2019 (4) TMI 563 - AT - Income Tax

Penalty u/s. 271(1)(b) - non-compliance of statutory notices issued u/s. 142(1) - assessment order passed by AO u/s. 148 r.w.s 143(3) not u/s 144 - HELD THAT - We further note that the assessee has made part compliance and the assessment order is not passed u/s. 144, therefore, relying on the judgment in the case of Ram Commercial Enterprises Ltd 1998 (10) TMI 13 - DELHI HIGH COURT wherein it was held that since the order was passed by the AO u/s. 143(3) and not 144. This means the subsequent compliance in the assessment proceedings was considered as good compliance and default committed earlier were ignored by AO. Therefore, it will be deemed that the assessee had made proper compliance and penalty u/s. 271(1)(b) should not be levied. - Decided in favour of assessee.

Summary

Issues:
Appeals against penalty orders under section 271(1)(b) of the Income-Tax Act, 1961 for assessment years 2009-10 & 2010-11.

Analysis:
The appeals were filed by the assessee against separate penalty orders passed by the Commissioner of Income-tax (Appeals), Ranchi, arising from the orders by the Assessing Officer (DCIT, Cir2, Ranchi) under section 271(1)(b) of the Income-Tax Act, 1961. The appeals involved common and identical issues for different assessment years, so they were clubbed together for a consolidated order. The assessee had made part compliance during the assessment proceedings by submitting required documents at various stages.

The counsel for the assessee argued that the assessee had made part compliance by submitting bank account statements during the assessment proceedings and sought adjournments for filing required documents. On the other hand, the revenue's representative contended that the assessee did not submit all the necessary documents as required by the Assessing Officer. The revenue argued for the imposition of penalties under section 271(1)(b) of the Act due to the alleged non-compliance.

After hearing both parties and reviewing the records, the Tribunal noted that the assessee had made part compliance in response to the notices issued under section 142(1) of the Act. The assessment was conducted under section 148 read with section 143(3) of the Act. The Tribunal observed that the assessee submitted required documents before the Assessing Officer at different times, but there were instances where the assessee could not appear before the AO on fixed hearing dates. The AO imposed penalties for non-compliance with the statutory notices issued under section 142(1) of the Act.

The Tribunal referred to a judgment of the Hon’ble Delhi High Court in a similar case and concluded that since the assessment order was passed under section 143(3) and not section 144 of the Act, subsequent compliance during the assessment proceedings was considered as good compliance, and earlier defaults were ignored. Therefore, the Tribunal held that the assessee had made proper compliance, and the penalties under section 271(1)(b) of the Act should not be levied. Consequently, the Tribunal allowed the appeals filed by the assessee, leading to the deletion of the penalties imposed for both assessment years 2009-10 & 2010-11.

In conclusion, the Tribunal ruled in favor of the assessee, allowing both appeals and deleting the penalties.