Smt. Rekha Rani vs. DCIT ITAT Delhi `F’ Bench Before G. C. Gupta (VP) and Inturi Rama Rao (AM) ITA No. 6131 /Del/2013 Assessment Year: 2009-10. Decided on: 6th May, 2015. Counsel for assessee / revenue : None / Vikram Sahay

Facts:
The
Assessing Officer (AO) issued notice u/s. 143(2) of the Act on five
different dates and the assessee failed to comply with the same. The AO
invoked the provisions of section 271(1)(b) of the Act and imposed
penalty of Rs. 10,000 for each default on the ground that the assessee
had no reasonable cause for not appearing on the date fixed for hearing.
Thus, he levied a total penalty of Rs.50,000. Aggrieved, the assessee
preferred an appeal before CIT(A) who confirmed the action of the AO.
Aggrieved, the assessee preferred an appeal to the Tribunal.

Held:
The
Tribunal observed that there was no reasonable cause on the part of the
assessee for not appearing on the different dates of hearing before the
AO in response to the notices issued u/s. 143(2) of the Act. The
Tribunal found that the default was the same in all the five cases and
therefore, it held, that penalty of Rs.10,000 could be imposed for the
first default made by the assessee in this regard. It held that the
penalty u/s. 271(1)(b) could not be imposed for each and every notice
issued under section 143(2), which remained not complied with on the
part of the assessee. It observed that the provision of section 271(1)
(b) is of deterrent nature and not for earning revenue. It held that any
other view taken shall lead to imposition of penalty for any number of
times (without limits) for the same default of not appearing in response
to the notice u/s.143(2) of the Act. This, according to the Tribunal,
does not seem to be the intention of the legislature in enacting the
provisions of section 271(1)(b) of the Act. It observed that in case of
failure on the part of the assessee to comply with the notice u/s.143(2)
of the Act, the remedy with the AO lies in framing “best judgement
assessment” under the provisions of section 144 of the Act and not to
impose penalty u/s. 271(1)(b) of the Act again and again.

The
Tribunal restricted the penalty levied u/s. 271(1)(b) of the Act to the
first default of the assessee in not complying with the notice issued
u/s. 143(2) of the Act.

The appeal filed by assessee was partly allowed.