Penalty for non-compliance with tax notices deleted where Covid restrictions prevented timely appearance and compliance.

Penalty under section 271(1)(b) for non-compliance with notices under section 142(1) was considered in the context of the Covid pandemic and lockdown restrictions. The record showed that the notices were issued during a period when movement and compliance difficulties were affected by restrictions, and the assessee's failure to appear was treated as arising from circumstances beyond control. On that factual basis, the penalty was found unsustainable and was deleted in favour of the assessee.

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Issues: Whether the penalty under section 271(1)(b) of the Income-tax Act, 1961 was leviable for non-compliance with notices issued under section 142(1) of the Income-tax Act, 1961 during the Covid pandemic period.

Analysis: The assessee did not appear, but the record showed that the notices were issued during the Covid pandemic, when lockdowns and restrictions were in force. In that factual setting, the non-compliance was treated as resulting from circumstances beyond the assessee's control. The circumstances were considered sufficient to justify deletion of the penalty.

Conclusion: The penalty was not sustainable and was deleted in favour of the assessee.

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