2020 (9) TMI 690 - AT - Income Tax

Levy of penalty u/s. 271(1)(b) - non-compliance of notice u/s. 142(1) - HELD THAT - Informations were received by the Assessing Officer from Sales Tax Department, Maharashtra and after which he had issued notice u/s. 148 of the Act to the assessee for which there was no compliance. AO had issued another notice u/s. 142(1) of the Act. Again there was non-compliance and the Assessing Officer proceeded to impose penalty u/s. 271(1)(b) of the Act stating that there was no reasonable cause demonstrated by the assessee for non-attendance on the given date as per the said notice. The penalty was confirmed by the ld. CIT(A) upholding the findings of AO. When we peruse the penalty order is crystal clear that the assessee has submitted before the Assessing Officer a medical certificate from Dr. Majoj Dashpute stating that the assessee was under his treatment for depression with anxiety disorder for the last two years. AO still levied the penalty saying that this is not sufficient reason for non-compliance of notice and therefore the AO in our considered view has absolutely overlooked the facts on record which are genuine. Neither the AO nor the CIT(A) has brought on record anything against the evidences furnished by the assessee regarding his ill-health. We are of the considered view that this is not a fit case for imposition of penalty u/s. 271(1)(b) of the Act and we therefore, delete the penalty - Decided in favour of assessee.

Summary

Issues: Confirmation of penalty u/s.271(1)(b) of the Income Tax Act, 1961 for non-compliance of notice u/s. 142(1) of the Act.

Analysis:
1. Confirmation of Penalty: The appeal before the Appellate Tribunal ITAT Pune pertained to the confirmation of a penalty of ?10,000 imposed on the assessee under section 271(1)(b) of the Income Tax Act, 1961. The penalty was levied due to the assessee's non-compliance with a notice issued under section 142(1) of the Act.

2. Background and Assessment Proceedings: The assessee, an individual engaged in the business of trading, had filed a return declaring total income of ?4,89,542. During the assessment proceedings, it was noted that the assessee failed to comply with a notice issued under section 142(1) of the Act, prompting the Assessing Officer to initiate penalty proceedings. Despite a show cause notice, the assessee did not respond, leading to the imposition of the penalty by the Assessing Officer, which was later confirmed by the CIT(A).

3. Appellate Tribunal's Analysis: In the absence of the assessee or their representative during the hearing, the Appellate Tribunal reviewed the case records and the facts presented. The Tribunal noted that the penalty was imposed due to non-compliance with the notice under section 142(1) of the Act. However, upon examination, it was revealed that the assessee had submitted a medical certificate indicating ongoing treatment for depression and anxiety disorder, which was not considered adequate by the Assessing Officer for justifying non-compliance.

4. Decision and Reasoning: The Tribunal observed that the medical evidence provided by the assessee regarding their health condition was genuine and valid. It was noted that neither the Assessing Officer nor the CIT(A) had refuted the medical evidence presented. Consequently, the Tribunal concluded that the penalty imposed under section 271(1)(b) was unwarranted in the circumstances. The Tribunal held that the case did not merit the imposition of the penalty and, therefore, decided to delete the penalty, allowing the appeal of the assessee without delving into the merits of the case.

5. Conclusion: The Appellate Tribunal ITAT Pune, in its judgment dated July 29, 2020, allowed the appeal of the assessee, overturning the penalty of ?10,000 imposed under section 271(1)(b) of the Income Tax Act, 1961. The Tribunal based its decision on the genuine medical evidence provided by the assessee, which demonstrated a valid reason for the non-compliance with the notice, thereby finding the penalty unjustified and deleting it accordingly.