2014 (2) TMI 577 - AT - Income Tax

Penalty u/s 271(1)(b) of the Act Non-compliance of Notice u/s 143(2) of the Act - Held that -The show cause notice does not mention about the non-compliance of notice on which penalty has been levied thus, assumption of jurisdiction is not proper - the assessee was not given proper opportunity as a mandatory requirement the assessment were completed u/s. 143(3) of the I.T. Act, it does mean the subsequent compliance in the assessment proceedings was considered as good compliance Relying upon Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. Assistant Director of Income Tax 2007 (8) TMI 386 - ITAT DELHI-G and Hindustan Steel vs. State of Orissa 1969 (8) TMI 31 - SUPREME Court - An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and 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 order of the CIT(A) set aside and the levy of penalty set aside Decided in favour of Assessee.

Summary

Issues:
- Confirmation of penalty under section 271(1)(b) of the Income Tax Act for alleged default committed by the assessee on 31.10.2011.

Analysis:
The Appellate Tribunal ITAT DELHI heard appeals against the order of the Ld. CIT(A) confirming a penalty of Rs. 10,000 under section 271(1)(b) of the Income Tax Act for a default by the assessee on 31.10.2011. The AO imposed the penalty for non-compliance with notices under sections 143(2) and 142(1) of the Act. The Ld. CIT(A) upheld the penalty for the default on 31.10.2011 but provided relief for non-compliance on 24.10.2011. The assessee challenged this decision before the Tribunal, arguing that the penalty was unjustified due to jurisdictional issues and lack of proper opportunity. The assessee cited a Tribunal decision where penalties were deleted for similar reasons.

The Tribunal considered the submissions and found merit in the assessee's argument regarding jurisdictional issues and lack of proper opportunity. It noted that the show cause notice did not specify the non-compliance for which the penalty was imposed. Additionally, the AO had given the assessee only 10 days to respond to 30 questions, which the Tribunal deemed insufficient opportunity. Citing a previous Tribunal decision, the Tribunal emphasized the importance of allowing adequate time for compliance before levying penalties under section 271(1)(b) of the Act.

Moreover, the Tribunal highlighted that assessments were completed under section 143(3) of the Act, indicating that subsequent compliance should be considered good compliance. It referenced a Supreme Court decision emphasizing that penalties should not be imposed for technical or venial breaches, but only for deliberate defiance or contumacious conduct. In light of these considerations and legal precedents, the Tribunal set aside the Ld. CIT(A)'s orders and deleted the penalty levied on the assessee.

In conclusion, the Tribunal allowed all appeals filed by the assessee, ruling in favor of the assessee and cancelling the penalty under section 271(1)(b) of the Income Tax Act.