No penalty U/s 271(1)(b) if the assessment is completed U/s 143(3) & not ex-parte U/s 144

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No penalty U/s 271(1)(b) if the assessment is completed U/s 143(3) & not ex-parte U/s 144

 

 

The imposition of penalty for non compliance is a regular feature, mostly after the national faceless assessment scheme. However, it should not be imposed in a case wherein assessment is completed U/s 143(3) & not ex-parte U/s 144. This has been held in various cases. Here is  a case before ITAT Chandigarh in the case of Sardarmal Kothari, Chennai vs ACIT wherein the Tribunal held as under:

 

“We have heard both sides. Perused the materials on record and the orders of authorities below. We have gone through the decisions relied on by the Counsel for the Assessee. In both these decisions, the Tribunal held that when an assessment has been made under sec. 143(3) and not under sec.144 of the I.T. Act, it means that subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the Assessing Officer and, therefore, there is no case for levy of penalty under sec.271(1)(b) of the Act. In the present case, the assessee seems to have cooperated with the assessment proceedings by responding to the notices and filing information called for and the assessment was completed under sec.143(3) and not sec.144 of the Act. Therefore, we hold that there is no case for levy of penalty under sec.271(1)(b) of the I.T. Act the assessee’s case.”

 

Income Tax Appellate Tribunal – Chennai

Sardarmal Kothari, Chennai vs Assessee

            IN THE INCOME TAX APPELLATE TRIBUNAL

                      “A” BENCH, CHENNAI

      BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND

      SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER

                    ITA No.2104/Mds/2012

                     Asst. Years : 2009-10

SARDARMAL KOTHARI,                  The Asst. Commissioner of Income

No.664, T.H. Road, Tondiarpet,      Tax, Business Range-VII

CHENNAI – 600 081.               v. CHENNAI.

PAN : AADPK9902A.

  (Appellant)                              (Respondent)

                  Appellant by : Mr. Uttamchand P. Jain, CA

                 Respondent by : Mr. Shaji P. Jacob, Addl.CIT

                        Date of hearing : 05 Mar 2013

                 Date of Pronouncement : 08 Mar 2013

                           O R D E R

PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER :

This is an appeal filed by the assessee against the order of Commissioner of Income Tax (Appeals)-IX, Chennai, dated 30.8.2012 for the Asst. Year 2009-10. The only grievance of the assessee in this appeal is that the Commissioner of Income Tax  (Appeals) erred in confirming the penalty of .10,000/- levied by the Assessing Officer under sec.271(1)(b) of the I.T. Act.

  1. The Assessing Officer levied penalty of .10,000/- under sec.271(1)(b) of the Act as the assessee did not respond to notices issued by him under sec.143(2) & 142(1) of the I.T. Act on three occasions, ie., on 2.9.2010, 8.9.2011 and 15.10.2011, fixing the dates of hearing on 20.9.2010, 12.9.2011 and 20.10.2011 respectively. Subsequently, the assessment was made under sec.143(3) of the Act wherein the assessee appeared and furnished information called for by the Assessing Officer. The assessee preferred appeal before the Commissioner of Income Tax (Appeals) against levy of penalty contending that no Show Cause Notice has been issued by the Assessing Officer before levy of penalty under sec.271(1)(b) of the Act.
  2. The assessee contended that he has cooperated with the Assessing Officer by responding to the notices issued thereafter and the assessment was completed under sec.143(3) of the Act and, therefore, since he has cooperated with the assessment proceedings complying with the notices subsequently issued and since the assessment was made under sec.143(3) of the Act and it was not an ex-parte assessment under sec.144 of the Act, the Assessing Officer should not have levied penalty under sec.271(1)(b) of the Act. He placed reliance on the decision of Delhi Bench of the ITAT in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. Asst. Director of Income Tax (115 TTJ 419) and the decision of Ahmedabad Bench of the Tribunal in the case of Swarnaben M. Khanna & Others v. DCIT (132 TTJ 1). However, the Commissioner of Income Tax (Appeals) confirmed the penalty levied by the Assessing Officer on the ground that the assessee did not respond to the notices issued by the Assessing Officer.
  3. The Counsel for the Assessee reiterates the submissions made before the Commissioner of Income Tax (Appeals) and submits that there is no justification in levying penalty, especially when the assessment was made under sec.143(3) of the Act and not under sec.144 of the I.T. Act.
  4. Departmental Representative supported the orders of lower authorities.
  5. We have heard both sides. Perused the materials on record and the orders of authorities below. We have gone through the decisions relied on by the Counsel for the Assessee. In both these decisions, the Tribunal held that when an assessment has been made under sec. 143(3) and not under sec.144 of the I.T. Act, it means that subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the Assessing Officer and, therefore, there is no case for levy of penalty under sec.271(1)(b) of the Act. In the present case, the assessee seems to have co-operated with the assessment proceedings by responding to the notices and filing information called for and the assessment was completed under sec.143(3) and not sec.144 of the Act. Therefore, we hold that there is no case for levy of penalty under sec.271(1)(b) of the I.T. Act the assessee’s case.
  6. In the result, the appeal of the assessee is allowed.
  7. Order pronounced on Friday, the 8th day of March 2013, at Chennai.

          Sd/-                                     sd/-

  ( N.S. SAINI )                       (CHALLA NAGENDRA PRASAD)

ACCOUNTANT MEMBER                            JUDICIAL MEMBER

Chennai,

Dated : 08th March    2013.

Jls.

Copy to:-

                       (1)    Appellant

                       (2)    Respondent

                       (3)    CIT-(A),

                       (4)    C.I.T.,

                       (5)    D.R. (6) Guard file

 

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