2024 (8) TMI 930 - AT - Income Tax

Penalty imposed u/s 272A(1)(d) - non-compliance of notices/questionnaires issued u/s 142(1) - HELD THAT - Admittedly, in the present case, the assessee failed to respond certain notices of the AO, which were issued u/s 143(2) and 142(1) of the Act, however, in response, subsequent notices, the assessee has made necessary replies and accordingly assessment was completed u/s 143(3), therefore, respectfully, following the analogy drawn in the decision referred, we find that the penalty-imposed u/s 272A(1)(d) of the Act is not justifiable in the present case. AO himself has deemed to have condoned the absence of assessee or his Authorized Representative on earlier occasions, subsequently the necessary information and evidences were furnished by the assessee to assist in the completion of the assessment and since assessment was completed u/s 143(3) of the Act, the penalty u/s 272A(1)(d) cannot be imposed. Considering the ratio of law followed in various judicial decision, we find it appropriate to set aside the order of Ld. CIT(A), and direct the Ld. AO to delete the penalty. Decided in favour of the assessee.

Summary

Issues:
Penalty u/s 272A(1)(d) for non-compliance of notices u/s 142(1)

Detailed Analysis:
The appeal was filed against the penalty imposed on the assessee for non-compliance of notices issued under section 142(1) of the Income Tax Act. The assessee had responded to subsequent notices during the assessment proceedings, leading to the completion of assessment under section 143(3) of the Act. The Assessing Officer (AO) initiated penalty proceedings under section 272A(1)(d) due to the assessee's failure to respond to specific notices. The AO imposed a penalty of Rs. 20,000 for two defaults related to non-compliance with notices issued under sections 143(2) and 142(1). The assessee contended that the penalty was unjustified, citing relevant case laws that emphasized the completion of assessment under section 143(3) as condoning earlier non-compliances. The assessee requested the deletion of the penalty based on these arguments.

The assessee relied on judgments such as Rambhai Kanjibhai Patel vs. The DCIT and Saleem Ahmed Khan vs. Income Tax Officer to support their contention that penalty under section 272A(1)(d) was not warranted when the assessment had been completed under section 143(3). These cases highlighted that the AO is deemed to have condoned earlier non-compliances when subsequent details are furnished leading to the completion of assessment. The assessee argued that the penalty for non-compliance should be deleted based on these legal principles.

The Appellate Tribunal considered the submissions of both parties and reviewed the case laws cited by the assessee. The Tribunal found that since the assessee had responded to subsequent notices and the assessment was completed under section 143(3), the penalty under section 272A(1)(d) was not justifiable. The Tribunal concluded that the AO had condoned the earlier non-compliances by accepting the subsequent information provided by the assessee. Therefore, the Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and directed the AO to delete the penalty imposed under section 272A(1)(d).

In conclusion, the Tribunal allowed the appeal of the assessee, ruling in favor of deleting the penalty imposed for non-compliance with notices under section 142(1) based on the completion of assessment under section 143(3) and relevant legal precedents.