2022 (12) TMI 1075 - AT - Income Tax

Levy of penalty u/s 271 (1 )(b) - non compliance of notice issued u/s 142(1) - HELD THAT - As is not in dispute that notice under section 142(1) of the Act along with the questionnaire has been issued, but the assessee has failed to file any reply in response to the said notice. It is also not in dispute that the assessment order has been passed under section 142(1) of the Act not under section 144 of the Act, wherein the Ld. A.O. considering the subsequent compliance made by the assessee and by considering the said compliance as good compliance, ignored the default committed earlier. The said fact has been corroborated with the assessment order dated 22.11.2018 passed under section 143(3) of the Act by the A.O. See case of Akhil Bhartiya Prathmik Shamshak Sangh Bhawan Trust 2007 (8) TMI 386 - ITAT DELHI-G - Penalty order set aside - Decided in favour of assessee.

Summary

Issues:
Levy of penalty under section 271(1)(b) of the Income Tax Act, 1961 for non-compliance with notice under section 142(1) of the Act.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) confirming the penalty imposed by the Assessing Officer under section 271(1)(b) of the Act. The appellant contended that the penalty was unjustly confirmed, arguing that non-compliance with the notice under section 142(1) was not deliberate and had reasonable cause. Additionally, it was highlighted that subsequent compliance by the appellant was considered good compliance by the Assessing Officer, as reflected in the assessment order passed under section 143(3) instead of 144 of the Act.

The case involved the appellant's failure to respond to the notice under section 142(1) of the Act, leading to the initiation of penalty proceedings under section 271(1)(b). The appellant's appeal against the penalty order was dismissed by the Commissioner of Income Tax (Appeals). The appellant contended that the penalty order was unjust as subsequent compliance was considered good compliance, and earlier defaults were overlooked by the Assessing Officer. The appellant argued that the penalty order lacked mandatory satisfaction in the assessment order.

The Tribunal considered the appellant's arguments, noting that the assessment order was passed under section 143(3) of the Act, indicating that subsequent compliance was viewed favorably, and earlier defaults were disregarded. Citing a similar case precedent, the Tribunal held that in such circumstances, there was no basis to conclude that the default was willful. Relying on the precedent, the Tribunal concluded that the penalty order and the Commissioner's order confirming it should be set aside, thereby allowing the appeal filed by the assessee.

In conclusion, the Tribunal set aside the penalty order under section 271(1)(b) of the Act, emphasizing that subsequent compliance by the appellant was considered good compliance, and earlier defaults were overlooked. The Tribunal allowed the appeal filed by the assessee, leading to the penalty's deletion and a favorable outcome for the appellant.