2024 (5) TMI 347 - AT - Income Tax

Penalty u/s 271(1)(b) - Non-compliance with a notice issued u/s 142(1) - first round of proceedings was deleted by the Tribunal - HELD THAT - Vide our order of date 2024 (5) TMI 320 - ITAT DELHI in quantum appeal we have quashed the orders of the Ld. AO/CIT(A) passed by them in the second round of assessment proceedings. In such a scenario the present appeal against the orders of penalty under section 271(1)(b) of the Act arising out of quantum assessment proceedings in the second round cannot survive. Appeal of the assessee is allowed.

Summary

Issues Involved:
The judgment involves issues related to the imposition of penalty u/s 271(1)(b) of the Income Tax Act, 1961 for non-compliance of notice u/s 142(1) for Assessment Year 2006-07.

Grounds Raised by Assessee:
The assessee raised various grounds challenging the penalty imposition:
1. Improper service of notice by CIT(A).
2. Compliance with notice u/s 142(1) by the appellant.
3. Failure to consider appellant's reply and previous ITAT decision.
4. Non-satisfaction of prerequisite conditions for penalty imposition.

Facts and Proceedings:
- Assessment for AY 2006-07 was initially completed under section 153A but was set aside for fresh adjudication.
- During fresh proceedings, notice u/s 142(1) was issued regarding a bank account, which the assessee denied having.
- Penalty imposed for non-compliance of notice based on non-submission of consent form.
- Assessee's appeal before CIT(A) was unsuccessful, leading to the Tribunal.
- Assessee's argument included non-compliance due to consent form requirements and the quashing of the original assessment order by the Delhi High Court.
- CIT-DR supported the penalty order.
- Tribunal noted the deletion of penalty in a previous case by ITAT.
- Delhi High Court's observations favored the appellant regarding the consent form issue.
- Tribunal quashed the penalty imposed in the second round of assessment proceedings due to the vitiation of the assessment order.

Conclusion:
The Tribunal allowed the appeal of the assessee and deleted the penalty imposed under section 271(1)(b) of the Act, considering the quashing of the assessment order and the lack of grounds for penalty imposition in the second round of proceedings.