2017 (9) TMI 115 - AT - Income Tax

Penalty u/s 271(1)(b) - alleged breach or non-compliance - failure to comply with the 2 statutory notices/date fixed for hearing - Demand in the quantum proceedings reduced to nil - Held that - It is seen that nowhere the Assessing Officer has mentioned about any particulars of statutory notice/s for which there was any default on part of the assessee. Failure to comply with certain notices on a particular date was due to reasonable cause as highlighted by the assessee not only during the course of the assessment 8 proceedings but also before the Assessing Officer and Learned CIT(Appeals) in the impugned penalty proceedings and hence penalty cannot be levied in such circumstances. Demand in the quantum proceedings has been reduced to nil , after giving effect to the first appellate order and there has been no substantive non-compliance either during the course of the assessment proceedings or during the appellate proceedings. In such circumstances such an alleged breach or non-compliance is mere technical and venial in nature and therefore, penalty should not be levied for such venial breach. Accordingly, the levy of penalty of ₹ 20,000/- u/s 271(1)(b) for all the assessment years is unsustainable for the reasons given above and is directed to be deleted. Thus, grounds raised by the assessee are allowed.

Summary

Issues involved:
- Penalty proceedings u/s 271(1)(b) for A.Ys. 2002-03 to 2008-09 due to non-compliance with statutory notices.

Detailed Analysis:
1. The appeals were filed against a common impugned order for penalty proceedings u/s 271(1)(b) for multiple assessment years. The issues were heard together due to identical facts. The penalty of ?20,000 was imposed for failure to comply with statutory notices on specific dates.

2. The assessee challenged the penalty, citing reasons for non-compliance, including vague penalty notice, compliance through replies submitted via dak counter or registered post, difficulties due to multiple assessments, and the detention of a key person responsible for tax matters. The assessee claimed a reasonable cause for the delay in compliance.

3. The Assessing Officer and CIT (Appeals) upheld the penalty, rejecting the reasons provided by the assessee. They emphasized the importance of timely compliance with statutory notices and the lack of valid reasons for non-compliance. The burden of proof was on the taxpayer to establish a reasonable cause for failure to comply.

4. The Tribunal analyzed the case, noting the lack of specificity in the penalty notice and the assessee's submissions during the assessment proceedings. The Tribunal acknowledged the delay in compliance but considered the overall conduct of the assessee and the reasons provided. It found that the reasons presented by the assessee constituted a reasonable cause for the delay in compliance.

5. Additionally, the Tribunal highlighted that the demand in the quantum proceedings had been reduced to nil, indicating technical and venial non-compliance. Therefore, the Tribunal ruled in favor of the assessee, concluding that the penalty of ?20,000 for all assessment years was unsustainable and directed its deletion.

6. The Tribunal's decision applied to all the assessment years under appeal, and the penalties u/s 271(1)(b) were directed to be deleted. The appeals of the assessee were allowed, and the penalty was deemed unwarranted based on the reasonable cause presented and the technical nature of the non-compliance.