2022 (12) TMI 385 - AT - Income Tax

Penalty u/s 271(1)(b) - defaults committed by the assessee in not causing appearing before the AO, during the course of assessment proceedings - HELD THAT - No penalty is prescribed for non-appearance under section 271(1)(b) of the Act. Further, we also observe that in respect of the said notices issued by the AO, there is no mention in the penalty order of the date on which the notices were served upon the assessee and also the date on which the hearing was fixed. We observe that in the notice dated 03-07-2070, the hearing was fixed for 07-07-2017, thus giving only four days time for the assessee to cause appearance. Again in respect of notice dated 17-11-2017, the hearing was fixed for 22-11-2017, which again gives a very limited time for the assessee to cause appearance. Again, in respect of notice dated 12-12-2017, the hearing was fixed for 15- 12-2017, which again displays lack of time and adequate opportunity being provided to the assessee to cause appearance. We also observe that the assessee submitted before Ld. CIT(Appeals) that during the period he had shifted to Diu and therefore there is no mention in the penalty order, whether the notices were served upon the assessee. Therefore we are of the considered view that adequate opportunity of causing appearance was not granted to the assessee to cause appearance. Further, there is no mention in the order levying penalty under section 271(1)(b) of the Act, whether the notice was served of the assessee, coupled with the fact that only 3 to 4 days time was given to the assessee to cause appearance. Therefore, in the instant set of facts, we are of the view that this is not a fit case for levying penalty under section 271(1)(b) - Appeal of the assessee is allowed.

Summary

Issues:
Appeal against penalty under section 271(1)(b) of the Income Tax Act, 1961 for A.Y. 2010-11.

Analysis:
1. The appellant challenged the penalty imposed under section 271(1)(b) of Rs. 10,000 by the CIT(A). The grounds of appeal included errors in law and facts, lack of legal service of notices, failure to consider statutory positions, and inadequate time provided for compliance. The appellant also argued that penalty proceedings initiation was flawed and no reasonable opportunity was granted at the appeal stage.

2. The assessment order determined the total income of the assessee at 26,84,240/-, with the AO issuing six notices for non-compliance during assessment proceedings. The penalty of 60,000/- was levied for each default. The CIT(A) reduced the penalty to 10,000/- citing a precedent where penalty could be imposed only for the first default due to the same nature of the offense.

3. The appellant contended that inadequate time and lack of mention of notice service date by the AO rendered the penalty unjustified. The appellant was stationed at Diu during the period, and the short notice periods provided did not allow for proper compliance. The Tribunal observed that the penalty order lacked details on notice service and provided limited time for the assessee to appear. Considering these factors, the Tribunal concluded that the penalty was unwarranted in this case.

4. The Tribunal ruled in favor of the appellant, directing the dropping of the penalty levied under section 271(1)(b) of the Act due to insufficient opportunity provided for compliance. The appeal was allowed, and the penalty was set aside based on the findings of inadequate time and lack of mention of notice service in the penalty order.

This detailed analysis of the legal judgment provides insights into the grounds of appeal, assessment proceedings, the CIT(A)'s decision, arguments presented by the appellant, and the Tribunal's final ruling, ensuring a comprehensive understanding of the case.