2016 (12) TMI 940 - 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 u/s 271(1)(b) of ?10,000 each confirmed by CIT(Appeals).

Analysis:
1. The AO imposed penalties under section 271(1)(b) due to non-compliance by the assessee with the notice issued under section 143(2) of the Income Tax Act. The assessee failed to attend and submit details as requested, leading to the penalty imposition.

2. The assessee argued that due to various reasons, including the AO's refusal to acknowledge their presence and the inability to submit details, they were prevented from complying. The assessee approached higher authorities, but no action was taken. The CIT(Appeals) upheld the penalty, stating that the assessee did not furnish any details during the assessment proceedings, akin to best judgment orders under section 144.

3. The ITAT considered the case law cited by the assessee, emphasizing that penalties should not be levied for technical breaches. The ITAT noted that the assessee's non-attendance was due to reasonable cause, and the penalty was not justifiable. The ITAT referred to the Hindustan Steel Ltd. case, stating that penalties need not be levied for technical breaches.

4. The ITAT found that the assessment order was passed under section 143(3) and not section 144, as contended by the CIT(Appeals). The ITAT held that the penalty imposition was unwarranted, considering the circumstances and legal precedents. The ITAT allowed the assessee's appeal, setting aside the penalties levied by the lower authorities.

5. Ultimately, the ITAT ruled in favor of the assessee, emphasizing that the penalty was unjustified given the technical nature of the breach and the reasonable cause for non-compliance. The ITAT overturned the decisions of the lower authorities and deleted the penalties imposed, aligning with legal principles and precedents.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, the legal reasoning behind the decisions, and the final ruling by the ITAT in favor of the assessee, emphasizing the lack of justification for the penalties imposed.