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Facts
The assessee filed an appeal against a penalty order of Rs. 40,000/- levied under Section 271(1)(b) for non-compliance with notices issued under Section 142(1). The penalty was confirmed by the CIT(A) as the assessee failed to provide a reasonable cause for non-compliance.
Held
The Tribunal held that the penalty under Section 271(1)(b) is for non-compliance with a notice and is independent of the quantum of the assessment order. Therefore, the penalty was confirmed to the extent of Rs. 10,000/- for one default.
Key Issues
Whether the penalty levied under Section 271(1)(b) for non-compliance with notices can be sustained when the assessment proceedings were restored to the AO for fresh assessment, and if the assessee provided a reasonable cause for non-compliance.
Sections Cited
271(1)(b), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI SS VISWANETHRA RAVI & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2016-17 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 20.08.2025.
The Assessing Officer (A.O.) has levied a penalty of Rs. 40,000/- u/s 271(1)(b) of the Income-tax Act, 1961 (“the Act”) for non- compliance with notices issued u/s 142(1) on 17.08.2023, 15.09.2023, 29.09.2023 and 16.10.2023. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), however, confirmed the penalty on the ground that the assessee failed to establish reasonable cause for such non-compliance.
The Ld. Authorized Representative (A.R.) submitted that the assessment order, in relation to which the penalty proceedings were initiated, has already been set aside to the file of the A.O. for framing a fresh assessment. It was therefore prayed that the penalty matter may also be restored to the file of the A.O.
The Ld. Departmental Representative (D.R.), on the other hand, relied on the orders of the lower authorities.
We have heard the rival submissions and perused the material available on record. The A.O has levied penalty of Rs 40,000/- u/s 271(1)(b) for non-compliance of four notices issued u/s 142(1) of the Act. The A.O has issued first notice u/s 142(1) on 17.08.2023 calling for certain details by 01.09.2023, which was not complied. The subsequent three notices issued are calling for the same information.
The assessee has not been able to substantiate the reasonable cause for non compliance of the notice issued on 17.08.2023. We therefore confirm the penalty for the default of notice dated 17.08.202 to the extent of Rs.10,000/- for one default. We do not agree with the Ld. AR, request to restore the penalty proceeding back to A.O as the assessment proceeding has been restored back to the file of A.O by the Ld CIT(A), as the penalty u/s 271(1) (b) is for the non compliance of notice and is not dependent on the quantum of assessment order. Accordingly, the penalty levied to the extent of Rs10,000/- is confirmed.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced on 28t day of November, 2025 at Chennai.