Penalty for delayed compliance was deleted after later replies were accepted and reasonable cause was shown under tax law.

Penalty under section 272A(1)(d) was held unsustainable where the assessee made delayed but actual compliance to notices under section 142(1), and the assessment under section 143(3) was completed after the replies and supporting documents were taken on record. The subsequent compliance effectively regularised the earlier defaults, so the past procedural lapse did not justify penalty. The assessee also showed reasonable cause under section 273B through affidavit-supported explanations, including administrative difficulties and absence of key finance personnel, with no material showing wilful delay. On both grounds, the penalty was deleted.

---

---

Issues: (i) Whether penalty under section 272A(1)(d) of the Income-tax Act, 1961 was sustainable when the assessee had made delayed but actual compliance to notices under section 142(1) and the assessment was completed under section 143(3) after considering those replies. (ii) Whether the assessee had established reasonable cause under section 273B of the Income-tax Act, 1961 to escape penalty.

Issue (i): Whether penalty under section 272A(1)(d) of the Income-tax Act, 1961 was sustainable when the assessee had made delayed but actual compliance to notices under section 142(1) and the assessment was completed under section 143(3) after considering those replies.

Analysis: The replies and supporting documents filed in response to the notices were taken on record and considered while completing the assessment under section 143(3). Once the assessment was framed after acceptance of the subsequent compliances, the earlier defaults stood effectively regularised and the earlier non-compliances were treated as having been condoned. The applied principle was that penalty for past default cannot survive where the assessment proceedings themselves show acceptance of later compliance and participation by the assessee.

Conclusion: The penalty under section 272A(1)(d) was not sustainable on this ground.

Issue (ii): Whether the assessee had established reasonable cause under section 273B of the Income-tax Act, 1961 to escape penalty.

Analysis: The record showed administrative difficulties, including absence of key finance personnel, and the assessee was a co-operative society engaged in activities benefiting farmers and milkmen. The explanation was supported by affidavit material, and no material was brought to show wilful or contumacious delay. These circumstances satisfied the statutory requirement of reasonable cause.

Conclusion: The assessee established reasonable cause under section 273B, and the penalty could not be sustained.

Final Conclusion: The impugned penalty was deleted and the assessee obtained complete relief in the appeal.

Ratio Decidendi: Where an assessee makes subsequent compliance to notices and the assessment is completed under section 143(3) after considering those replies, earlier procedural defaults may stand regularised and penalty for those defaults is not sustainable, particularly where reasonable cause is established under section 273B.

---