Law:

Section:

Section 271(1)(b) of the Income-tax Act, 1961 - Penaity - Failure to comply with notice - Assessment years 1982-83 and 1983-84 - Assessee having not filed her return even after issuance of notices under sections 148 and 142(1), Assessing Authority completed assessment ex-parte under section 144 and also imposed penalty under section 271(1)(b) - Deputy Commissioner (Appeals) as well as Tribunal deleted penalty on ground that same could not be imposed because no return was filed by assessee and as per provisions of section 271(1)(b) for computing penalty to be levied, a return was a must - Whether authorities below rightly set aside penalty imposed - Held, yes FACTS The assessee, an individual did not file any return even after issue of notices under section 148 and under section 142(1) .The assessment under section 144 was completed ex-parte and assessing authority imposed penalty under section 271(1)(b). The Deputy Commissioner of Income-tax (Appeals) allowed the appeal on the ground that the penalty under section 271(1)(b) could not be imposed because no return had been filed by the assessee and as per the provisions of section 271(1)(b) for computing the penalty to be levied, a return was must. The order of the Deputy Commissioner (Appeals) was upheld by the Tribunal on the ground that prior to 1-4-1989, i.e., before the amendment of clause (ii) of sub-section (1) of section 271, the re-assessment proceeding could not be treated as regular assessment. On reference: HELD The submissions of the Revenue that the reasons given by the Tribunal for upholding the order of the Deputy Commissioner (Appeals) were erroneous as much as even the first assessment made under section 147 was to be treated as regular assessment and, therefore, the penalty was rightly levied, was misconceived, under section 271(1)(b), as it stood during the relevant period, penalty was imposable if any person had without reasonable cause failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or failed to comply with the direction issued under sub-section (2A) of section 142. However under clause (ii ) sub-section (1) of section 271, the quantum of…

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