Penalty u/s 271(1)(b) not imposable for non-compliance of section 142(1)

Sh. Sangram Ram S/o Dharma Ram Vs ITO (ITAT Jodhpur)

ITAT Jodhpur held that penalty under section 271(1)(b) of the Income Tax Act not imposable for non-compliance of section 142(1) of the Income Tax Act.

Facts- The assessee is an individual and receives income from agricultural activities. The assessment u/s 143(3) r.w.s. 147 of the I.T. Act was completed by the AO on 27.12.2017 determining the total income at Rs.3,63,518/-. The ld. PCIT, Jodhpur vide his order dated 05.03.2021 u/s 263 of the I.T. Act has set aside the assessment order of the AO for not examining the agricultural income of the assessee of Rs.1,45,000/- which was claimed as exempt by him. Subsequently, the AO completed the assessment u/s 147 r.w.s. 263 of the I.T. Act on 01.12.2021, wherein he assessed the total income at Rs.5,08,518/- by not allowing the agricultural income of Rs.1,45,000/- as exempt. The AO also levied penalty u/s 271(1)(b) of the I.T. Act of Rs.10,000/- for not complying to the notices issued u/s 142(1) of the I.T. Act. Aggrieved by this, the assessee has preferred an appeal before CIT(A).

Conclusion- it was clear from the provisions of Section 271(1)(b) that this provision can be invoked only for non compliance of notice Under section 115WD (2) or Section 115WE(2) or Section 142(1) or 143(2) or directions issued Under section 142(2A) of the Act. Therefore, other than the default committed by the assessee specified in clause (b) of section 271(1) the non compliance to the other notices or directions would not attract the penalty Under section 271(1)(b) of the Act. Further, we perused the documentary evidence of the assessee’s reply notices on 14.06.2022, 20.06.2022 and 04.08.2022 for requesting to treat as compliance of reply of notice in which there was a reasonable cause to treat.

In our considered opinion, that the assessee was served with the notices issued by the AO and subsequently reply of notices were sent by the assessee is also on record. The reasons explained by the assessee were bonafide and reasonable before the CIT (A) where the ld. CIT(A) has not taken into consideration.

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