2012 (10) TMI 810 - AT - Income Tax

Penalty u/s. 271 (1) (b) - non-compliance of three notices issued in connection with assessment year 2003-04 - Held that - Penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so as decided in Hindustan Steel Limited Versus State Of Orissa 1969 (8) TMI 31 - SUPREME COURT In the present case assessee s conduct was not contumacious to warrant levy of penalty as there was no deliberate attempt on the part of the assessee to evade the assessment proceedings as he claimed that on some occasions, he himself had gone to the office of the concerned Assessing Authority where the concerned assessing authority s office was found locked and also some of the notices were general notices without requiring any specific documents to be complied with - in favour of assessee.

Summary

Issues:
Penalty imposition under section 271(1)(b) of the I.T. Act for non-compliance with notices u/s 143(2) for assessment year 2003-04.

Detailed Analysis:

1. Issue of Penalty Imposition:
The appeals by the Assessee were against the penalty of Rs. 10,000/- in each case confirmed by the Ld. Commissioner of Income Tax (Appeals)-I under section 271(1)(b) of the Income Tax Act. The Assessing Officer imposed the penalty due to the Assessee's failure to comply with three notices issued under section 143(2) for the assessment year 2003-04 and for not responding to show cause notices related to penalty proceedings.

2. Confirmation of Penalty by CIT(A):
The Ld. Commissioner of Income Tax (A) upheld the penalty levy, leading to the Assessee appealing before the Appellate Tribunal. The Tribunal considered the arguments presented and reviewed the records to make a decision.

3. Assessee's Submissions and Tribunal's Decision:
The Assessee's counsel argued that there was no deliberate attempt to evade assessment proceedings and highlighted instances where the concerned Assessing Authority's office was inaccessible. It was also mentioned that some notices were general and did not specify particular document requirements. After careful consideration, the Tribunal found that the Assessee's conduct was not contumacious to justify the penalty imposition. Relying on legal precedent, the Tribunal concluded that the penalty of Rs. 10,000/- for each non-compliance instance should be deleted.

4. Legal Precedent Consideration:
The Tribunal referenced the decision of the Hon'ble Apex Court in Hindustan Steel vs. State of Orissa, emphasizing that the imposition of a penalty for failing to fulfill a statutory obligation should be based on deliberate defiance of the law, contumacious behavior, or conscious disregard of obligations. The Tribunal applied this principle to the present case and decided to delete the penalty in all three instances.

5. Final Tribunal Decision:
In light of the arguments, submissions, legal precedent, and the facts of the case, the Appellate Tribunal allowed all three appeals filed by the Assessee, thereby deleting the penalty imposed under section 271(1)(b) of the Income Tax Act for non-compliance with notices issued for the assessment year 2003-04.