Appeal successful: Penalty under IT Act section 271(1)(b) deleted for subsequent compliance

The appeal was allowed, and the penalty under section 271(1)(b) of the Income Tax Act, 1961 was deleted. The court found that subsequent compliance during assessment proceedings after initial default could mitigate the default, leading to the cancellation of the Revenue authorities' orders. The decision was issued on 27th November 2020 at Ahmedabad.

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Issues:
Appeal against confirmation of penalty under section 271(1)(b) of the Income Tax Act, 1961.

Analysis:
The appeal was against the penalty confirmation under section 271(1)(b) of the Income Tax Act, 1961. The assessee's case was selected for scrutiny assessment under section 143(2) after declaring a total loss. The penalty of Rs. 10,000 was imposed for non-compliance with a notice issued under section 142(1) of the Act. The assessee contended that the non-compliance was due to misplacement by the clerk, but all required details were submitted during the assessment proceedings. The ld.AO noted this in the assessment order under section 143(3). The counsel argued that since the assessment was finalized based on the details submitted, there was no default on the part of the assessee to attract penalty under section 271(1)(b). The counsel cited relevant case laws to support this argument.

Upon considering the submissions, it was noted that the assessee's representative attended the hearing and provided necessary details during the assessment proceedings, leading to the finalization of assessment under section 143(3). The AO recorded this fact in the assessment order, indicating cooperation from the assessee. Citing the case laws referred to by the counsel, it was established that subsequent compliance during assessment proceedings after initial default could mitigate the default. Therefore, in this case, there was no justification for imposing a penalty under section 271(1)(b). Consequently, the penalty was deleted, and the orders of the Revenue authorities were canceled.

In conclusion, the appeal of the assessee was allowed, and the penalty under section 271(1)(b) of the Act was deleted. The decision was pronounced in court on 27th November 2020 at Ahmedabad.

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