Non-Compliance of Notice not Deliberate: ITAT Deletes Penalty u/s 271B

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The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 271B of the Income Tax Act 1961 as the non-compliance of notice was not deliberate. 

The Assessing Officer had issued notices dated 14.03.2022 and 19.02.2022 to the assessee, Devnadi Advisory Pvt. Limited. These notices were not complied with by the assessee. Therefore, a penalty under Section 271B of the Income Tax Act had been imposed.

In this section, it had been provided that if an assessee failed to comply with the notice issued by the Assessing Officer, the penalty of Rs.10,000/- would be imposed on a single failure. In the present case, the assessee had imposed a penalty of Rs.20,000/- on account of the failure of the assessee for not complying with two notices.

Miraj D. Shah appeared on behalf of the assessee Ranu Biswas, who appeared on behalf of the Revenue.

Under Section 271B of the Income Tax Act, The Income-tax Officer may order that a person pay a penalty equal to 0.5 per cent of the total sales, turnover, or gross receipts, as applicable, in business or of the gross receipts in the profession, in such previous year or years if that person fails to obtain an audit of his accounts for any prior year or prior years relevant to an assessment year or obtain a report of such audit as required under section 44AB of the Income Tax Act.

The two-member Bench of Rajpal Yadav, (Vice-President) and Manish Borad, (Accountant Member) allowed the appeal observing that, the first appellate authority had not considered the fact that the first notice was not served upon the assessee and the second notice was complied with by the assessee.

The Bench deleted the penalty and held that the assessee had not knowingly violated the notices issued by the Assessing Officer. There was a reasonable cause for its non-appearance on the first notice, as it was not served upon the assessee. Similarly, the assessee had submitted a reply to the second notice, therefore, it could not be construed that the assessee had failed to comply with the notices.To Read the full text of the Order CLICK HERE

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Devnadi Advisory Pvt. Limited vs Income Tax Officer


Counsel for Appellant:   Shri Miraj D. Shah

Counsel for Respondent:   Smt. Ranu Biswas

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