ITAT Jaipur: Multiple penalties for same default not justified under IT Act

The Appellate Tribunal ITAT Jaipur ruled in five appeals challenging penalty orders under section 271(1)(b) of the IT Act for the assessment year 2013-14. The Tribunal held that multiple penalties for the same default were not justified, restricting penalties to a single default. It emphasized that penalty provisions are deterrent in nature and not meant for repeated penalties for the same default. The Tribunal dismissed one appeal and allowed others, highlighting the need for clear communication in notice issuance and the deterrent purpose of penalties.

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Issues:
Penalty under section 271(1)(b) for non-compliance with notices under section 142(1) - Whether multiple penalties justified for repeated non-compliance or restricted to a single default.

Analysis:
The judgment by the Appellate Tribunal ITAT Jaipur dealt with five appeals by the assessee challenging penalty orders under section 271(1)(b) of the IT Act for the assessment year 2013-14. The AO initiated penalty proceedings due to non-compliance with notices under section 142(1). The assessee contended that the show cause notices were vague and did not specify the default, denying them the opportunity to respond adequately. The assessee also argued that the notices were not received, attributing non-compliance to staff being out of station. The assessee further claimed that the AO issued multiple penalties for a single default, citing a Tribunal decision to support their position.

The Tribunal considered the submissions of both parties and examined the facts. It noted that the AO issued five notices under section 142(1) on different dates due to non-compliance with the initial notice. However, the information sought in all notices was the same. Relying on a Delhi Tribunal decision, the Tribunal held that multiple penalties for the same default were not justified. It restricted the penalty to a single default, deleting the excess penalties imposed by the AO. The Tribunal emphasized that the penalty provision is deterrent in nature and not for repeated penalties for the same default.

Regarding the argument of non-receipt of notices, the Tribunal observed that the assessee did not raise this issue before the AO but only after the penalty order was passed. The Tribunal rejected the plea of reasonable and bonafide explanation, as the notices were sent multiple times, and all remained non-complied with. Consequently, the appeal in one case was dismissed, while appeals in the other cases were allowed.

In conclusion, the judgment clarified that in cases of repeated non-compliance with identical notices, penalties should be restricted to a single default. The decision underscored the importance of clear communication in notice issuance and emphasized the deterrent nature of penalty provisions.

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