2024 (8) TMI 737 - AT - Income Tax

Levy of penalty u/s 272A(1)(d) - non compliance to certain statutory notices issued u/s 143(2) and 142(1) - HELD THAT - We find that the assessee has put forth its explanation in terms of non-availability of information/documentation due to one of the its Directors becoming hostile and who has in his possession the relevant information/documents as sought for. Regarding the contention of the DR that it is a case where the assessment order has been passed u/s 144 and not u/s 143(3) of the Act and the assessee company cannot take benefit of subsequent compliance to the notices, we find that firstly, AR has not raised any such contention and secondly, besides the aforesaid notices, there are subsequent notices and the responses to the said notices by the assessee company and to what extent the compliances have been made or not and what has lead to passing of the best judgment order u/s 144 is not the subject matter of present penalty proceedings and is not emerging from the impugned penalty order. The contention of the AR has been limited to the extent that the notices which are subject matter of present penalty proceedings have been substantially complied with though after the passing of the penalty order and the same therefore be considered. Penalty levied u/s 272A(1)(d) is herby directed to be deleted. Assessee appeal allowed.

Summary

Issues:
Levy of penalty under section 272A(1)(d) for non-compliance with statutory notices during assessment proceedings.

Analysis:
The appellant, an assessee, filed an appeal against the penalty imposed under section 272A(1)(d) amounting to Rs. 50,000 by the Assessing Officer (AO) for non-compliance with statutory notices. The case was initially scrutinized by ITO, W-1(1), Nangal, and later transferred to ITO, W-4(1), Chandigarh. The AO issued multiple notices under sections 143(2) and 142(1) to which the appellant responded, citing reasons for non-compliance, such as jurisdictional transfer and unavailability of records. The penalty was imposed despite subsequent compliance by the appellant.

The appellant appealed to the Ld. CIT(A), NFAC, Delhi, who upheld the penalty. The appellant then appealed to the Appellate Tribunal ITAT Chandigarh. During the hearing, the appellant argued that there was no deliberate non-compliance with the notices and provided explanations for each instance of non-compliance. The Departmental Representative (DR) supported the lower authorities' orders, emphasizing the lack of reasonable cause for non-compliance.

The Tribunal analyzed each notice issued by the AO. For notices under section 143(2), it found that the appellant responded appropriately, and there was no requirement for specific information, leading to the deletion of the penalty. Regarding notices under section 142(1), the Tribunal noted the reasons provided by the appellant for non-compliance, such as uncooperative directors and voluminous information. Despite subsequent compliance, the AO levied the penalty prematurely without considering the delayed compliance.

The Tribunal concluded that the penalty was unjustified as the appellant had substantially complied with the notices, even if delayed. It set aside the CIT(A)'s order and directed the deletion of the penalty under section 272A(1)(d) amounting to Rs. 50,000. The appellant's appeal was allowed, and the order was pronounced on 31/01/2024.