The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the penalty for the same default under Section 271(1)(b) of the Income Tax Act in the second round.
The assessee Amar Bharti filed his return of income on 30.09.2015 for the assessment year 2015-16 declaring total income of Rs. 8,84,710/- electronically. The case was selected for limited scrutiny by CASS. Accordingly, notice under Section 143(2) of the Income Tax Act, 1961 was issued and served upon the assessee through speed post and email.
In compliance to notice the assessee filed his audit report P & L account. The assessee derives income from the business of wholesale of mobile phones. The case has been selected through CASS for the purpose of ‘Limited Scrutiny’ reasons for scrutiny selection.
The assessment was completed under Section 143(3) of the Income Tax Act but since the assessee has made default in the reply to the various notices issued by the Assessing Officer, he has also initiated penalty proceedings under Section 271(1) (b) of the Income Tax Act.
The assessee had already been penalized with an order dated 07.12.2017. However, another penalty order of Rs. 10,000 under section 271(1) (b) was issued. The assessee appealed against this penalty order, and the appeal was disposed of by the National Faceless Appeal Centre (NFAC) on 07.02.2023
The counsel for the revenue argued that the penalty was imposed by the Assessing Officer for non-compliance with notices issued under Section 142(1) of the Income Tax Act on various dates for scheduled hearings.
The counsel also contended that there is no prohibition on initiating penalty proceedings and imposing penalties for non-compliance with statutory notices even before the assessment order is passed by the Assessing Officer.
The bench consisting of two members, the Judicial Member Sandeep Gosain and the Accountant Member Rathod Kamlesh Jayantbhai observed that the Assessing Officer has already passed the penalty proceeding under Section 271(1)(b) of the Income Tax Act vide order dated 07.12.2017 there cannot be a second round of the penalty for the same defaults. Based on, the tribunal quashed the levy of the penalty vide order dated 12.06.2018. In the result, the appeal of the assessee was allowed.
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