2022 (4) TMI 163 - AT - Income Tax

Penalty u/s 271(1)(b) - default of non-appearance - assessee failed to comply with subsequent notices issued by Ld. AO u/s 142(1) - HELD THAT - In the written submission filed before us as submitted that Ld. CIT(A) has erred in law and in fact in confirming penalty u/s 271(1)(b) of the Act even for the first default since in the assessment order no specific date of service on the assessee has been mentioned in respect of the first notice dated 05/06/2015 issued u/s 142(1) of the Act. Also there was a very short time gap between issuance of first notice dated 05/06/2015 and the second notice which was issued on 10/06/2015. CIT(A) has erred in confirming penalty in respect of even the first notice as well. We note that the written submissions are absolutely silent on why the assessee failed to comply with subsequent notices issued by Ld. AO u/s 142(1) of the Act dated 10/06/2015 15/07/2015 and 18/01/2016. The assessee has repeatedly defaulted in responding to various notices issued by the Ld. AO u/s 142(1) of the Act and the assessment order had to be passed ex-parte in absence of any response/ co-operation by the assessee. The assessee has given no plausible explanation for his recurring non-compliance to various notices issued. Therefore we are of the view that the Ld. CIT(A) has taken a well-reasoned view and has not erred in restricting addition to one default based on various judicial precedents cited in the appeal order. We are therefore view that CIT(A) has taken a very reasonable view in the matter by restricting the penalty to only one default of non- compliance though the Ld. AO has issued four notices u/s 142(1) of the Act all of which remained un-compiled with. Appeal of assessee dismissed.

Summary

Issues:
Appeal against penalty under section 271(1)(b) of the Income Tax Act - Non-compliance with notices - Confirmation of penalty by CIT(A) - Restriction of penalty to one default.

Analysis:
1. The appeal was filed against the order of the Ld. CIT(A) confirming the penalty under section 271(1)(b) of the Income Tax Act. The assessee raised multiple grounds challenging the penalty imposed.
2. The Ld. AO initiated penalty proceedings under section 271(1)(b) as the assessee failed to comply with several notices issued during the assessment proceedings. The penalty was levied for each default, totaling to ?40,000.
3. The CIT(A) considered the penalty order and the assessee's submissions. The penalty was restricted to ?10,000 for the first default only, citing that penalty should be imposed for the initial non-appearance only, not for every uncomplied notice.
4. The CIT(A) relied on judicial precedents to support the decision, emphasizing that section 271(1)(b) is deterrent in nature and not for revenue generation. The penalty should be reasonable and based on the severity of non-compliance.
5. The assessee contended that the penalty for the first default was also unjustified due to lack of specific service date mentioned in the notice. However, no explanation was provided for subsequent non-compliance.
6. The ITAT noted the recurring non-compliance by the assessee with various notices, leading to an ex-parte assessment. The CIT(A)'s decision to restrict the penalty to one default was deemed reasonable based on legal principles and case law.
7. Referring to a specific case, the ITAT emphasized that penalty under section 271(1)(b) should not be imposed repeatedly for the same non-compliance. The assessee's failure to respond to multiple notices warranted the penalty imposed.
8. The ITAT upheld the CIT(A)'s decision to limit the penalty to one default, despite the issuance of multiple uncomplied notices. The assessee's lack of response and explanation for non-compliance justified the penalty imposed.
9. Ultimately, the ITAT dismissed the assessee's appeal, affirming the CIT(A)'s decision to restrict the penalty to one default of non-compliance. The penalty amount was upheld at ?10,000.

This detailed analysis outlines the issues raised in the appeal, the sequence of events leading to the penalty imposition, the CIT(A)'s reasoning for restricting the penalty, and the ITAT's decision to uphold the penalty for one default of non-compliance.