2022 (9) TMI 1322 - AT - Income Tax

Penalty u/s 271(1)(b) - assessee has made no response to the questionnaire, only adjournment has been filed, even when two months have elapsed from the date of issue of notice u/s 142(1) - assessment order was passed u/s 143(3) r.w.s. 153A - as per AO assessee has failed to comply with the notice without any reasonable cause and is therefore liable to be penalized u/s 274 r.w.s. 271(1)(b) - HELD THAT - AO while framing the assessment order u/s 143(3) r.w.s. 153A of the Act, has himself mentioned in the assessment order that assessee submitted details and documents. Assessment order, u/s 143(3) r.w.s. 153A of the Act, was framed by assessing officer after getting the required documents and details. Therefore, we note that when the assessee has submitted the required details and documents during the scrutiny assessment proceeding and based on these details and documents, the Assessing Officer has framed the assessment on merit. In view of this, we note that there was no wisdom in the assessment order in respect of alleged non-compliance. Therefore, we note that when the AO has framed the assessment order u/s 143(3) r.w.s. 153A of the Act and assessment order has not been passed u/s 144 of the Act, therefore the penalty u/s 271(1)(b) of the Act, for non-compliance should not be levied. CIT(A) sustained penalty partly for second default - As penalty sustained by the Ld. CIT(A) is not in accordance with the provision of Section 271(1)(b) and clause (ii) of that Section. We note that Law is well settled that when the statute requires to do certain thing in certain way, the thing must be done in that way or not at all. Other methods or mode of performance are impliedly and necessarily forbidden. The aforesaid settled legal proposition is based on a legal maxim 'Expressio unius est exclusion alteris', meaning there by that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner and following of other course is not permissible. See NAZIR AHMAD VERSUS KING EMPEROR (NO. 2) 1936 (6) TMI 11 - PRIVY COUNCIL ,RAM PHAL KUNDU VERSUS KAMAL SHARMA 2004 (1) TMI 675 - SUPREME COURT and INDIAN BANKS' ASSOCIATION AND OTHERS VERSUS DEVKALA CONSULTANCY SERVICE AND OTHERS 2004 (4) TMI 73 - SUPREME COURT - Also see ORISSA RURAL HOUSING DEVELOPMENT CORPORATION LTD. 2011 (12) TMI 230 - ORISSA HIGH COURT Thus CIT(A) has erred in sustaining the part penalty u/s 271(1)(b) of the Act, therefore order passed by the ld CIT(A) is not in accordance with the provisions of law. Appeal of assessee allowed.

Summary

Issues Involved:
1. Legitimacy of penalty levied under section 271(1)(b) of the Income Tax Act, 1961.
2. Compliance with notices issued under section 142(1) of the Act.
3. Impact of subsequent compliance on penalty imposition.
4. Applicability of penalty under section 272A(1)(d) of the Act.

Issue-wise Detailed Analysis:

1. Legitimacy of Penalty under Section 271(1)(b):
The primary issue revolves around whether the penalty levied under section 271(1)(b) for non-compliance with notices issued under section 142(1) was justified. The assessee argued that despite taking adjournments, they eventually submitted the required documents, which were acknowledged by the Assessing Officer (AO) in the assessment order. The Tribunal found merit in this argument, noting that the assessment order was passed under section 143(3) r.w.s. 153A, indicating that the AO considered the subsequent compliance satisfactory. Therefore, the Tribunal concluded that the penalty under section 271(1)(b) should not be levied when the assessment was not passed under section 144.

2. Compliance with Notices Issued under Section 142(1):
The Tribunal examined the compliance with notices dated 02.12.2020 and 16.12.2020. The assessee sought adjournments on both occasions, citing heavy workload and the Covid-19 pandemic. The Tribunal noted that the AO eventually received the necessary documents and details, which were used to frame the assessment order. The Tribunal agreed with the CIT(A) that the first notice's compliance was adequate as the adjournment request was timely. However, for the second notice, despite extensions, the compliance was delayed, justifying a partial penalty.

3. Impact of Subsequent Compliance on Penalty Imposition:
The Tribunal emphasized that when the assessment order is framed under section 143(3) r.w.s. 153A, it implies that the AO accepted the subsequent compliance as satisfactory. Citing the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. ACIT, the Tribunal reiterated that penalties should not be imposed when the assessment is not passed under section 144, as it indicates that the AO did not consider the initial non-compliance willful.

4. Applicability of Penalty under Section 272A(1)(d):
For some appeals, penalties were levied under section 272A(1)(d), which is similar to section 271(1)(b). The Tribunal applied the same reasoning and deleted these penalties as well, emphasizing that the compliance eventually made by the assessee should not attract penalties.

Conclusion:
The Tribunal allowed all twelve appeals, deleting the penalties under sections 271(1)(b) and 272A(1)(d). The decision underscores that penalties for non-compliance should not be imposed when subsequent compliance is acknowledged and the assessment is not passed under section 144. The Tribunal's order was pronounced on 27/09/2022.