2014 (7) TMI 416 - AT - Income Tax

Penalty u/s 271(1)(b) of the Act - Sufficient time for reply not provided - Held that - The decision in Kamla Madan vs. DCIT, Central Circle 21, New Delhi 2014 (7) TMI 250 - ITAT DELHI follwed - the notices u/s 142 (1) of the Act were giving a very short time - when these notices were served does not find mention in the penalty orders - the assessee was not provided sufficient time to respond to the notice - there is no mention of any non-cooperation by the assessee with the AO during the assessment proceedings there was no case for the imposition of penalty u/s 271(1)(b) of the Act Decided in favour of Assessee.

Summary

Issues:
Appeal against penalty imposed under section 271(1)(b) of the Income-tax Act, 1961 without adequate opportunity for compliance and non-cooperation during assessment proceedings.

Analysis:
The appeals filed by the assessee challenge the penalty imposed under section 271(1)(b) of the Income-tax Act, 1961, arising from a search and seizure operation conducted on the assessee's premises. The Assessing Officer issued a notice under section 142(1) of the Act, but the assessee failed to attend the hearing and provide necessary documents. Subsequently, a penalty of Rs. 10,000/- each was levied for all assessment years. The CIT (A) upheld the penalty, leading to the appeal by the assessee.

During the hearing, the assessee's representative highlighted that similar penalties imposed by the Assessing Officer and confirmed by the CIT (A) in other cases had been deleted by various Benches of the ITAT. The ITAT, Delhi Bench 'D', New Delhi, in the case of Kamla Madan vs. DCIT, Central Circle 21, New Delhi, and the ITAT, Delhi Bench 'E', New Delhi, in the case of Ms. Manjusha Madan vs. DCIT, Central Circle 21, New Delhi, both deleted penalties citing inadequate time provided for compliance and lack of non-cooperation by the assessee during assessment proceedings.

The ITAT referred to the principle established by the Hon'ble Apex Court in Hindustan Steel vs. State of Orissa, emphasizing that penalties for failure to fulfill statutory obligations should not be imposed unless there is deliberate defiance of the law or contumacious conduct. The ITAT concluded that the penalties in the present appeals should be deleted based on the discussions and precedents, setting aside the orders of the CIT (A) and deleting the penalty.

In line with the decisions in similar cases, including Roop Kishore Madan vs. DCIT and Sanya Hospital & Diagnostic vs. DCIT, Central Circle 21, New Delhi, where penalties were also deleted by the ITAT, the penalties in the present appeals were deemed unjustified and were consequently deleted.

In conclusion, all seven appeals filed by the assessee were allowed, and the penalties imposed under section 271(1)(b) of the Income-tax Act, 1961 were set aside and deleted.