ITAT deletes Penalty u/s 271(1)(b) and 272A(1)(b) for Improper Procedure in Issuance of Income Tax Notice [Read Order]

The Amritsar Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the penalty under Sections 271(1)(b) and 272A(1)(b) of the Income Tax Act due to improper procedure in issuance of notice.

The assessee, Antony Madassery filed an appeal against the order of CIT(A) challenged the confirmation of levy of the penalty under Section 271(1)(b) and 272A(1)(b) of the Income Tax Act.

The Bench, consisting of Judicial Member Anikesh Benerjee and Accountant Member M L Meena observed that the case was  squarely applicable to the decision in case of Navjeevan Charitable Society V. DCIT Central Circle-1, Jalandhar, that held as the Assessing Officer  had written a letter to  Surendra Mahajan and Associates for special audit of four case including the appellants but, the Assessing Officer  had never issue a specific notice with points of special audit to the appellant assessee under Section 142(2A) of the Income Tax  Act with the Approval of the PCIT.

The Assessing Officer had merely written letters to the assessee without mentioning the issues/points, regarding propose of its case for special audit and it was without taking the prior approval of the PCIT is bad in law

The Assessing Officer had never issued a specific notice with points of special audit to the appellant assessee under Section 142(2A) of the Income Tax Act with the Approval of the PCIT. Therefore, the order of the CIT (A) confirming levy of penalty under Section 271(1)(b) and 272A(1)(b) by observing non-compliance to direction under Section  142(2A) of the Income Tax Act is perverse to the fact on record.

On parity of facts, following the Coordinate Bench’s decision in “Navjeevan Charitable Society”, the Bench held that the impugned orders were infirm and perverse to facts on record.

Accordingly, the impugned orders were set aside and the penalties levied under Sections 271(1)(b) and 272A(1)(b) of the Income Tax Act were deleted.

In result, the appeals filed by assessee were allowed.

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