2024 (3) TMI 521 - AT - Income Tax

Levy of penalty u/s 272A(1)(d) - non compliance to the notice(s) issued during the course of assessment proceedings - assessee was asked to comply within a period of two hours and that to on a day which was a public holiday - as submitted that in the said penalty notice, there is no mention as to which specific notice issued by the AO during the course of assessment proceedings - HELD THAT - There were infact three notices which were issued on the same date whereby the assessee was asked to comply within a period of two hours and that to on a day which was a public holiday. Given that AO has to complete the assessment proceedings within the limitation period involving number of cases, the Assessing officer may be working on a public holiday beyond the call of duty and calling for the necessary information/documentation and thus, there is an expectation from the assessees to co-operate and adhere to the notices asking for the necessary information, documentation in order to enable the Assessing officer to complete the assessment proceedings. Expectation must meet the test of reasonableness and the assessee be provided reasonable time to respond to the various notices. In the instant case, it is manifestly clear that the AO for reasons best known to him has issued three notices one after the another on the day which was a public holiday and asking the assessee to respond to the said notices within period of two hours which is clearly not reasonable and in any case, cannot be a basis to press charges as far as the deliberate non-compliance on the part of the assessee. Considering the fact that substantial compliances have been made by the assessee and the assessment has been completed u/s 143(3) of the Act, we find that there is no justifiable basis for levy of penalty u/s 272A(1)(d) of the Act. The penalty so levied is hereby directed to be directed. Appeal of the assessee is allowed.

Summary

Issues:
The judgment involves the sustenance of penalty under section 272A(1)(d) of the Act based on non-compliance with notices issued during assessment proceedings.

Details of Judgment:

1. Assessee's Challenge:
The assessee challenged the levy of penalty amounting to Rs. 60,000 under section 272A(1)(d) of the Act, contending that the penalty notice did not specify the specific charge against the assessee, leading to a failure on the part of the NFAC to provide a clear basis for the penalty.

2. Assessee's Compliance:
The assessee submitted that it had complied with the various notices issued during the assessment proceedings, providing details of responses to each notice issued by the AO, emphasizing that the penalty notice lacked specificity regarding the alleged non-compliance.

3. Violation of Natural Justice:
The assessee highlighted that it was granted less than two days to respond to several notices, which was deemed a violation of the principle of natural justice. Reference was made to court decisions emphasizing the importance of providing reasonable time for responses in line with natural justice principles.

4. AO's Actions:
The AO issued three notices on a public holiday, asking for responses within a very short period, indicating a violation of natural justice principles by not granting sufficient time for the assessee to comply with the notices.

5. Legal Precedent:
Citing the Hindustan Steel Ltd. case, it was argued that penalty imposition should be based on deliberate defiance of law or contumacious conduct. Given the substantial compliance by the assessee despite inadequate response time, it was contended that the penalty should be deleted.

6. Revenue's Position:
The Revenue argued that the assessee failed to respond to the notices issued during the assessment proceedings and did not establish any reasonable cause for non-compliance, leading to the imposition of penalty amounting to Rs. 60,000, which was upheld by the Ld. CIT(A).

7. Judgment and Decision:
Upon review, it was found that the assessee had indeed responded to the notices by furnishing necessary information and documentation during the assessment proceedings. The issuance of multiple notices on a public holiday with very short response times was deemed unreasonable. As substantial compliance was evident, and the assessment was completed, the penalty under section 272A(1)(d) was deemed unjustified and directed to be deleted. Consequently, the appeal of the assessee was allowed.

Separate Judgment:
The judgment was delivered by Shri. Vikram Singh Yadav, AM.

Order pronounced in the open Court on 05/03/2024.