The Income Tax Appellate Tribunal (ITAT) held that every ...

Tribunal Rules Each Non-Compliance Notice Under Sec 142(1) Needs Separate Penalty; Single Notice Invalidates Penalty.

December 5, 2024

Case Laws     Income Tax     AT

The Income Tax Appellate Tribunal (ITAT) held that every non-compliance with a notice u/s 142(1) gives a separate cause of action for levying penalty u/s 271(1)(b). There must be a specific initiation and issuance of notice u/s 271(1)(b) for each non-compliance, and the assessee must be put on notice. Initiating penalty proceedings and levying penalty u/s 271(1)(b) for non-compliance with a notice u/s 142(1) is incorrect. The Assessing Officer (AO) issued only one notice u/s 271(1)(b), which the assessee claimed was never received, and the AO imposed an ex-parte penalty u/s 271(1)(b), breaching principles of natural justice. The Commissioner of Income Tax (Appeals) [CIT(A)] did not verify the assessee's contentions and explanations regarding non-compliance with notices u/s 271(1)(b) and dismissed the appeal without calling for records or specifying the non-compliance upheld. The ITAT accepted the assessee's contentions and deleted the penalty, considering the reasonable explanation for not attending the AO's hearing and the provisions of Sections 273B and 271(1)(b).

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