2004 (5) TMI 263 - AT - Income Tax

Summary

Issues Involved:
1. Imposition of penalty under Section 271(1)(b) of the Income Tax Act, 1961.
2. Compliance with statutory notices issued by the Department.
3. Validity of penalty levied by the Assessing Officer (AO) based on alleged non-compliance.

Issue-wise Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(b) of the Income Tax Act, 1961:
The appeal concerns the penalty imposed under Section 271(1)(b) for the assessment year 1992-93. The assessee contested the penalty confirmed by the CIT(A), Jodhpur. The penalty was imposed due to alleged non-compliance with notices issued by the Department. The Tribunal noted that the levy of penalty is penal in nature and requires meticulous consideration of each default.

2. Compliance with Statutory Notices Issued by the Department:
The Tribunal examined the compliance history of the assessee with various notices issued by the Department. The detailed chart from the penalty order highlighted instances of compliance and non-compliance. For example, on several occasions, the assessee's Authorized Representative attended and requested adjournments, which were considered compliance. In some cases, there was no clear evidence of service of notices, making it difficult to establish non-compliance. The Tribunal found that in many instances, the assessee had complied with the notices, either through attendance or by seeking adjournments.

3. Validity of Penalty Levied by the Assessing Officer (AO) Based on Alleged Non-Compliance:
The Tribunal scrutinized the AO's approach in levying the penalty. It was observed that the AO had not relied on a specific instance of non-compliance but rather generalized the pattern of proceedings. The AO's penalty order did not refer to any specific notice for which default was committed, and no separate show-cause notices were issued for each alleged non-compliance. The Tribunal emphasized that for each non-compliance, a separate show-cause notice and penalty are required. The Tribunal also noted that the assessee had applied for the transfer of assessment records, which might have led to a misunderstanding between the AO and the assessee, contributing to the situation.

Conclusion:
The Tribunal concluded that the AO did not follow the proper procedure for levying the penalty as required under Section 271(1)(b). The penalty was levied in a generalized manner without specifying particular instances of non-compliance. The Tribunal found that the assessee had complied with most of the notices, either through attendance or by seeking adjournments, and that the penalty imposed could not be sustained in the eyes of law. Consequently, the appeal of the assessee was accepted, and the penalty was set aside.