Non-Response to Re-Assessment Notice will not Attract Penalty under Income Tax Act: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the non-response to the re-assessment notice under the Income Tax Act, 1961 will not attract penalty under section 271(1)(b) of the Income Tax Act, 1961.

the assessee, Mr. Neeraj Kumar is an individual and no return of income was filed as his income was below the taxable limit. The case was re-opened on the basis of AIR information for trading in Multi commodity exchange in which he has suffered losses. After making additions, the AO also imposed penalty u/s 271(1)(b) of Rs.70000/- being defaults made for non-compliance of notices on seven occasion @ Rs.10000/- each vide order dated 17.09.2015.

The assessee contended that he came to know about the assessment and the demand on being contacted by TRO-17, in first week of October 2018, then he immediately contacted him and AO and obtained certified copies of all orders and filed the appeals on 25.10.2018.

A bench of Shri Anil Chaturvedi, Accountant Member And Shri Challa Nagendra Prasad, Judicial Member held that the Assessing Officer nowhere stated that the notices issued u/s 142(1) of the Act were served on the assessee. In the entire penalty order we observe that the notices said to have been issued by the AO but it is not the finding of the AO that anyone of such notices were served on the assessee.

“It is also the contention of the assessee that even notice u/s 148 said to have been issued by the AO was never served on the assessee and the appeal filed by the assessee is still pending before the Ld.CIT(A). We also observe that even for not responding to notice u/s 148 of the Act the AO levied penalty u/s 271(1)(b) of the Act even though the provisions of Section 271(1)(b) does not stipulate levying any penalty for not responding to notice u/s 148 of the Act,” the Tribunal said.

Quashing the penalty orders, the ITAT held that “the assessee even though furnished affidavit explaining the circumstances under which the notices issued to him were not served the Ld.CIT(A) failed to appreciate the submissions and confirmed the penalty levied u/s 271(1)(b) even for the default for not responding to 148 notice which no penalty is also leviable u/s 271(1)(b) of the Act. We observe that there is a reasonable cause in not responding to the notice by the assessee as the Revenue nowhere proved that the notices issued u/s 142(1) were served on the assessee so as to attract the penalty u/s 271(1)(b) of the Act. Therefore, taking the totality of facts and circumstances into consideration, we direct the Assessing Officer to delete the penalty levied u/s 271(1)(b) of the Act.”

To Read the full text of the Order CLICK HERE

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