Tribunal overturns unjust tax penalty due to lack of fault, directs Assessing Officer to delete penalty

The Tribunal set aside the penalty of Rs. 10,000 imposed under section 271(1)(b) of the Income Tax Act, 1961, finding it unjustly imposed due to the lack of fault on the part of the assessee. The Tribunal concluded that the assessee had not been given adequate time to respond to the Department's queries, leading to the incorrect imposition of the penalty. Consequently, the Tribunal directed the Assessing Officer to delete the penalty, ruling in favor of the assessee.

---

---

Issues Involved:
Levy of penalty of Rs. 10,000 under section 271(1)(b) of the Income Tax Act, 1961.

Analysis:
The appeal was filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals) challenging the penalty of Rs. 10,000 imposed under section 271(1)(b) of the Income Tax Act, 1961. The grounds raised by the assessee included contentions that the penalty was contrary to law and facts of the case, and that proper opportunity was not given to respond to the notices issued during the assessment proceedings. The Authorized Representative argued that the penalty was wrongly imposed as the assessee was not provided adequate time to respond to the queries raised by the Department. The AR pointed out that the assessee had submitted explanations and requests for adjournment, indicating a valid and reasonable ground for the delay in compliance. The AR requested the deletion of the penalty based on these grounds.

The Department, represented by the Senior DR, relied on the orders of the lower authorities. After hearing both sides and examining the material on record, the Tribunal agreed with the Authorized Representative's contention that the penalty was unjustly imposed due to the lack of fault on the part of the assessee. The Tribunal found that the assessee did not receive sufficient time to respond to the Department's queries, leading to the incorrect imposition of the penalty. Consequently, the Tribunal set aside the order of the First Appellate Authority and directed the Assessing Officer to delete the penalty. As a result, the penalty imposed on the assessee was allowed, and the order was pronounced on 07.01.2022.

---