Assessment Completed u/s 143(3) after Condonation of Delay due to Covid: ITAT deletes Penalty u/s 271(1)(b) [Read Order]

The Surat Bench of Income Tax Appellate Tribunal ( ITAT) held that the penalty under Section 271(1)(b) of the Income Tax Act could not be levied after condonation of delay when an assessment has been completed under Section 143(3) of the Income Tax Act 1961.

Smt. Ramabhai Kanjibhai Patel, the Appellant assessee filed five appeals against the separate orders passed by the Commissioner of Income Tax (Appeal) Surat. The assessee has appealed against the assessment officer's decision to levy a penalty of Rs.10,000/- under section 271(1)(b) of the Income Tax Act, 1961 for non-compliance of a notice under Section 142(1) of the Income Tax Act. The Commissioner of Income Tax (Appeal) has partly allowed the appeal.

Shri P. M. Jagasheth, the Counsel for the assessee stated that the assessee had complied with the notices issued by the Assessing officer from time to time and the delay in submission of part details was due to the Covid-19 pandemic. He further stated that it should not be considered as default for non-compliance of legal notice. The assessee also submitted that the assessment order was passed under section 143(3) read with Section 153A of the Income Tax Act and not under Section 144 of the Income Tax Act.

 The counsel for the revenue submitted that the Assessing Officer issued a notice to the assessee for non-compliance of the notice, but the assessee failed to show sufficient cause for the penalty to be levied. so penalty should be levied under Section 271(1)(b) of the Income Tax Act.

The two-member bench of Pawan Singh (Judicial Member) and Dr A.L. Saini (Accountant Member) observed that in light of Ganesh B Pokhriyal vs ACIT, Globus Infocom Ltd. vs. DCIT, and Akhil Bharatiya Prathmik Shamshak Sangh Bhawan Trust vs. ADIT, the Assessing officer condoned the delay of assessee’s absence due to Covid- 19 pandemic.

The ITAT held that the Reasonable cause is a belief that would constrain a person of average intelligence and ordinary prudence. The assessee has made sufficient compliance of notices issued by the assessing officer, and no penalty under Section 271(1)(b) of the Income Tax Act can be levied when an assessment has been completed under Section 143(3) of the Income Tax Act.

While allowing the Appeals the Court directed the Assessing Officer to delete the penalty which was levied under Section 271(1)(b) of the Income Tax Act, 1961.

To Read the full text of the Order CLICK HERE

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