2023 (3) TMI 763 - AT - Income Tax

Penalty u/s. 271(1)(b) - assessee though not complied to the 142(1) notices - assessment order passed u/s.144 - reasonable cause for the said failure u/s 273B - HELD THAT:- As before completion of assessments, the assessee filed various details vide its letters dated 05.11.2018, 16.11.2018, 07.12.2018, 19.12.2018 and 20.12.2018. However submissions were not taken on record by the Assessing Officer and passed a best judgment assessment. Whereas when the assessee has filed so many details, AO ought not have passed the assessment order u/s. 144 of the Act, but ought to have passed the assessment order u/s. 143(3) of the Act.

As stated by the assessee during the appellate proceedings, the entire additions made u/s. 144 assessment order is deleted by the CIT(A). Thus, the grievance made out by the assessee is found to be genuine and reasonable. In the above circumstances the levy of penalty under Section 271(1)(b) in our considered opinion is unwarranted.

If the statutory provision shows that the word “shall” has been used in Section 271(1)(b), then the imposition of penalty would have been mandatory. Section 273B as noted further throws light on the legislative intent, as it specifically provides that no penalty “shall” be imposed, if the assessee proves “that there was reasonable cause for the said failure”. - Decided in favour of assessee.