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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI WASEEM AHMED, & SHRI SIDDHARTHA NAUTIYAL
आदेश/O R D E R PER BENCH:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income tax (Appeals), Jamnagar, dated 09/04/2018 arising in the matter of penalty order passed under s.271(1)(b) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2009-10.
The only issue raised by the assessee in this appeal is that Ld. CIT(A) erred in confirming the penalty order of AO u/s 271(1)(b) of the Act.
Briefly, the facts are that the assessee is an individual. The Assessing Officer during the course of assessment proceedings u/s 143(3) r.w.s. 147 of the Act issued notices u/s 142(1) of the Act on various dates but the assessee failed to comply the same. In view of above, the AO initiated penalty proceedings u/s 271(1)(b) of the Act but again there was no response from the side of the assessee. Finally, the AO imposed the penalty for Rs. 30,000/- for each default committed by the assessee as discussed above under the provisions of section 271(1)(b) of the Act.
Aggrieved, assessee preferred an appeal before Ld. CIT(A) who also confirmed the order of the AO.
Aggrieved by this, the assessee has come up in appeal before us.
The ld. AR before us submitted the penalty of Rs. 10000.00 for one default of non-compliance of notice issued under section 142(1) of the Act was sufficient enough. The ld. AR in this regard has relied on the order of ITAT in the case of Smt. Rekha Rani Vs. DCIT reported in 60 taxmann.com 131.
On the other hand, the ld. DR vehemently supported the order of lower authorities.
We have heard the rival contentions of both the parties and perused and carefully considered the materials on record, including the judicial pronouncements cited and placed reliance upon. At the outset it was observed that in the identical facts and circumstances the Delhi Tribunal has decided the issue in favour of assessee in part in the case of Smt. Rekha Rani (Supra) by observing that penalty for the first default of non-compliance of notice under section 142(1) of the Act was sufficient enough. The relevant extract of the order reads as under:
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.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the Court on 14/09/2022 at Ahmedabad.