LABH SINGH PANCHKULA,PANCHKULA vs. INCOME TAX OFFICER, WARD 2, PANCHKULA, PANCHKULA

The Assessing Officer (AO), in the course of assessment proceedings, issued statutory notices under sections 143(2) and 142(1) on various dates. Since the assessee did not comply with the notices, the AO levied a penalty of ₹40,000/- under section 271(1)(b), being ₹10,000/- for each of four defaults. The learned CIT(A) confirmed the levy.

Aggrieved, the assessee is in appeal before the Tribunal.

The learned Authorised Representative submitted that the assessee is an illiterate person and was unable to respond to all notices properly, and there was no deliberate defiance of statutory notices. In any case, multiple penalties for the same proceedings are harsh, and the penalty should be restricted reasonably.

The learned Departmental Representative relied on the orders of the AO and the CIT(A), and submitted that the assessee repeatedly failed to comply with statutory notices without reasonable cause, therefore penalty was rightly levied for each default.

I have considered the rival submissions and perused the record. The brief facts of the case are that the Assessing Officer in the course of assessment proceedings issued statutory notices under sections 143(2) and 142(1) on different dates. Since there was no compliance on the part of the assessee, the Assessing Officer initiated penalty proceedings under section 271(1)(b) of the Income-tax Act and ultimately levied a penalty of ₹40,000/-, being ₹10,000/- for each of four instances of default. The learned CIT(A) sustained the levy of penalty in appellate proceedings. Aggrieved, the assessee is now in appeal before the Tribunal.

The learned Authorised Representative submitted that the assessee is an illiterate individual who was unable to appreciate the implications of multiple statutory notices. It was contended that there was no deliberate defiance of law, and in any case, levy of penalty for four separate instances arising in the same proceedings is harsh and excessive. Reliance was placed on judicial precedents to submit that penalty under section 271(1)(b) should not be imposed mechanically and deserves to be restricted.

The learned Departmental Representative, on the other hand, relied upon the orders of the authorities below and argued that despite repeated statutory notices, the assessee did not respond, and therefore penalty was rightly levied for each instance of non-compliance.

I have carefully considered the rival contentions. It is not in dispute that there was non-compliance with certain statutory notices issued during assessment proceedings. However, having regard to the fact that the assessee is an illiterate person of limited means and that the non- compliances occurred in the same set of proceedings, in my considered view, levy of penalty for all four defaults would be excessive. The ends of justice would be met if the penalty is restricted to two instances of default. Accordingly, I sustain the penalty to the extent of ₹20,000/- (₹10,000 × 2) and direct that the balance penalty of ₹20,000/- be deleted.

In the result, the appeal of the assessee is partly allowed.