2025 (2) TMI 1436 - AT - Income Tax

Penalty for non compliance with notice under section 142(1) set aside where later compliance led to completed assessment

Failure to respond to a notice issued under section 142(1) attracted a penalty claim under the penalty provision, but the tribunal found the penalty ... Penalty u/s 272A(1)(d) - non-compliance of the notice issued u/s 142(1) - HELD THAT:- Admittedly, in the present case, the assessee failed to respond to the notice issued u/s 142(1) of the Act dt. 02.11.2019, however, in response, subsequent notices, the assessee has made necessary compliances and thereafter the assessment was completed u/s 143(3) of the Act. Therefore, by respectfully following the decision of Gyan Mata Radha Satyam Kriyayog [2021 (3) TMI 5 - ITAT ALLAHABAD] we find that the penalty-imposed u/s 272A(1)(d) of the Act is not justifiable in the present case. AO himself has deemed to have condoned the default of assessee of making non-compliance on earlier occasion as the assessment was finally passed u/s 143(3) of the Act after considering the necessary information and evidences furnished by the assessee subsequently. Appeal of the assessee is allowed. Issues: Whether the penalty imposed under Section 272A(1)(d) of the Income-tax Act, 1961 for non-compliance with notice issued under Section 142(1) is sustainable where the assessee subsequently complied with notices and the assessment was finally completed under Section 143(3) of the Income-tax Act, 1961.Analysis: The assessee failed to respond to the notice dated 02.11.2019 issued under Section 142(1), but subsequently furnished the required information in response to later notices and the assessment was completed under Section 143(3). The assessing officer, by framing the assessment under Section 143(3) after considering the information, effectively accepted the explanations and evidence later filed. Reliance is placed on the principle that when the assessee ultimately complies and the assessment is completed after considering such compliance, the earlier default is deemed condoned and penalty levied under provisions such as Section 272A(1)(d) is not justified. The Tribunal followed the coordinate decision applying Section 273B and related authorities dealing with deletion of penalties where compliance is ultimately found acceptable during assessment proceedings.Conclusion: Penalty imposed under Section 272A(1)(d) of the Income-tax Act, 1961 is not justifiable in the facts of the case and is to be deleted; decision is in favour of the assessee.