Validity of Penalty under section 271(1)(b) if Assessee did not comply with notice under section 142(1) but Assessment order was passed under section 143(3), and not under section 144

 1,109 total views

Validity of Penalty under section 271(1)(b) if Assessee did not comply with notice under section 142(1) but Assessment order was passed under section 143(3), and not under section 144

Short Overview  Where assessee did not comply with notice under section 142(1) but assessment order was passed under section 143(3) and not under section 144, that meant that subsequent compliance of assessment proceedings was considered as good compliance and defaults committed earlier were ignored by AO and, therefore, levy of penalty under section 271(1)(b) was not justified.

Issue was as regards imposition of penalty under section 271(1)(b) for non-compliance by assessee with respect to statutory notices issued under section 142(1), when assessment was completed under section 143(3). 

 It is held that Where assessee did not comply with notice under section 142(1) but assessment order was passed under section 143(3) and not under section 144, that meant that subsequent compliance of assessment proceedings was considered as good compliance and defaults committed earlier were ignored by AO and, therefore, levy of penalty under section 271(1)(b) was not justified.

Decision: In assessee’s favour.

IN THE ITAT, DELHI BENCH

G.S. PANNU, V.P. & SUDHANSHU SRIVASTAVA, J.M.

Jai Gopal Sondhi v. ITO

ITA Nos. 6305, 6306, 6307 & 6308/Del/2017

28 October, 2020

Appellant by : Aayushi Ajmani, CA

Respondents by : M. Barnwal, Sr. DR

ORDER

Sudhanshu Srivastava, J.M.

These four appeals have been preferred by the above captioned assessees and have been filed against the separate orders of the learned Commissioner (Appeals) (CIT(A)) wherein he has upheld the imposition of penalties under section 271(1)(b) of the Income Tax Act, 1961 (hereinafter called ‘the Act’). Since these appeals involved identical issues, they were heard together and they are being disposed of through this common order for the sake of convenience.

2. The brief facts of the cases are that penalty under section 271(1)(b) has been imposed by the assessing officers for non-compliance by the assessees with respect to the statutory notices issued under the Act. In the case of Sh. Ashok Nayyar, the penalty levied is of Rs. 20,000, in the case of Sh. Jagjeet Singh Sahi, the penalty levied is of Rs. 70,000, in the case of Jai Gopal Sondhi, the penalty levied is of Rs. 90,000 and in the case of Sh. Mohit Monocha, the penalty levied is of Rs. 80,000.

3. The learned Authorized Representative (AR) appearing on behalf of all the four assessees and submitted that in all these four cases although the penalty proceedings had been initiated under section 271(1)(b) of the Act for alleged non-compliance, the assessing officer had passed the assessment orders under section 143(3) of the Act and not under section 144 of the Act meaning thereby that the subsequent compliance in the assessment proceedings was considered as a good compliance and the default committed earlier was condoned by the Assessing officer and, therefore, the impugned penalties under section 271(1)(b) could not have been levied by the assessing officer. Reliance was placed on the order of ITAT Delhi Bench in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. ADIT (2008) 115 TTJ 419 (Del) : 2008 TaxPub(DT) 0882 (Del-Trib) wherein a Co-ordinate Bench of this Tribunal had taken the view that where an assessee had not complied with notice issued under section 142(1) of the Act but the assessment order was passed under section 143(3) of the Act and not under section 144, it meant that subsequent compliance in assessment proceedings was considered as good compliance and defaults committed earlier were ignored by the assessing officer and therefore, levy of penalty under section 271(1) (b) of the Act was not justified. The learned Authorized Representative prayed that the penalties imposed should be deleted.

4. Per contra, the learned SR. Departmental Representative (DR) vehemently supported the levy of penalty and submitted that no reasonable cause had been demonstrated by the assessees for failure to comply with the statutory notices and, therefore, the penalty levied was legally correct and that a hyper technical view should not be taken and further that the subsequent passing of assessment orders under section 143(3) of the Act by the assessing officer did not mean that the defaults committed earlier by the assessees were ignored.

5. We have heard the rival submissions and have also perused the orders of the Lower Authorities. We note that although the assessing officer has levied penalty in all the four cases for non-compliance of statutory notices, all the same he has proceeded to frame the assessment order under section 143(3) of the Act. We also note that the Commissioner (Appeals), while dismissing the assessees’ appeals has observed on identical lines in all the four impugned orders that subsequent compliance by the assessee to the statutory notices cannot be a basis for non levy of penalty on account of earlier defaults. The learned Commissioner (Appeals) has also observed in all the four impugned orders that the claim of the assessees that no penalty is leviable since the assessment orders had been issued under section 143(3) was not acceptable as the impugned penalty had been levied for specific defaults on specific dates. We are of the considered opinion that we are bound by the judicial precedent laid down by the Co-ordinate Bench of this Tribunal in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. ADIT (supra) wherein the Tribunal had taken a view that where the assessee had not complied with notice under section 142(1) of the Act but the assessment order was passed under section 143(3) of the Act and not under section 144 of the Act, that meant that subsequent compliance of assessment proceedings was considered as good compliance and defaults committed earlier were ignored by assessing officer and, therefore, levy of penalty under section 271(1)(b) was not justified. The facts in these four appeals are identical to the facts in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. ADIT (supra) and further the Department has also not pointed out any order in favour of the Department in this regard. Therefore, respectfully following the order of the Co-ordinate Bench of this Tribunal in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. ADIT (supra), we set aside the impugned orders in all the four appeals and direct the assessing officer to delete the penalty.

6. In the final result, all the four appeals of the captioned assessees stands allowed.

Leave a Comment

Your email address will not be published.

the taxtalk

online portal for tax news, update, judgment, article, circular, income tax, gst, notification Simplifying the tax and tax laws is the main motto of the team tax talk, solving