ITAT overturns penalty, assessee wins appeal citing reasonable cause for non-compliance.

The ITAT allowed the appeals filed by the assessee, setting aside the penalty of Rs. 10,000 each imposed under section 271(1)(b) by the CIT(Appeals). The ITAT found that the assessee had reasonable cause for non-compliance with the notice under section 143(2) of the Income Tax Act due to various factors, including the AO's actions. The ITAT held that the penalty was not warranted, emphasizing the lack of attendance recording by the AO and citing relevant case law. The decision favored the assessee, overturning the orders of the lower authorities.

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Issues:
Levy of penalty under section 271(1)(b) of Rs. 10,000 each confirmed by CIT(Appeals).

Analysis:
The case involved appeals by the assessee against a common order of the CIT(Appeals) related to assessment years 2005-06 to 2011-2012. The primary issue raised was the confirmation of the penalty under section 271(1)(b) of Rs. 10,000 each by the CIT(Appeals). The penalty was imposed due to the assessee's non-compliance with the notice under section 143(2) of the Income Tax Act, issued on 18-01-2013, and subsequent failure to attend and submit details. The AO passed the assessment order under section 143(3) of the IT Act, leading to the imposition of the penalty.

Before the CIT(Appeals), the assessee argued that due to various reasons, including the AO's refusal to admit their presence and declining to review documents, the assessee was unable to comply with the notice. The assessee also highlighted interactions with higher authorities regarding the alleged harassment by the AO and the prevention from submitting details. The CIT(Appeals, however, upheld the penalty, emphasizing the lack of compliance by the assessee despite the assessment orders being passed under section 143(3) and not 144, indicating non-furnishing of details.

The ITAT considered the submissions and facts of the case, noting that the time given for submission of details after a search and seizure was unreasonable. The ITAT also observed that the assessee had replied to subsequent show cause notices and that the AO's refusal to record the attendance of the assessee was a significant factor. Relying on the decision of the ITAT, Delhi Bench in a similar case, the ITAT concluded that there was a reasonable cause for the non-attendance of the assessee, making the penalty under section 271(1)(b) not leviable.

The ITAT further emphasized that the CIT(Appeals erred in distinguishing the relevant case law and that the technical breach observed did not warrant the imposition of a penalty, citing the precedent set by the Hon'ble Apex Court. Consequently, the ITAT allowed the appeals filed by the assessee, setting aside the orders of the authorities below and deciding in favor of the assessee.

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