Penalty under Section 272A(1)(d) deleted for non-compliance with notices after substantial compliance shown

ITAT Chandigarh allowed the assessee's appeal and deleted the penalty levied under section 272A(1)(d) for non-compliance with statutory notices under sections 143(2) and 142(1). The assessee explained non-availability of information due to a hostile director possessing relevant documents. The tribunal found that notices were substantially complied with after the penalty order was passed, and the penalty proceedings were limited to specific notices rather than the broader assessment process under section 144.

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Issues:
Levy of penalty under section 272A(1)(d) for non-compliance with statutory notices during assessment proceedings.

Analysis:
The appellant, an assessee, filed an appeal against the penalty imposed under section 272A(1)(d) amounting to Rs. 50,000 by the Assessing Officer (AO) for non-compliance with statutory notices. The case was initially scrutinized by ITO, W-1(1), Nangal, and later transferred to ITO, W-4(1), Chandigarh. The AO issued multiple notices under sections 143(2) and 142(1) to which the appellant responded, citing reasons for non-compliance, such as jurisdictional transfer and unavailability of records. The penalty was imposed despite subsequent compliance by the appellant.

The appellant appealed to the Ld. CIT(A), NFAC, Delhi, who upheld the penalty. The appellant then appealed to the Appellate Tribunal ITAT Chandigarh. During the hearing, the appellant argued that there was no deliberate non-compliance with the notices and provided explanations for each instance of non-compliance. The Departmental Representative (DR) supported the lower authorities' orders, emphasizing the lack of reasonable cause for non-compliance.

The Tribunal analyzed each notice issued by the AO. For notices under section 143(2), it found that the appellant responded appropriately, and there was no requirement for specific information, leading to the deletion of the penalty. Regarding notices under section 142(1), the Tribunal noted the reasons provided by the appellant for non-compliance, such as uncooperative directors and voluminous information. Despite subsequent compliance, the AO levied the penalty prematurely without considering the delayed compliance.

The Tribunal concluded that the penalty was unjustified as the appellant had substantially complied with the notices, even if delayed. It set aside the CIT(A)'s order and directed the deletion of the penalty under section 272A(1)(d) amounting to Rs. 50,000. The appellant's appeal was allowed, and the order was pronounced on 31/01/2024.

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