2014 (7) TMI 475 - AT - Income Tax

Appeals allowed, penalties deleted under Income-tax Act for multiple years emphasizing reasonable opportunity.

The ITAT, Delhi Bench, allowed the appeals filed by the assessee and deleted the penalties imposed under section 271(1)(b) of the Income-tax Act, 1961 for ... Penalty u/s 271(1)(b) of the Act – Opportunity of being heard – Held that:- The decision in Kamla Madan vs. DCIT, Central Circle 21, New Delhi [2014 (7) TMI 250 - ITAT DELHI] followed - The notices u/s 142 (1) of the Act were issued and giving a very short time - when the notices were served, rather as to whether such notices were served at all, does not find mention in the penalty orders - the assessee was not provided sufficient time to respond to the notice -the assessee was not provided sufficient time to respond to the notice - there is no mention of any non-cooperation by the assessee with the AO during the assessment proceedings – there was no case for the imposition of penalty u/s 271(1)(b) of the Act – Decided in favour of Assessee. Issues Involved:Appeal against penalty levied under section 271(1)(b) of the Income-tax Act, 1961 for assessment years 2005-06 to 2011-12.Analysis:1. Issue: Penalty under section 271(1)(b) of the ActThe appeals filed by the assessee challenged the penalty imposed by the Assessing Officer under section 271(1)(b) of the Income-tax Act, 1961. The Assessing Officer levied a penalty of Rs. 10,000 in each assessment year due to non-compliance with notice u/s 142(1) of the Act. The CIT (A) confirmed the penalty, leading to the appeals before the ITAT.2. Analysis:The ITAT considered the arguments presented by the assessee's counsel, highlighting similar cases where penalties were deleted by other ITAT benches due to insufficient time provided for compliance with notices. The ITAT referred to specific cases such as Kamla Madan vs. DCIT and Manjusha Madan vs. DCIT, where penalties were deleted on grounds of inadequate time for response and lack of evidence of non-cooperation during assessment proceedings.3. Analysis:Further, the ITAT emphasized the importance of providing a reasonable opportunity to the assessee and cited the Hindustan Steel case to underscore that penalties should not be imposed for technical breaches or when the party acted in good faith. The ITAT found that the penalties in the present case were not justified based on the precedents and principles of law discussed.4. Analysis:Based on the above considerations, the ITAT set aside the orders of the CIT (A) and deleted the penalties imposed on the assessee. The ITAT noted consistency in its decisions across similar cases and ordered the penalties in the present appeals to be deleted, ultimately allowing all seven appeals filed by the assessee.In conclusion, the ITAT, Delhi Bench, in a detailed analysis, allowed the appeals filed by the assessee and deleted the penalties imposed under section 271(1)(b) of the Income-tax Act, 1961 for the assessment years in question. The decision was based on the principles of providing a reasonable opportunity to the assessee, consistency in previous judgments, and the discretionary nature of imposing penalties for statutory obligations.