The Jodhpur Bench of Income Tax Appellate Tribunal (ITAT) has held that no penalty shall be levied under Section 271(1)(b) of the Income Tax Act 1961 for non-compliance of section 142(1) of the Income Tax Act.
The assessee, Sangram Ram, is an individual who received income from agricultural activities. The assessment under Section 143(3) r.w.s. 147 of the Income Tax Act was completed by the AO determining the total income. The PCIT, had set aside the assessment order of the AO for not examining the agricultural income of the assessee which was claimed as exempted by him.
Subsequently, assessed the total income by not allowing the agricultural income as exempted. The AO also levied a penalty under Section 271(1)(b) of the Act for not complying to the notices issued under Section 142(1) of the Act.
Section 142(1) of the Income-tax act 1961, deals with issuing notice for making an assessment in which the return is filed or if return is not filed then to furnish the required information in the prescribed manner
Suresh Ojha, on behalf of the assessee submitted that the assessee had already replied for the notice issued by the Department submitting that the assessee was going to prefer an appeal requesting the Assessing Officer to keep penalty proceeding in abeyance with proof of filing the appeal.
He also contented that assessee had also sent reply for the notice under Section 271(1)(c) of the Income Tax Act submitting that the appeal of the assessee against the addition had been accepted . he further contented to treat this as compliance of notice issued previously.
And requested to drop the penalty proceeding.
Nidhi Nair, on behalf of the revenue, supported the order of the lower authorities.
B. R. Baskaran (Accountant Member) and S. Seethalakshmi (Judicial Member) set aside the impugned order and allowed the appeal observing 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 bona fide and reasonable before the CIT (A) where the ld. CIT(A) has not been taken into consideration.”
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