The Income Tax Appellate Tribunal (ITAT) Hyderabad Bench upheld the penalty levied under section 271(1)(b) of Income Tax Act, 1961 due to non compliance of notice.
The assessee Ishoo Narang director of M/s. Kyori Oremin and Kyori Infrastructure. He filed his return of income for the A.Y 2014-15 on 25.7.2014 admitting income of Rs.94,22,920/-. It was treated as invalid by CPC due to pending e-verification by the assessee and therefore, was not processed.
After issuing several notices to the assessee for hearing he did not respond. Hence, non compliance of notice on part of assessee AO imposed penalty under Section 271(1)(b) of Income Tax Act.
Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax Appeal {CIT(A)} who upheld the order. Thus the assessee filed a second appeal before the tribunal.
Before the bench, P. Murali Mohan Rao,counsel for assessee submitted that assessee had filed the reply to the show cause notice issued in the quantum proceedings and had also filed the return of income in response to the notice issued under Section 142 of the Income Tax Act.
Dr. Rajendra Kumar, the Counsel for the revenue submitted that assessee has failed to submit the reply before the Assessing Officer. The Assesee also had not replied to the show cause notice under Section 142(1) Income Tax Act for asking the assessee to submit his reply. Due to non-compliance of notice by the assessee, the Assessing Officer issued show cause notice under Section 271(1)(b) of the Income Tax Act for proposing to levy a penalty of Rs.10,000/-.
After reviewing the facts and submission, the tribunal observed that penalty levied under Section 271(1)(b) of the Income Tax Act is a technical penalty and normally is required to be levied when there is a willful default on the part of the assessee for noncompliance in filing the document/information in response to the notice of the Assessing Officer.
It was also observed that the assessee, despite several opportunities, had not filed any reply before the Assessing Officer. Thus once there is deliberate or willful default on the part of the assessee then the penalty should be imposed.
Therefore, the two member bench of the tribunal comprising R.K. Panda,, (Accountant Member) and Laliet Kumar, ( Judicial Member) upheld the penalty imposed due to non compliance of notice.
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