2022 (7) TMI 1223 - AT - Income Tax

Invalid Penalty of Rs.10,000 Deleted Due to Procedural Issues

M/s Cosmopolitan Solution Pvt. Ltd. Versus Income Tax Officer, Ward-1 (1) (2), Surat

M/s Cosmopolitan Solution Pvt. Ltd. Versus Income Tax Officer, Ward-1 (1) (2), Surat - TMI Issues:1. Validity of penalty under section 271(1)(b) of the Income Tax Act.2. Compliance with notice requirements under section 142(1) and 271(1)(b).3. Proper initiation and verification of penalty by the Assessing Officer.Analysis:1. The appeal was against the penalty imposed under section 271(1)(b) of the Income Tax Act for the assessment year 2012-13. The appellant challenged the validity of the penalty, claiming that the order by the Assessing Officer and subsequent confirmation by the CIT(A) were contradictory to law and facts. The appellant argued that the penalty should be deleted as the assessment order was served invalidly through email after an unreasonable delay, rendering both the assessment order and penalty invalid.2. The case involved the non-compliance of notice requirements under section 142(1) and subsequent penalty under section 271(1)(b). The Assessing Officer issued a show cause notice for non-compliance of a notice dated 08.12.2018, which the appellant contested, stating that no such notice was received or reflected online. Despite the appellant's denial, the Assessing Officer levied a penalty of Rs.10,000. The CIT(A) upheld the penalty, citing the appellant's failure to comply with notices during assessment and appellate proceedings.3. Upon review, the Tribunal found discrepancies in the initiation and verification of the penalty by the Assessing Officer. It was noted that the penalty was not mentioned or initiated in the assessment order dated 08.12.2018. The show cause notice referred to a non-existent notice dated 08.12.2018, indicating a lack of proper verification by the Assessing Officer. Consequently, the Tribunal concluded that the penalty was levied in a mechanical manner without proper verification, leading to the deletion of the Rs.10,000 penalty. The Tribunal allowed the appeal, ruling in favor of the appellant.In summary, the Tribunal found the penalty under section 271(1)(b) to be invalid due to procedural irregularities and lack of proper verification by the Assessing Officer. The appeal was allowed, and the penalty of Rs.10,000 was deleted.