2023 (2) TMI 407 - AT - Income Tax

Penalty levied u/s 271(1)(b) and / or 272A(1)(d) - assessee failed to comply notice under Section 142(1) - HELD THAT - The penalty could be imposed for first default and not for each and every notices which remained noncomplied. Before us assessee vehemently submitted that in February, 2021, it was a nationwide severe pandemic of Covid and everyone was taking proper care and caution, due to which the assessee could not make compliance of notice dated 03/02/2021. We find convincing force in the submission of ld. AR of the assessee that corresponding period during which the assessee could not make compliance of notice, issued by AO was a severe Covid-19 pandemic period. However, thereafter the assessee made full compliance of various notices issued by AO and ultimately the explanation or submission furnished by assessee was accepted and passed assessment order. As decided in Akhil Bhartiya Prathmik Shmshak Sangh Bhawan Trust 2007 (8) TMI 386 - ITAT DELHI-G held that where assessee had not complied with notice under Section 142(1) but assessment order was passed under Section 143(3) and not under Section 144, that meant that subsequent compliance in the assessment proceedings was considered as a good compliance and defaults committed earlier were ignored by Assessing Officer and, therefore, penalty under Section 271(1)(b) was not justified - thus direct the Assessing Officer to delete the impugned penalty. In the result, ground of appeal raised by assessee is allowed.

Summary

Issues Involved:
- Appeals against penalty levied under Section 271(1)(b) and/or 272A(1)(d) of the Income Tax Act, 1961 for Assessment years 2013-14 to 2019-20.

Analysis:

Issue 1: Penalty Imposed for Non-Compliance of Notice
- The appellant challenged the penalty levied under Section 271(1)(b) for non-compliance of a notice dated 03/02/2021. The Assessing Officer initiated and levied a penalty of Rs. 10,000 for this non-compliance. The appellant argued that due to the Covid-19 pandemic, there was a delay in responding to the notice, and all details were eventually submitted to the Assessing Officer. The ld. CIT(A) acknowledged that necessary compliance was made before the assessment was finalized under Section 143(3) r.w.s. 153A. The ld. CIT(A) upheld the penalty in one appeal but granted relief in two other appeals, considering the pandemic situation and the overall compliance history of the assessee.

Issue 2: Legal Arguments and Precedents
- The appellant's representative relied on various legal precedents and decisions of Coordinate Benches to support the argument that subsequent compliance in the assessment proceedings, leading to the final assessment under Section 143(3), should be considered as good compliance. The appellant cited cases such as Akhil Bhartiya Prathmik Shmshak Sangh Bhawan Trust Vs ADIT and other similar decisions to emphasize that penalties under Section 271(1)(b) should not be imposed if defaults committed earlier were rectified during the assessment process.

Issue 3: Tribunal's Decision
- The Tribunal, after considering the submissions of both parties and the legal arguments presented, found merit in the appellant's contentions. The Tribunal noted that the assessment was completed under Section 153A/143(3) after the appellant's compliance, despite initial delays due to the pandemic. Citing the legal position established in previous cases, the Tribunal directed the Assessing Officer to delete the imposed penalty, stating that the compliance made during the assessment process was sufficient, and no penalty under Section 271(1)(b) should be levied on the appellant.

Final Decision:
- The Tribunal allowed the appeal of the assessee, directing the deletion of the impugned penalty. Subsequently, in similar appeals for the Assessment years 2014-15 to 2019-20, the penalties were also deleted based on the decision made in the primary appeal for the year 2013-14.

This comprehensive analysis covers the legal judgment involving the challenges against the penalties imposed under the Income Tax Act for various assessment years.