2014 (1) TMI 1687 - AT - Income Tax

Appellate Tribunal cancels penalty for inadequate time in responding to tax notice

M/s Shivaansh Advertising and Publications (P) Versus. Assistant Commissioner of Income Tax

The Appellate Tribunal ITAT Delhi ruled in an appeal against a penalty imposed under Section 271(1)(b) of the Income-tax Act, 1961 for non-compliance with ... Penalty levied under Section 271(1)(b) - non-compliance of the notice under Section 142(1)/143(2) - Held that:- The penalty had been levied by the Assessing Officer for non-compliance of the notice dated 8.11.2010. From the assessment order, it is evident that the notice under Section 142(1)/143(2) dated 8.11.2010 alongwith the detailed questionnaire was issued fixing the case for 18.11.2010. These details have been mentioned by the Assessing Officer in paragraph 2 page 1 of the assessment order. Thus, total ten days’ time was allowed from the date of issue of the notice. In the assessment order, the Assessing Officer has not mentioned the date on which such notice was served upon the assessee. Therefore, in our opinion, the time of less than ten days allowed by the Assessing Officer for complying with the detailed questionnaire cannot be said to be a sufficient time being allowed to the assessee and, therefore, failure of the assessee to comply with such notice cannot be said to be a default which may justify the levy of penalty under Section 271(1)(b) of the Act. Accordingly, the same is cancelled. - Decided in favour of assessee. Issues: Levy of penalty under Section 271(1)(b) of the Income-tax Act, 1961 for non-compliance with notice under Section 142(1)/143(2) dated 8.11.2010.The judgment by the Appellate Tribunal ITAT Delhi involved an appeal against the order of the CIT(A)-II, New Delhi for the AY 2009-10, specifically challenging the penalty of `10,000/- imposed under Section 271(1)(b) of the Income-tax Act, 1961. The tribunal noted that the penalty was levied due to non-compliance with a notice dated 8.11.2010, which was issued under Section 142(1)/143(2) along with a detailed questionnaire, setting the case for 18.11.2010. The tribunal observed that the Assessing Officer did not specify the date of service of the notice on the assessee. It was highlighted that less than ten days were allowed for compliance with the detailed questionnaire from the date of notice issuance. The tribunal concluded that the time provided was insufficient for the assessee to respond adequately, thus ruling that the failure to comply did not constitute a justifiable default warranting the penalty under Section 271(1)(b) of the Act. Consequently, the penalty was canceled, and the appeal of the assessee was allowed.In summary, the tribunal's decision focused on the adequacy of the time granted for compliance with the notice and the justification for imposing a penalty under Section 271(1)(b) of the Income-tax Act, 1961. The tribunal emphasized the need for a reasonable period for the assessee to respond to the notice and deemed the time provided by the Assessing Officer as insufficient. This ruling highlights the importance of considering the circumstances and time constraints when penalizing non-compliance with statutory notices, ensuring that penalties are imposed judiciously and in accordance with the provisions of the Act.