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Facts
The assessee, Usha Goyal, was penalized Rs. 10,000 under Section 271(1)(b) of the Income Tax Act, 1961, for alleged non-compliance with a Section 142(1) notice issued during assessment year 2014-15. The assessee sought an adjournment on the compliance date, citing her authorized representative's unavailability, and subsequently submitted all required details. The ld. CIT(A) confirmed the penalty.
Held
The Tribunal observed that the assessee had a reasonable cause for non-compliance due to her authorized representative being out of Delhi and having requested an adjournment. Citing the Supreme Court's ruling in Hindustan Steel Ltd. vs. State of Orissa, the Tribunal held that penalty should not be imposed if the assessee's conduct is not contumacious. Finding the assessee's conduct not contumacious, the Tribunal deleted the penalty.
Key Issues
Whether penalty under Section 271(1)(b) for non-compliance with a Section 142(1) notice is sustainable when the assessee demonstrates reasonable cause and subsequently complies with the notice.
Sections Cited
271(1)(b), 142(1), 273B, 147, 143(3), 144, 139, 148, 274
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Income Tax Appellate Tribunal, DELHI BENCH ‘H’ : NEW DELHI
Before: SHRI SHAMIM YAHYA & SHRI SUDHIR PAREEK
Order
: 09.05.2024 ORDER
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
This appeal by the assessee is directed against the order of the ld. CIT (Appeals)/National Faceless Appeal Centre (NFAC) dated 26.06.2023 for the assessment year 2014-15.
2. Grounds of appeal
taken by the assessee read as under :-
1. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in law and facts in confirming penalty imposed of Rs.10,000/- u/s 271(1)(b) of the Income Tax Act, 1961 without appreciating the facts that there was no non- compliance of notice issued u/s 142(1) of the Act dated 06.11.2019 on the scheduled date 08.11.2019 as the appellant duly filed adjournment before the Ld. Assessing Officer and later on filed all requisite details and documents.
Without prejudice to the ground of Appeal
No.1, the Ld. CIT (A) erred in law and facts in confirming penalty imposed of Rs.10,000/- u/s 271(1)(b) of the Act without appreciating the facts that alleged non-compliance of notice issued u/s 142(1) of the Act dated 06.11.2019 if any was not deliberate and due to reasonable cause, therefore provisions of section 273B of the Act is applicable in the case of the appellant.
3. Without prejudice to the ground of Appeal no.1, the Ld. CIT (A) erred in law and facts in confirming penalty imposed of Rs.10,000/- u/s 271(1)(b) of the Act even though the Ld. AO has framed assessment u/s 147 r.w.s. 143(3) instead of 144 of the Act, which implies that subsequent compliances made by the appellant were considered as good compliance and the defaults committed earlier were ignored by him.”
3. Brief facts of the case are captured from the submissions of the assessee made before the ld. CIT (A) as under :- “1. The appellant has e filed her return of income under section 139 of the Income Tax Act, 1961 on 27.03.2015 declaring income of Rs.41,42,690/-.
2. The proceedings under section 147 of the Income Tax Act, 1961 were initiated and notice under section 148 of the Income Tax Act, 1961 dated 30.03.2019 was issued by ACIT, Circle 40 (1) to the appellant to file ITR. In response, appellant e filed ITR under section 148 on 29.04.2019 declaring income of Rs.41,42,690/-.
3. During the course of assessment proceedings, the Ld. AO has issued notice under section 142(1) of the Income Tax Act, 1961 dated 06.11.2019 to furnish certain details for the assessment year under consideration for which date of compliance was fixed for 08.11.2019.
4. In response, the appellant vide letter dated 08.11.2019 requested the Ld. AO to adjourn the hearing as her authorized representative was out of Delhi to attend the marriage function of his relative.
5. Subsequently, the ld. Assessing Officer issued notice under section 274 r.w.s. 271(1)(b) of the Income Tax Act, 1961 dated 12.11.2019 and 13.05.2021 and asked the appellant to show cause as to why an order imposing a penalty should not be made under section 271(1)(b) of the Income Tax Act, 1961 for non compliance of notice issued under section 142(1) of the Act dated 06.11.2019.
6. In response, the appellant vide letter dated 15.11.2019 and 24.05.2021 furnished explanation as to why order imposing penalty under section 271(1)(b) of the Act should not be made in her case. The appellant submitted that an adjournment was sought on scheduled date i.e. 08.11.2019 in compliance to the notice under section 142 (1) of the Income Tax Act, 1961 dated 06.11.2019. 7. The appellant has submitted all the details/documents/ explanations as required by the AO during the course of assessment proceedings which is also acknowledged by the Ld. Assessing Officer in the assessment order. 8. However, the Ld. AO imposed penalty of Rs.10,000/- under section 271(1)(b) of the Act, vide order dated 06.07.2021 for failure to comply with the notice issued under section 142(1) of the Income Tax Act, 1961 dated 06.11.2019 and alleged in the impugned order.”
4. Against this levy of penalty, assessee appealed before the ld. CIT(A) who confirmed the same.
5. Against this order, assessee has filed appeal before us. We have heard the ld. DR for the Revenue and perused the records. 6. We find that penalty of Rs.10,000/- under section 271(1)(b) of the Income-tax Act, 1961 (for short ‘the Act’) has been imposed in this case on the failure of the assessee to comply with the notice dated 06.11.2019 though it is also recorded that on 08.11.2019 assessee had requested the Assessing Officer to adjourn the hearing as her Authorised Representative was out of Delhi. When the reasonable cause for non-compliance with the notice is crystal clear, assessee need not to be visited with the rigours of penalty u/s 271(1)(b) of the Act. In this regard, we note that Hon’ble Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa 83 ITR 26 has held that assessee may not be visited with rigours of penalty if the assessee’s conduct is not found to be contumacious. In our considered opinion, the conduct of the assessee in this case is not contumacious. Accordingly, in the background of the facts and circumstances of the case, we set aside the orders of the authorities below and delete the penalty levied of Rs.10,000/-. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on this 9th day of May, 2024.