2016 (12) TMI 742 - AT - Income Tax

Levy of penalty u/s 271(1(b) - non attendance of the assessee - Held that - The facts emanating from the orders of the authorities below the assessee was given notice which was served on 11-01-2013 by which the assessee was requested to attend and submit the details on 15-01-2013. It was this non attendance of the assessee against which penalty u/s 271(1)(b) was levied. On 15-02-2013 a show cause letter was issued which was served on 18-02-2013 in response to which the assessee submitted a reply. Thereafter assessment order u/s 143(3) was passed. Now perusal of the facts clearly indicate that this was a case of search and seizure on a big group. Four days time to submit details in such a case is not at all reasonable from any stretch of imagination. Further more the assessee did reply to the subsequent show cause notice and assessment was framed u/s 143(3) of the I.T. Act. This has also to be looked into on the anvil of assessee s submission that the AO has refused the assessee recording of attendance on the specified date and for which the assessee has petitioned to higher authorities.In these circumstances, in our opinion, there was a reasonable cause for non attendance of the assessee. Hence on the anvil of section 273B penalty is not leviable. As the above fact clearly indicates it is a technical breach and in such circumstances, as held by Hon ble Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa 1969 (8) TMI 31 - SUPREME Court penalty need not be levied. Hence in the background of aforesaid discussion and precedent have no hesitation in deleting the levy of penalty. - Decided in favour of assessee

Summary

Issues:
Levy of penalty under section 271(1)(b) of ?10,000 each confirmed by CIT(Appeals).

Analysis:
The case involved appeals by the assessee against a common order of the CIT(Appeals) related to assessment years 2005-06 to 2011-2012. The primary issue raised was the confirmation of the penalty under section 271(1)(b) of ?10,000 each by the CIT(Appeals). The penalty was imposed due to the assessee's non-compliance with the notice under section 143(2) of the Income Tax Act, issued on 18-01-2013, and subsequent failure to attend and submit details. The AO passed the assessment order under section 143(3) of the IT Act, leading to the imposition of the penalty.

Before the CIT(Appeals), the assessee argued that due to various reasons, including the AO's refusal to admit their presence and declining to review documents, the assessee was unable to comply with the notice. The assessee also highlighted interactions with higher authorities regarding the alleged harassment by the AO and the prevention from submitting details. The CIT(Appeals, however, upheld the penalty, emphasizing the lack of compliance by the assessee despite the assessment orders being passed under section 143(3) and not 144, indicating non-furnishing of details.

The ITAT considered the submissions and facts of the case, noting that the time given for submission of details after a search and seizure was unreasonable. The ITAT also observed that the assessee had replied to subsequent show cause notices and that the AO's refusal to record the attendance of the assessee was a significant factor. Relying on the decision of the ITAT, Delhi Bench in a similar case, the ITAT concluded that there was a reasonable cause for the non-attendance of the assessee, making the penalty under section 271(1)(b) not leviable.

The ITAT further emphasized that the CIT(Appeals erred in distinguishing the relevant case law and that the technical breach observed did not warrant the imposition of a penalty, citing the precedent set by the Hon'ble Apex Court. Consequently, the ITAT allowed the appeals filed by the assessee, setting aside the orders of the authorities below and deciding in favor of the assessee.