Continuing default: successive notices on the same matter constitute one default, so duplicate penalties should be restricted.

Non-compliance with three successive assessment notices issued in quick succession about the same cash deposit transaction constitutes a single continuing default rather than multiple independent defaults; therefore the penal provision for failure to comply must not be multiplied for each notice. The Tribunal applied the continuing-default principle and considered statutory mitigation, concluding the aggregate penalty should be restricted: one default penalty upheld and the excess deleted, resulting in partial allowance of the taxpayer's challenge to the penalty.

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Issues: Whether penalty under Section 272A(1)(d) of the Income-tax Act, 1961 imposed separately for three successive notices u/s 142(1) relating to the same issue amounts to multiple defaults or constitutes a single continuing default and whether part of the penalty deserves deletion.

Analysis: The notices dated 22.08.2022, 21.09.2022 and 11.10.2022 were issued in quick succession to examine the same cash deposit transaction. Where successive notices are directed to the same issue within a short span, non-compliance in relation to those notices partakes the character of a single continuing default rather than distinct independent defaults. In that context, Section 272A(1)(d) must be applied to ensure compliance and not to multiply penal consequences for a singular lapse. The Tribunal also considered the scope of Section 273B as a relevant provision for mitigation where appropriate and noted precedent treating successive notices concerning the same matter as one default.

Conclusion: The penalty deserves to be restricted to one default; of the total penalty of Rs. 30,000 imposed by the Assessing Officer under Section 272A(1)(d) of the Income-tax Act, 1961, a penalty of Rs. 10,000 is upheld and the balance Rs. 20,000 is deleted (decision partly in favour of the assessee).

Ratio Decidendi: Where multiple successive notices concern the same issue within a short period, non-compliance constitutes a single continuing default and penalty under Section 272A(1)(d) should not be multiplied for each such notice; mitigation under Section 273B may be applied accordingly.

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