2023 (9) TMI 793 - AT - Income Tax

Penalty under Income-tax Act deleted by ITAT for failure to provide proper opportunity to assessee.

The ITAT BANGALORE allowed the appeal, deleting the penalty imposed on the appellant under section 272A(1)(d) of the Income-tax Act, 1961. The judgment ... Penalty u/s 272A(1)(d) - non-compliance of notice issued u/s 142(1) - HELD THAT:- Assessee has filed a manual letter dated 31.10.2019 requesting for some time to get details and then reply. However, the AO passed the assessment order on 23.11.2019 without disposing of the assessee’s letter dated 31.10.2019 either rejecting the said application or granting time. We also found that ultimately assessment was completed by AO u/s 144 making addition which is cash deposit in various bank accounts. In our opinion, it is the duty of the AO to dispose of any communication/letters filed by the assessee before him at the time of assessment or giving finding about those letters in his order. Being so, the inaction of the AO on the various letters filed by the assessee which enable the assessee to believe that the time to comply with the extension of time as prayed was granted. Therefore, in the circumstances, we are of the opinion that it cannot be said that assessee is guilty of contumacious or apparent conduct to comply with the notice u/s 142(1) of the Act. Thus, it is not a fit case for levy of penalty u/s 272A(1)(d) - Decided in favour of assessee. Issues involved:The judgment involves issues related to the imposition of penalty under section 272A(1)(d) of the Income-tax Act, 1961 for non-compliance with statutory notices, proper opportunity for the appellant to present their case, and the authority's duty to address communications from the assessee during assessment proceedings.Grounds of Appeal:The appellant raised several grounds of appeal, including contentions that the CIT (A) order was contrary to law and facts, proper opportunity was not provided for proving reasons, and denial of justice due to lack of examination of facts and decision on grounds of appeal.Assessment Proceedings and Penalty Imposition:The assessment was completed under section 144 of the Act, with a penalty show cause notice issued for non-compliance with statutory notices. The appellant contended that proper opportunity was not given, and penalty was levied by an authority different from the one who issued the notice, contrary to section 272A(3)(a)(a).Adjudication and Decision:The ITAT heard the submissions and reviewed the materials. The AO issued notices for non-compliance with statutory notices, but failed to address the appellant's request for time to respond. The assessment was completed without disposing of the appellant's communication, leading to the deletion of the penalty as the appellant was not at fault for non-compliance.Conclusion:The ITAT allowed the appeal, deleting the penalty imposed on the appellant. The judgment highlighted the importance of the authority's duty to address communications from the assessee during assessment proceedings and the need for providing a proper opportunity for the appellant to present their case.This summary captures the key issues, grounds of appeal, assessment proceedings, adjudication, and the final decision of the Appellate Tribunal ITAT BANGALORE regarding the penalty imposition under the Income-tax Act, 1961.