2020 (11) TMI 363 - AT - Income Tax

Penalty u/s 271(1)(c) - non complying notices issued u/s 142(1) - HELD THAT - We notice that in the assessment order passed u/s 143(3) r.w.s. 147 of the Act, AO himself acknowledges that notice u/s 142(1) was issued and served on the assessee and in response, assessee has made his submission, through mail, which clearly indicates that assessee has complied the notices issued u/s 142(1) of the Act, therefore the penalty levied u/s 274 r.w.s. 271(1)(b) is not proper and justifiable. Accordingly, the grounds raised by the assessee are allowed.

Summary

Issues:
1. Reopening of assessment for undisclosed interest income
2. Dismissal of appeal by Ld. CIT(A)
3. Allegations of improper service of notices and communication
4. Imposition of penalty under section 271(1)(c) of the Act
5. Compliance with notice u/s 142(1) and penalty imposition

Analysis:
1. The appeal was filed against the order of the Ld. Commissioner of Income Tax (Appeals) for AY 2012-13. The case involved the reopening of assessment due to undisclosed interest income. The assessee initially filed a return of income but later, upon receiving information about undeclared interest income, the case was reopened under section 147. The Assessing Officer (AO) made additions and levied a penalty under section 271(1)(c) of the Act.

2. The assessee appealed the AO's decision before the Ld. CIT(A), who dismissed the appeal after considering the submissions. The grounds of appeal included allegations of improper service of notices and communication, discrepancies in addresses, and the imposition of penalty. The Ld. CIT(A) upheld the penalty of ?10,000 levied by the AO under section 271(1)(c) of the Act.

3. The appellant raised concerns regarding the service of notices and communication, arguing that they were not properly delivered to the given address. The Ld. AR contended that the notice u/s 142(1) was complied with, indicating the assessee's participation in the assessment proceedings. The Tribunal observed that the AO acknowledged the service of notices and the assessee's responses, leading to the conclusion that the penalty imposed was unjustifiable.

4. The Tribunal considered the submissions and evidence on record, noting that the appellant had indeed complied with the notices issued by the AO. Consequently, the Tribunal allowed the grounds raised by the assessee, leading to the appeal being allowed. The penalty under section 271(1)(c) was deemed improper and was set aside.

5. The Tribunal justified the delay in pronouncing the order beyond 90 days from the hearing's conclusion due to exceptional circumstances, such as the nationwide lockdown. Citing legal precedents and the impact of the COVID-19 pandemic on judicial proceedings, the Tribunal clarified the extension of time limits for pronouncing orders. The decision to allow the appeal and dismiss the AO's appeal was made in accordance with the exceptional circumstances and the prevailing legal framework.

This comprehensive analysis covers the key issues addressed in the legal judgment, detailing the arguments presented, the Tribunal's findings, and the impact of extraordinary circumstances on the judicial process.