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TMI Blog2025 (3) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy with the AO lies with framing of "best judgement assessment" under the provisions of Section 144 of the Act, as has been rightly done in the instant case but not to impose penalty u/s. 271(1)(b) of the Act again and again for the same default.
We hold that the authorities below were not justified in levying penalty for each default in not responding to the notices issued u/s. 142(1) of the Act. We therefore set aside the order of CIT(A) and restrict the penalty levied u/s. 271(1)(b) of the Act to the first default of the assessee in not complying with the notice u/s. 142(1) X X X X Extracts X X X X X X X X Extracts X X X X ..... e failure to respond to the notices. However, no reprieve was given by the ld. CIT(A) by observing as under : "6. DECISION: I have considered the facts of the case, the grounds of appeal and written submissions made by the appellant. The appellant has raised a number of grounds which are adjudicated as follows: 6.1 The first ground relates to the contention that there is no absolute failure on the part of the appellant and the appellant subsequently after due date replied to the notices in question. This argument, however, is not tenable as the assessment had to be completed in this case u/s. 144 because of the noncompliance of the appellant. And even the show cause notices u/s. 274 r.w.s. 271(1)(b) dated 30.03.2022 and 03.08.2022 rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfaction was to be recorded in the assessment order. This ground is accordingly rejected. 6.4 The next ground relates to the plea that the appellant had requested that the penalty proceeding be kept in abeyance. However, copy of no such request made by the appellant has been enclosed with the submission of the appellant. Thus, this contention is also without any evidence. This ground too is, accordingly, rejected. ME 6.5 I am accordingly inclined to confirm the penalty levied by the AO." 4. Ld. Counsel for the assessee reiterated the submissions made before the CIT(A) and submits that there is no justification in levying penalty for each default of noncompliance to the notices issued u/s. 142(1) of the Act. 5. Ld. Departmental Repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.10. From a perusal of the above provisions, we can understand that, notwithstanding anything contained in the provisions of clause (b) of Sub-section (1) of section 271, no penalty shall be imposed on the person or the assessee as the case may be, for any failure referred to in the said provision, if he proves that there was reasonable cause for the said failure. So it can be understood that penalty cannot be imposed, if the assessee is able to prove tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. In case of failure of the assessee to comply with the notice u/s. 142(1) of the Act, the remedy with the Assessing Officer lies with framing of "best judgement assessment" under the provisions of Section 144 of the Act, as has been rightly done in the instant case but not to impose penalty u/s. 271(1)(b) of the Act again and again for the same default. In this view of the matter, we hold that the authorities below were not justified in levying penalty for each default in not responding to the notices issued u/s. 142(1) of the Act. We therefore set aside the order of ld.CIT(A) and restrict the penalty levied u/s. 271(1)(b) of the Act to the first default of the assessee in not complying with the notice u/s. 142(1) of the Act. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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