Penalty for summons non-compliance sustained only where refusal was proved; other alleged defaults failed for lack of independent finding.

Penalty for non-compliance with a statutory summons must rest on a judicious exercise of discretion and a clear finding of default. The assessee had otherwise participated in the investigation and given a statement, so the matter was not one of complete non-compliance. For the first summons, the refusal report attracted a presumption of service under the Evidence Act, and the penalty was sustained. For the remaining alleged defaults, the authorities had not recorded an independent satisfaction on service or wilful default and had relied only on postal and process-server reports, so the penalty was deleted.

---

---

Issues: Whether penalty under section 272A(1)(c) of the Income-tax Act, 1961 was sustainable for non-compliance with summons issued under section 131(1) of the Income-tax Act, 1961, and whether the penalty could be sustained for all alleged defaults or only for the summons found to have been refused.

Analysis: Penalty for failure to comply with a statutory summons is not to be imposed mechanically and requires a judicious exercise of discretion. The record showed that the assessee had participated in the investigation and had given a statement, indicating that the case was not one of complete non-compliance. The lower authorities had not recorded an independent satisfaction regarding service of all summonses, and had largely relied on postal and process-server reports without such independent finding. For the first summons, the report showed refusal, attracting a presumption of service under section 114(f) of the Indian Evidence Act, 1872. For the remaining alleged defaults, the material did not justify sustained penalty in the absence of a satisfactory finding of wilful default.

Conclusion: Penalty under section 272A(1)(c) was upheld only for the first default relating to the summons stated to have been refused, and deleted for the remaining seven alleged defaults.

---