2023 (7) TMI 556 - AT - Income Tax

Penalty u/s 271(1)(b) - non-compliance of notices issued during assessment proceedings - HELD THAT - The assessee has adduced evidences before us showing that during this period there were FIRs lodged against the Directors of the company and they had moved anticipatory bail application before the Sessions Court which was rejected and the assessee had moved to the High Court both Hon ble Bombay High Court and Hon ble High Court of Gujarat. The assessee surely was deeply embroiled in litigations and, therefore, had plausible reasons for not complying with the notices, since there were criminal proceedings initiated against the directors of the assessee company who were trying to escape from being put behind the bars on account of the same Thus sufficient cause has been adduced by the assessee for non-compliance to the notices, we hold that there is no case for levying penalty u/s 271(1)(b) - The penalty levied u/s 271(1)(b) of the Act is, therefore, directed to be deleted. Decided in favour of assessee.

Summary

Issues involved:
The appeal against the order confirming the penalty under Section 271(1)(b) of the Income Tax Act, 1961 for the Assessment Year 2014-15.

Details of the Judgment:
1. The penalty was levied for noncompliance with notices issued during assessment proceedings, leading to a penalty of Rs. 50,000 for each non-compliance.
2. The Assessing Officer did not grant further time for the reply, resulting in the penalty being levied without considering the submissions made.
3. The appellant contended that they faced financial difficulties and legal issues, preventing compliance with the notices.
4. The appellant provided evidence of financial struggles, closure of business, unpaid salaries, legal actions against directors, and more to justify non-compliance.
5. The appellant participated in the appellate proceedings and explained the reasons for non-compliance, providing evidence of criminal proceedings and bail applications.
6. The Tribunal found sufficient reasons for non-compliance with the notices, given the ongoing litigations and criminal proceedings against the directors.
7. Consequently, the Tribunal held that there was no basis for the penalty under Section 271(1)(b) and directed the deletion of the penalty of Rs. 50,000.
8. The appeal of the assessee was allowed, and the order was pronounced in open court on 11/07/2023 at Ahmedabad.