2023 (10) TMI 442 - AT - Income Tax

Penalty u/s 271(1)(b) - non-compliance of notice u/s 142(1) - whether there was a compliance by the assessee in response to the notice u/s 142(1) or not? - HELD THAT - As penalty levied u/s 271(1)(b) of the Act is a technical penalty and normally is required to be levied when there is a willful default on the part of the assessee for noncompliance in filing the document/information in response to the notice of the Assessing Officer. In the present case, the assessee, despite several opportunities, had not filed any reply before the Assessing Officer. Though, subsequently, the assessee has complied with the same. In our view, once there is deliberate or willful default on the part of the assessee then the penalty should be imposed. During the course of argument as submitted before us that the AO had passed the order u/s 143(3) r.w.s. 147 of the Act, when it was so represented before us, we had made it clear that the penalty is required to be deleted, however, on verification, we find that the Assessing Officer had passed the order u/s 144 r.w.s. 147 of the Act and not u/s 143(3) r.w.s 147 - Thus judgment/decision on the strength of which we had expressed deletion of penalty are not applicable, as there is deliberate and willful disobedience by the assessee in filing the response before the Assessing Officer, even after receiving the notice u/s 142(1) - Hence, we uphold the penalty imposed by the AO. Decided against assessee.

Summary

Issues involved:
The appeal challenges the order imposing penalty under section 271(1)(b) of the Income Tax Act for non-compliance with notices issued under sections 142(1) and 271(1)(b) for the assessment year 2014-15.

Grounds of appeal:
1. The order of the CIT(A) is alleged to be erroneous both on facts and in law, prejudicial to the appellant.
2. The Assessing Officer is criticized for levying a penalty without appreciating the facts of the case.
3. Failure to consider replies filed by the assessee in response to notices issued under sections 142(1) and 271(1)(b) of the Act.
4. Allegation that the appellant's failure to comply was due to circumstances beyond their control and not willful.
5. Claiming a reasonable cause for the failure, invoking section 273B of the Act.
6. Lack of proper opportunity for the appellant to be heard before the penalty was imposed.
7. Request for the flexibility to amend the grounds of appeal.

Facts of the case:
The appellant, an individual and director of two companies, filed their income tax return for the A.Y. 2014-15 on 25.7.2014, but it was deemed invalid due to pending e-verification. Subsequently, notices were issued under sections 148, 142(1), and 271(1)(b) of the Act for non-compliance.

Arguments presented:
The appellant's representative argued that responses were filed to show cause notices in the quantum proceedings and returns of income were submitted as required. On the other hand, the Revenue's representative contended that the appellant failed to respond to the notices promptly, leading to the penalty imposition.

Judgment and reasoning:
The Tribunal noted that the appellant did eventually respond to the notices, but only after the Assessing Officer had already completed the assessment and imposed the penalty. Emphasizing that penalties under section 271(1)(b) are for willful defaults, the Tribunal upheld the penalty due to the initial non-compliance by the appellant.

Decision and conclusion:
After considering the arguments and facts presented, the Tribunal dismissed the appeal, stating that the penalty imposed by the Assessing Officer was justified given the initial non-compliance by the appellant. The judgment was pronounced on 15th June 2023.