2024 (5) TMI 586 - AT - Income Tax

Penalty u/s 271(1)(b) - non-compliance of notice issued u/s 142(1) - assessee had requested the AO to adjourn the hearing as her Authorised Representative was out of Delhi - HELD THAT - When the reasonable cause for non-compliance with the notice is crystal clear, assessee need not to be visited with the rigours of penalty u/s 271(1)(b) - we note that in the case of Hindustan Steel Ltd. vs. State of Orissa 1969 (8) TMI 31 - SUPREME COURT has held that assessee may not be visited with rigours of penalty if the assessee s conduct is not found to be contumacious. In our considered opinion, the conduct of the assessee in this case is not contumacious - Appeal of the assessee is allowed.

Summary

Issues involved:
The issues involved in this case include the imposition of penalty u/s 271(1)(b) of the Income Tax Act, 1961 for alleged non-compliance with a notice issued u/s 142(1) of the Act, the applicability of section 273B of the Act, and the consideration of subsequent compliances made by the appellant.

Imposition of Penalty u/s 271(1)(b) for Non-Compliance:
The appellant filed her return of income u/s 139 of the Income Tax Act, 1961, and in response to a notice u/s 148, filed the ITR. Subsequently, a notice u/s 142(1) was issued, and the appellant requested an adjournment due to her representative being unavailable. The Assessing Officer then issued notices u/s 274 r.w.s. 271(1)(b) for non-compliance with the earlier notice. The appellant provided explanations and documents during the assessment proceedings, which were acknowledged by the AO. Despite this, a penalty of Rs. 10,000 was imposed u/s 271(1)(b) for non-compliance with the notice. The CIT(A) confirmed the penalty, but the ITAT Delhi set aside the penalty, noting that the appellant's conduct was not contumacious, and thus, the penalty was deleted.

Applicability of Section 273B:
The appellant contended that any alleged non-compliance was not deliberate and was due to a reasonable cause, invoking the provisions of section 273B of the Act. The appellant argued that subsequent compliances made by her should be considered in light of the assessment being framed u/s 147 r.w.s. 143(3) instead of 144, indicating that earlier defaults were overlooked. The ITAT Delhi, in its decision, emphasized that when the reasonable cause for non-compliance is evident, the penalty u/s 271(1)(b) should not be imposed. Citing the case of Hindustan Steel Ltd. vs. State of Orissa, it was held that the appellant need not face the penalty if her conduct was not contumacious.

Consideration of Subsequent Compliances:
The ITAT Delhi noted that the appellant had requested an adjournment for the scheduled compliance date, demonstrating a reasonable cause for the non-compliance with the notice. The Tribunal found that the conduct of the appellant was not contumacious and, therefore, set aside the penalty imposed u/s 271(1)(b) of the Act. The penalty of Rs. 10,000 was deleted based on the facts and circumstances of the case, ultimately allowing the appeal of the assessee.

This judgment highlights the importance of considering reasonable causes for non-compliance with notices under the Income Tax Act and emphasizes that penalties should not be imposed when the conduct of the assessee is not contumacious.