‘Non-cooperative attitude’ itself cannot be basis of imposing a penalty u/s 271

While setting aside all the impugned penalty orders issued by Tax authorities, The Delhi Bench of Income Tax Appellate Tribunal held that a ‘non-cooperative attitude’ itself cannot be the basis of imposing a penalty under the relevant section.

A Coram of Judicial Member, Anubhav Sharma and Accountant Member, N. K. Billaiya observed that “the assessment order or even under the penalty order that at the time of assessment proceedings itself, the AO had formed an opinion that there was intentional non-compliance justifying issuing notice u/s 271(1)(d) or u/s 272A(1)(d) of the Act, the AO is not justified to levy penalty.”

Advocate Salil Kapoor appeared for the Petitioner whereas Advocate Kanv Bali appeared for the respondent.

The brief facts of the case were that the assessment orders and impugned penalty orders were passed against the Alankit Groups by the Income Tax Authority of Delhi. The reason for issuing such orders is related to some external hard disc that was sought to be produced but was not produced by the assessee because it needed to be readable or corrupt. In response to the notice u/s 153(C) of the Act, the returns were filed and the assessments were completed with nil demand in A.Y. 2011-12 for Alankit Associates Pvt. Ltd. and nil demand in A.Y. 2019-20 in the case of Alankit Imaginations Ltd. It was also stated by the appellant that in the case of Alankit Associates Pvt. Ltd. in A.Y. 2010-11, the company was not in existence. Here, the Petitioner appealed for A.Y. 2014-15 to 2016-17, A.Y. 2010-11 to 2016-17 for penalty proceedings u/s 271(1)(b) of the Income Tax Act, 1961 and for A.Y. 2017-18 to 2019-20 for penalty order u/s 272A(1)(d) of the Act.

After considering the submission, the Bench noted that all the orders are verbatim similar except for a change of figures relevant to the assessment years.

The Bench stated that the penalty order does not mention which notice and under what provisions of the law were issued, how served, and which was not responded to by the assessee.

The Bench also stated that the assessments have been completed u/s 153C of the Act and no adverse inference was drawn against the assessee to pass an order on the best judgment basis u/s 144C.

The Bench expressed that without specifically bringing on record the specific notices, their specific non-compliances, and the satisfaction of the AO recorded during the assessment proceedings, penalties cannot be imposed.

Hence, all the grounds are sustained and the appeals are allowed by the Bench.

Cause Title: Alankit Imaginations Ltd. Vs. DCIT [ITA No. 895 to 900/Del/2023 / 2023-Enterslice-37-ITAT-Del]

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Alankit-Imaginations-Ltd.-Versus-DCIT