AMRUTLAL CHHAGANLAL TANNA,JAMNAGAR vs. THE INCOME TAX OFFICER, WARD-2(2), JAMNAGAR

आदेश/O R D E R PER BENCH:

5. We have considered the submissions of learned DR and have perused the order of the Assessing Officer and the learned CIT(A). 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 143(2) of the Act. However, we find that the default is same and, therefore, penalty of Rs. 10,000/- could be imposed for the first default made by the assessee in this regard. The penalty under Section 271(1)(b) could not be imposed for each and every notice issued under Section 143(2), which remained not complied with on the part of the assessee. The provision of Section 271(1)(b) is of deterrent nature and not for earning revenue. Any other view taken shall lead to the imposition of penalty for any number of times (without limits) for the same default of not appearing in response to the notice issued under Section 143(2) of the Act. This does not seem to be the intention of the legislature in enacting the provisions of Section 271(1)(b) of the Act. In case of failure of the assessee to comply with the notice under Section 143(2) of the Act, the remedy with the Assessing Officer lies with framing of "best judgement assessment" under the provisions of Section 144 of the Act and not to impose penalty under Section 271(1)(b) of the Act again and again. 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 143(2) of the Act. Accordingly, the penalty imposed is restricted to Rs. 10,000/- as against Rs. 50,000/- confirmed by the learned CIT(A). The grounds of appeal of the assessee are thus partly allowed. 8.1 The principles laid down by the Hon’ble Supreme Court in the case of Gujarat Travancore agency versus CIT reported in 177 ITR 455 are on a different proposition. It was held therein by the Lordship that the element of men-rea is not necessary while imposing the penalty under section 271(1)(a) of the Act. There was no issue decided about the quantum of the penalty whether it is to be levied for each and every default committed by the assessee for non-compliance of the notice issued under section 142(1) of the Act or penalty with respect to one default was sufficient enough to comply the provisions of section 271(1)(b) of the Act . Indeed, we are confirming the penalty in part levied by the authorities below which evidences the compliance of the judgment referred by the AO in his order i.e. Gujarat Travancore agency (Supra).

8.2 Respectfully following the aforesaid order of Delhi Tribunal, we set aside the order of Ld. CIT(A) and direct the AO to delete the penalty to the tune of ₹20,000.00 and confirm the penalty of Rs. 10,000.00 only. Hence, this ground of assessee’s appeal is partly allowed.

Order pronounced in the Court on 14/09/2022 at Ahmedabad.