2023 (9) TMI 1034 - AT - Income Tax

Penalty order u/s 272A(1)(d) - non-cooperative attitude of the assessee - As argued penalty orders have been passed without application of mind as the orders do not disclose as to which notice was not complied with - as submitted that the assessments are completed u/s 153(C) and not u/s 144 as such there cannot be any penalty for non-compliances - HELD THAT - The penalty order does not mention as to which notice and under what provisions of law was issued, how served and which was not responded by the assessee. As the matter of fact, the assessments have been completed u/s 153C of the Act and no adverse inference was drawn against the assessee to pass an order on best judgment basis u/s 144C. The respective assessment orders cited before us in PB also do not show that if at the time of assessment. Ld. AO had made observation as to which specific document or information sought was not supplied. It appears from the penalty orders that the dispute was with regard to some external hard disc which was sought to be produced but was not produced by the assessee on the basis that it was not readable or corrupt and on that basis the AO issued notice at the time of conclusion of assessment. Unless it is established in the assessment order or even under the penalty order that at the time of assessment proceedings itself, Ld. AO had formed opinion that there was intentional non-compliance justifiying issuing notice u/s 271(1)(d) or u/s 272A(1)(d) of the Act, Ld. AO is not justified to levy penalty. Ld. CIT(A) has also sustained the addition on the basis of non-cooperative attitude of the assessee. To the mind of this Bench, non-cooperative attitude as such in itself cannot be the basis of imposing penalty under the relevant section, as above, without specifically bringing on record the specific notices, their specific non-compliances and the satisfaction of the ld. AO recorded during the assessment proceedings that there has been failure to comply with the said notice for which imposing penalty is warranted. Decided in favour of assessee.

Summary

Issues involved:
The judgment involves appeals arising out of penalty proceedings under sections 271(1)(b) and 272A(1)(d) of the Income Tax Act, 1961.

Details of the Judgment:

Issue 1: Penalty under section 271(1)(b) of the Act
- The appeals were taken up together for adjudication as they had a common background in the assessment and penalty orders.
- The penalty orders were passed without specifying the non-compliance with any notice, and assessments were completed under section 153C of the Act.
- The contention was that penalties were imposed without proper application of mind, citing a relevant judgment.
- The Bench observed that the penalty orders lacked specifics on non-compliance with notices and the basis for penalty imposition.
- It was noted that the assessments were completed under section 153C, and no adverse inference was drawn against the assessee.
- The Bench emphasized that penalties cannot be levied without establishing intentional non-compliance during assessment proceedings.
- The orders of the tax authorities were not sustained, and all appeals were allowed with the impugned penalty orders set aside.

Issue 2: Penalty under section 272A(1)(d) of the Act
- Separate appeals were filed for penalties imposed under section 272A(1)(d) for different assessment years.
- The argument presented was that penalties were unjustified due to lack of specific non-compliances and satisfaction of the assessing officer.
- The Bench highlighted that a non-cooperative attitude alone cannot be the basis for imposing penalties under the relevant section.
- It was emphasized that specific notices, non-compliances, and the satisfaction of the assessing officer during assessment proceedings must be recorded for penalty imposition.
- In light of the above, the orders of the tax authorities were not sustained, and all appeals were allowed with the impugned penalty orders set aside.

Conclusion:
The judgment addressed the issues related to penalty proceedings under sections 271(1)(b) and 272A(1)(d) of the Income Tax Act, emphasizing the need for specific non-compliance details and assessing officer satisfaction before imposing penalties. The appeals were allowed, and the impugned penalty orders were set aside.