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Facts
The assessee, a partnership firm, failed to file income tax returns for AY 2016-17 & 2018-19 despite notices under Section 148A(d) and 142(1) of the Act. The Assessing Officer initiated penalty proceedings under Section 271(1)(b) for non-compliance with notices.
Held
The Tribunal held that while the assessee's non-compliance was established, the penalty for non-compliance with multiple notices under Section 142(1) should be restricted to the first default. The penalty was reduced to ₹.10,000/- for each assessment year.
Key Issues
Whether penalty under Section 271(1)(b) of the Act can be levied for each notice issued under Section 142(1) or only for the first default in compliance, and whether the penalty confirmed by CIT(A) was excessive.
Sections Cited
271(1)(b), 271(1)(d), 148A(d), 142(1)
AI-generated summary — verify with the full judgment below
Before: Shri S.S. Viswanethra Ravi & Shri Jagadish
O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
Both the appeals filed by the assessee are directed against separate orders dated 18.11.2024 & 14.11.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment years 2016-17 & 2018-19 under sections 271(1)(b) and 271(1)(d) of the Income Tax Act, 1961 [“Act” in short] respectively.
Since issues raised in both the appeals are more or less similar based on the same identical facts, with the consent of the both the parties, we proceed to hear both the appeals together and pass consolidated order for the sake of convenience.
First, we shall take appeal in for AY 2016- 17 for adjudication.
The assessee raised 3 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the penalty levied under section 271(1)(b) of the Act against exparte assessment order passed by the Assessing Officer.
5. The assessee is a partnership firm and as per information available with the Assessing Officer, which was flagged by the Risk Management Strategy formulated by the CBDT having tax implications towards shipping bill for exports (Custom – Export) ₹.66,84,888/- and TDS statements – payments to contractors/interest ₹.7,68,702/-. Since the assessee failed to file the return of income for the assessment year under consideration, the Jurisdictional Assessing Officer passed order under section 148A(d) of the Act by following due procedure. However, the assessee could not file the return of income. The Assessing Officer issued notices under section 142(1) of the Act dated 09.08.2023 & 20.09.2023, against which, there was no response from assessee.
6. Since the assessee could not filed any reply to the notice issued under section 142(1) of the Act dated 09.08.2023 & 20.09.2023, the Assessing Officer initiated proceedings under section 271(1)(b) of the Act. As the assessee has committed default as per the provisions of section 271(1)(b) of the Act for two times, the Assessing Officer levied penalty of ₹.20,000/-. On appeal, the ld. CIT(A) confirmed the penalty levied under section 271(1)(b) of the Act.
The ld. AR Shri S. Sridhar, Advocate (Erode) submits that the impugned penalty is unjust. He drew our attention to the provisions of section 271(1)(b) of the Act and submits that the impugned penalty is excessive and unfair, as the term “each such failure” must not be associated with each notice of the same species, but restricted to lack of response towards notice(s) issued under different provisions of the Act contemplating different compliances during the course of assessment, given that there is no maximum limit on the Assessing Officer to issue number of notices under the same provision for instance – 142(1) of the Act.
The ld. DR Shri A. Sasikumar, CIT submits that the Assessing Officer has issued notice under section 142(1) of the Act on two different dates and the assessee failed to comply with the same. Accordingly, the Assessing Officer has invoked the provisions of section 271(1)(b) of the Act and imposed penalty of ₹. 10,000/- for each default totalling to ₹. 20,000/-. He further submits that the assessee has no reasonable cause for not appearing on the date of hearing fixed before the Assessing Officer and thus, prayed to reject the prayer of the ld. AR.
We have heard both the parties, considered the submissions of ld. AR and the ld. DR and perused the material on record. We find that there was no reasonable cause on the part of the assessee for not appearing on the different dates of hearing before the Assessing Officer in response to notice issued under section 142(1) of the Act. However, we find that the default is same and, therefore, penalty of ₹. 10,000/- could be imposed for the first default made by the assessee in this regard. The penalty under section 271(1)(b) of the Act could not be imposed for each and every notice issued under section 142(1) of the Act, which remained not complied with the assessee. In this view of the matter, we restrict the penalty levied under section 271(1)(b) of the Act to the first default of the assessee in not complying with the notice under section 142(1) of the Act. Accordingly, the penalty levied is restricted to ₹. 10,000/- as against ₹. 20,000/- confirmed by the ld. CIT(A). The grounds of appeal of the assessee are, thus, partly allowed.
10. Similar issues on identical facts have been raised by the assessee in its appeal for AY 2016-17 in and since, the penalty levied under section 271(1)(b) of the Act is restricted to ₹.10,000/- as against ₹.20,000/-, our findings would be equally applicable to the assessment year under consideration by restricting the penalty under section 271(1)(d) of the Act at ₹.10,000/- as against ₹.20,000/-. Thus, the grounds raised by the assessee for AY 2018-19 are partly allowed.
In the result, both the appeals filed by the assessee are partly allowed Order pronounced on 28th February, 2025 at Chennai.