Penalty under Section 272A(1)(d) upheld for repeated non-compliance with income tax notices under Sections 143(2), 142(1)

ITAT Chennai upheld the penalty imposed u/s 272A(1)(d) on the assessee for non-compliance with statutory notices issued u/s 143(2) and 142(1). The AO had repeatedly called for details through several notices, which the assessee failed to respond to, leading to a penalty of Rs. 30,000. The CIT(A) rejected the assessee's appeal, including the request for condonation of delay. On further appeal, ITAT found consistent and unexplained non-compliance and held that the levy of penalty was justified, thereby dismissing the assessee's appeal and sustaining the penalty.

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1. ISSUES PRESENTED AND CONSIDERED

(1) Whether the delay of 838 days in filing the appeal against the assessment order disallowing deduction under section 80P was liable to be condoned by the appellate authority.

(2) Whether the delay of 654 days in filing the appeal against the penalty order under section 270A was liable to be condoned by the appellate authority.

(3) Whether, on facts, penalty imposed under section 272A(1)(d) for failure to comply with notices under sections 142(1) and 143(2) was sustainable on merits.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (1) - Condonation of delay in appeal against assessment disallowing deduction under section 80P

Interpretation and reasoning

The Court noted that reasons for delay were specifically set out in Column 15 of Form 35 and were reproduced in the appellate order. It observed that the first appellate authority had rejected condonation mainly on the ground that, in the returns of income for subsequent assessment years, the same e-mail ID was mentioned, implying that non-receipt of notices could not be a cause for delay. The Court found this reasoning factually incorrect because Form 35, under "Personal Information", disclosed a different e-mail address ([email protected]) to which no hearing notices had been sent. Having regard to the affidavit of the Secretary (I/c) and the submissions of the assessee, the Court held that the reasons stated for delay constituted a reasonable cause and that the delay was neither wilful nor deliberate.

Conclusions

The delay of 838 days in filing the appeal against the assessment order was directed to be condoned. The matter was remanded to the appellate authority to adjudicate the issues on merits after considering submissions and evidence to be furnished by the assessee, subject to payment of costs of Rs. 10,000/- to the State Legal Aid Authority, Madras High Court, within 30 days from receipt of the order. The appeal was allowed for statistical purposes.

Issue (2) - Condonation of delay in appeal against penalty under section 270A

Interpretation and reasoning

The Court observed that the delay of 654 days in filing the appeal against the order imposing penalty under section 270A arose from the same factual matrix and reasons as in the appeal against the assessment order. The appellate authority had similarly rejected the condonation of delay. The Court applied the reasoning adopted in Issue (1), holding that the cause shown for delay was reasonable and relatable to the same communication and representation difficulties already accepted in the earlier appeal.

Conclusions

The delay of 654 days in filing the appeal against the penalty order under section 270A was directed to be condoned. The matter was remanded to the appellate authority to decide the penalty issue on merits after considering the assessee's submissions and evidence, subject to payment of Rs. 10,000/- to the State Legal Aid Authority, Madras High Court, within 30 days from receipt of the order. The appeal was allowed for statistical purposes.

Issue (3) - Sustainability of penalty under section 272A(1)(d) for non-compliance with statutory notices

Legal framework

The Court reproduced section 272A(1) of the Act, including clause (d), which provides that failure to comply with a notice under section 142(1) or section 143(2), or a direction under section 142(2A), attracts a penalty of Rs. 10,000 for each default or failure.

Interpretation and reasoning

The Court recorded that the Assessing Officer had issued a notice under section 143(2) and multiple notices under section 142(1) requiring the assessee to furnish details. It found that the assessee had not complied with these notices. On this factual basis, the Court held that there was clear non-compliance with statutory notices within the meaning of section 272A(1)(d). It noted that the penalty of Rs. 30,000/- imposed by the Assessing Officer was a direct consequence of such failure, and that the appellate authority had dismissed the assessee's appeal by refusing to condone delay.

Conclusions

On merits, the assessee's failure to comply with notices under sections 142(1) and 143(2) was held to constitute clear non-compliance attracting section 272A(1)(d). The penalty of Rs. 30,000/- levied under section 272A(1)(d) was sustained, and the appeal against the penalty was dismissed.

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