2021 (4) TMI 327 - AT - Income Tax

Penalty levied u/s 271(1)(b) - assessee had failed to provide full submissions which were called for on hearing fixed on 01.09.2016 in the course of the assessment proceedings; and that on the said date (01.09.2016) none appeared or made any submissions - HELD THAT - Observation of the Assessing Officer that the Assessing Officer was, on the whole, satisfied with the overall compliances made by the assessee during the assessment proceedings. The satisfaction of the Assessing Officer with the compliances made by the assessee is also evidenced by the fact that no addition was made by the Assessing Officer, and the returned income was accepted in the order passed u/s 143(3) IT Act. We are of the view that penalty levied by the Assessing Officer u/s 271(1)(b) of the IT Act deserves to be cancelled if there are materials to suggest on conclusion of the proceedings before the Assessing Officer; that the Assessing Officer was, on the whole, satisfied with the overall compliances made by the assessee during proceedings before the Assessing Officer. We hereby cancel the penalty levied by the Assessing Officer u/s 271(1)(b) of Income Tax Act. Appeal filed by the assessee is allowed.

Summary

Issues:
Penalty under section 271(1)(b) of the Income Tax Act - Compliance with notices during assessment proceedings.

Detailed Analysis:

(A) Grounds of Appeal:
The appeal by the assessee challenges the order of the Commissioner of Income Tax (Appeals) upholding the penalty of ?10,000 imposed under section 271(1)(b) for Assessment Year 2014-15.

(B) Assessment Proceedings and Penalty Imposition:
The assessee's return of income was selected for scrutiny, and after various interactions with the Assessing Officer, the income was assessed at ?22,99,79,160 without any additions. However, a penalty of ?10,000 was imposed under section 271(1)(b) for non-compliance with notices during the assessment proceedings.

(C) Appeal and Arguments:
The appeal contested the penalty, arguing that subsequent compliance in the assessment proceedings was considered satisfactory by the Assessing Officer, as evidenced by the assessment order passed under section 143(3) and not section 144. The assessee relied on previous ITAT Delhi decisions to support this contention.

(D) Observations and Decision:
The assessment order indicated the Assessing Officer's satisfaction with the compliances made by the assessee during the proceedings, leading to no additions and acceptance of the returned income. This satisfaction was crucial in the cancellation of the penalty under section 271(1)(b).

(E) Judgment and Conclusion:
Considering the overall satisfaction of the Assessing Officer with the assessee's compliance during the assessment proceedings, the penalty of ?10,000 under section 271(1)(b) was canceled by the ITAT Delhi.

(G) Final Decision:
The ITAT Delhi allowed the appeal filed by the assessee, thereby canceling the penalty imposed under section 271(1)(b) of the Income Tax Act for the relevant assessment year.

This detailed analysis highlights the key aspects of the legal judgment, focusing on the penalty imposition and subsequent cancellation based on compliance during assessment proceedings.