comply with notices issued under section 142(1) at the assessment proceedings - as submitted that the A.O. in the assessment orders in absence of assessee passed the ex- parte Orders under section 153A/144 and determined the income of assessee on estimate basis - HELD THAT - Assessee was prevented by sufficient cause in not filing the appeals within the period of limitation and assessee has a bonafide explanation for not filing the appeals within the period of limitation and further for substantial cause of justice, when additions stand deleted by the Ld. CIT(A), penalty is not leviable. Even if assessee may not be strictly able to support the explanation for condonation of delay, we are of the view that for taking a pragmatic view in the facts and circumstances explained above, the delay shall have to be condoned. In view of the above, we condone the delay in filing the appeals before the Tribunal in all the above years. Since the additions on merit have already been deleted by the Ld. CIT(A) and no further appeals are pending as per contention of the Ld. D.R. on merit, therefore, there may not be a default on the part of the assessee and at best it could be considered as a technical default, for which, in our view, penalty should not be levied by the authorities below for failure to comply with the notices under section 142(1) - We set aside the Orders of the authorities below and cancel the penalty under section 271(1)(b) - Decided in favour of assessee.

Summary

Issues:
Challenging penalty under section 271(1)(b) of the I.T. Act, 1961 for A.Ys. 2005-2006 to 2009-2010.

Analysis:
The appeals were filed against different orders of the Ld. CIT(A)-11, New Delhi, challenging the penalty under section 271(1)(b) of the I.T. Act, 1961. The delay in filing the appeals ranged from 134 to 150 days, which the assessee sought to condone with a consolidated application supported by an affidavit. The counsel for the assessee argued that penalties were imposed due to non-compliance with notices under section 142(1) during assessment proceedings conducted ex-parte in the absence of the assessee. However, the Ld. CIT(A) deleted all additions based on estimates, citing the decision in CIT vs. Kabul Chawla, leading to no tax liability and, hence, no basis for levying penalties.

The Departmental Representative (D.R.) contended that the delay should not be condoned as the assessee failed to provide evidence of the impugned order's service or a satisfactory explanation for the delay. Despite admitting the deletion of additions on merit by the Ld. CIT(A), the D.R. opposed the condonation of delay. The Tribunal considered the submissions and observed that since all additions were deleted, there was no default on the assessee's part in complying with statutory notices. The Tribunal noted that the penalty under section 271(1)(b) should not be levied for a technical default when no additions stood against the assessee.

The Tribunal found that the assessee had a valid reason for the delay, and in the interest of substantial justice, the delay in filing the appeals was condoned. Emphasizing the technical nature of the default and the absence of pending appeals on merit, the Tribunal concluded that penalties should not be imposed. Consequently, the Tribunal set aside the lower authorities' orders and canceled the penalties under section 271(1)(b) of the I.T. Act for all the impugned assessment years, allowing the appeals of the assessee.

In conclusion, all the appeals of the assessee challenging the penalties under section 271(1)(b) of the I.T. Act for the specified assessment years were allowed, with the Tribunal canceling the penalties based on the deletion of additions and the technical nature of the default in complying with notices under section 142(1).