Income Tax Penalty u/s 271(1)(b) for Multiple Defaults Reduced to One: ITAT Limits Levy to Rs. 10,000 [Read Order]
The tribunal noted that the assessee, being illiterate and reliant on a tax consultant, had complied with subsequent notices after the first default, and deleted the penalty for the remaining two defaults
![Income Tax Penalty u/s 271(1)(b) for Multiple Defaults Reduced to One: ITAT Limits Levy to Rs. 10,000 [Read Order]](https://images.taxscan.in/h-upload/2025/08/15/2076930-income-tax-penalty-itat-taxscan.webp "Income Tax Penalty u/s 271(1)(b) for Multiple Defaults Reduced to One: ITAT Limits Levy to Rs. 10,000 [Read Order]")
The Rajkot Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed an appeal and held that the penalty under section 271(1)(b) of Income Tax Act,1961 for multiple defaults is reduced to one, limiting the levy to Rs. 10,000 for the Assessment Year (AY )2013-14. Anila Narendra Sangani, appellant-assessee, is a proprietor of M/s Shreenathji Enterprise, engaged in the...
The Rajkot Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed an appeal and held that the penalty under section 271(1)(b) of Income Tax Act,1961 for multiple defaults is reduced to one, limiting the levy to Rs. 10,000 for the Assessment Year (AY )2013-14.
Anila Narendra Sangani, appellant-assessee, is a proprietor of M/s Shreenathji Enterprise, engaged in the business of manufacturing brass parts. For the AY 2013-14, the assessee filed a return of income showing total income of Rs. 2,57,100/-.
The Investigation Wing of the Department discovered that the proprietary concern account was used for rotation of funds and providing accommodation entries to beneficiaries, amounting to Rs. 4,52,27,117/-.
The case was reopened after recording reasons and obtaining prior approval from Principal Commissioner of Income Tax (PCIT ), Jamnagar, on 31.03.2021. Subsequently, notices under section 142(1) of the Act were issued to the assessee on three occasions, but there was no response.
As a result, the Assessing Officer (AO ) imposed a penalty of Rs. 30,000/- for each default under section 271(1)(b) of the Act. The assessee appealed before the Commissioner of Income Tax (Appeals)[CIT(A)], who observed that the assessee did not provide any reasonable cause for non-compliance despite having an active e-filing account used for filing returns.
The CIT(A) confirmed the penalty and dismissed the appeal. Aggrieved by this order, the assessee filed the present appeal before the tribunal.
The Senior Departmental counsel argued that the penalty for all three defaults should be confirmed.
A single member bench Dr. A.L. Saini (Accountant Member) noted that the assessee, being illiterate and a farmer, had relied on his tax consultant, who failed to respond to the first notice during assessment. Since the assessee complied with subsequent notices, the tribunal held that the penalty under section 271(1)(b) should be imposed for one default only.
The penalty for the other two defaults was deleted, and the AO was directed to levy Rs. 10,000/- as penalty. The appeal was partly allowed.
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