2025 (3) TMI 716 - AT - Income Tax

Levy of penalty u/s 271(1)(b) - non-compliance of notice issued u/s 142(1) - HELD THAT - As evident from the record that the AO had sent the notice dated 19.07.2018 issued u/s 142(1) through the e-mail. Assessee did not see his e-mail before the compliance date; therefore the same remained un-complied with. The assessee ensured compliance later on which resulted completion of the assessment u/s 143(3) of the Act. Hon ble Supreme Court in the case of Hindustan steel Ltd. 1969 (8) TMI 31 - SUPREME COURT has held that an order-imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. We have taken note of the fact that the assessee has ensured regular compliance of the statutory notices after August 2018. Thus it appears that the provisions of Section 271(1)(b) have been used by the AO as a deterrent to ensure timely compliance. We are satisfied with the reasons of non-compliance of the notice dated 19.07.2018 issued u/s 142(1) as there is no deliberate defiance of law or is guilty of conduct contumacious or dishonest or act in conscious disregard of the legal obligation. We therefore hereby set aside the impugned order and delete the penalty of Rs. 10, 000/-. Aappeal of the assessee allowed.

Summary

In the case before the ITAT Delhi, the appeal concerns the levy of a Rs. 10,000 penalty under Section 271(1)(b) of the Income Tax Act, 1961, due to the assessee's non-compliance with a notice issued under Section 142(1). The assessee, an Engineering Consultant, initially failed to comply with the notice sent via email but later ensured compliance, leading to the completion of the assessment under Section 143(3). The Senior Departmental Representative argued for the penalty's imposition, citing the assessee's tactical non-compliance to avoid investigation.The Tribunal referenced the Supreme Court's decision in Hindustan Steel Ltd. 83 ITR 26, emphasizing that penalties for statutory non-compliance are quasi-criminal and should not be imposed unless there is deliberate defiance of law or contumacious conduct. The Tribunal found no evidence of such conduct by the assessee, noting subsequent compliance with statutory notices. Consequently, the Tribunal set aside the impugned order and deleted the penalty, allowing the appeal in favor of the assessee. The decision was pronounced on March 12, 2025.