Penalty under Section 272A(1)(d) cannot be levied if subsequent

Penalty under Section 272A(1)(d) cannot be levied if subsequent compliance leads to acceptance of returned income.

Issue

Whether a penalty under Section 272A(1)(d) for initial non-compliance with Section 142(1) notices is legally sustainable when the assessee subsequently furnishes all required details and the Assessing Officer completes the assessment under Section 143(3) by accepting the returned income without any adverse additions.

Facts

The Assessee: The assessee is an individual who filed a return of income declaring agricultural and interest income for the assessment year 2022-23.
Scrutiny and Notices: The case was selected for scrutiny, and the Assessing Officer (A.O.) issued statutory notices under Section 142(1).
Initial Non-Compliance: The assessee initially failed to comply with or respond to these issued notices.
Penalty Show-Cause: Due to the initial non-compliance, the A.O. issued a penalty show-cause notice and subsequently levied a penalty under Section 272A(1)(d).
Subsequent Cooperation: During the course of the assessment proceedings, the assessee later submitted a detailed written reply along with all necessary supporting documents.
Final Assessment Order: The A.O. accepted the subsequent filings and completed the regular assessment under Section 143(3), fully accepting the returned income of the assessee without making any adverse additions.

Decision

Deemed Condonation by A.O.: The court held that by subsequently accepting the details furnished by the assessee and completing the assessment under Section 143(3), the A.O. is deemed to have condoned the initial absence or non-compliance of the assessee.
Substantial Compliance Achieved: Since the assessee ultimately provided sufficient compliance that culminated in the total acceptance of their returned income, the initial default lost its penal consequence.
Penalty Set Aside: The court ruled that the penalty levied under Section 272A(1)(d) could not be legally sustained under these circumstances, deciding the matter in favor of the assessee.

Key Takeaways

Subsequent Compliance Wipes Out Initial Default: If an assessee fully cooperates later in the assessment proceedings and satisfies the revenue’s queries, initial procedural delays or non-compliances should not be penalized.
The “Deemed Condonation” Principle: When an Assessing Officer passes a clean assessment order accepting the returned income based on subsequent submissions, they implicitly waive the right to penalize prior non-cooperation for the same notices.
Assessment Outcome Influences Penalty: A penalty for non-compliance is highly untenable when the assessment itself concludes without a single addition or variance from the taxpayer’s original disclosure.

IN THE ITAT JODHPUR BENCH

Lila Lila Chayal

Deputy Commissioner of Income-tax^*

SUDHIR PAREEK, Judicial Member
and Dr. Mitha Lal Meena, Accountant Member

IT Appeal Nos. 812 to 821 (Jodh) of 2025
[Assessment years 2022-23]

APRIL 30, 2026

Rajendra Jain, Adv. for the Appellant. Smt. Swapnil Parihar, JCIT (Virtual) for the Respondent.

ORDER

1. These captioned appeals have been filed by assessees against the separate order of the Commissioner of Income Tax, Appeal, Jaipur-5 [hereinafter referred to as CIT(A)] dated 12.08.2025 and 15.07.2025 with respect to Assessment Year 2022-23.

2. The assessees have raised common issues in the grounds of appeal, therefore, the ground of appeal are reproduced as per ITA Nos. 812 to 821/Jodh/2025:

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That on the facts and in the circumstances of the case, the Id CIT (A) grossly erred in upholding the validity of penalty order passed by the Ld AO.

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That on the facts and in the circumstances of the case the Ld CIT(A) grossly erred in confirming the penalty of Rs. 10,000/- u/s 272A(1)(d) of the Act.

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That on the facts and in the circumstances of the case the Ld CIT(A) ought to have considered the reason for non-compliance of notice in the light of principle of natural & substantial justice.

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That on the facts and in the circumstances of the case the Ld CIT(A) grossly erred in recording the contrary findings in appellate order while confirming the penalty imposed by AO.

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That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing.

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The petitioner prays for justice & relief.

3. Since the appellants have raised a sole and common issue challenged on identical facts in these appeals, therefore, all these appeals were heard together and disposed of by this consolidated order for the sake of brevity. The ITA No. 812/Jodh/2025 is taken as a lead case for discussion of the facts and adjudication of the issues.

4. The appellant assesse has filed its return of income for the year under consideration disclosing total income of Rs. 3,73,890/- on 26.07.2022. The case of the assesse was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer (in short the “AO”) has issued notice u/s 142(1) of the Act, requiring the assesse to furnish details, information/submissions from time to time in all six cases where notices issued u/s 142(1) of the Income Tax Act. The AO stated that a penalty show cause notice has also been issued for noncompliance of notice u/s 142(1) and levied a penalty of Rs. 10,000/- u/s 272A(1)(d) for six non-compliances to the said statutory notices. However, the assessment has been completed u/s 143(3) of the Income Tax Act accepting the returned income shown by the assessee at Rs. 3,73,890/-.

5. Aggrieved assessee went in appeal before the Ld. CIT(A) who has summarily rejected the appeal of the assessee by observing that the appellant has no explanation to offer in the matter and there is no factual basis of the claim raised in the grounds of appeal and accordingly, he confirmed the penalty u/s 272A(1)(d) of the IT Act of Rs. 10,000/-.

6. The Ld. Counsel for the assessee has submitted that it was due to overload of the work of audit and ITR filing and pending assessment proceedings that the early notices remained non-complied during the course of assessment proceedings. However, the detailed compliance have been furnished with a written reply in the course of assessment proceedings with the supporting documentary evidence to assist the AO for the purpose of completion of the assessment after considering the submissions of the assessee. The AO has accepted the returned income of the assessee by passing regular assessment order u/s 143(3) of the Act. Thus, the AR contended that the details furnished by the assessee and assessments finally completed u/s 143(3) of the Act evidences that the AO has deemed condoned the non-compliance of the notices by the assesse on the earlier occasions. Accordingly, he requested that the penalty levied u/s 272A(1)(d) may kindly be deleted.

7. The Ld. DR on the other hand rely on the impugned order, however, she did not controvert the appellants contentions.

8. We have heard both the sides and perused the material on record. Admittedly, the issues of levy of penalty u/s 272A(1)(d) is common on identical facts in all the appeals. It is seen that in the early part of the assessment proceedings, the assessee could not make compliance to the notices issued u/s 142(1) of the IT Act. Subsequently, the assessee has made detailed compliance by way of furnishing a detailed reply with the support of the documentary evidence in the course of assessment proceedings. From the assessment order passed by the AO for the year under consideration, it is evident that after considering the submissions of the assessee, the AO has observed that the assessee is an individual entity and derived his income from agriculture in addition to that he has also derived income from other sources i.e. interest income which have been shown in the ITR for the year under consideration. The AO further stated in the assessment order that the reply filed by the assessee has been verified from the material available on record and the same has been found tenable and placed on record. After considering the detailed reply filed by the assessee, the AO has made no adverse observation or drawn any adverse inference and accepted the income disclosed by the assessee in its return of income filed u/s 139(1) of the Act.

9. Thus, it is evident from the assessment order that assessee has made sufficient compliance of the notices issued by the AO culminating into acceptance of returned income of the assessee by the AO. In our view, no penalty u/s 272A(1)(d) could be levied when the assessment order has been completed u/s 143(3) of the Act, wherein the AO is deemed to have condoned the absence of assessee or his Authorized Representative (AR) on earlier occasions by subsequently accepting the details furnished by the assessee and that assessment were being completed u/s 143(3) of the Act by accepting the returned income in particular. Our view gets support from the decision delivered by coordinate bench Surat in the case of Ramabhai Kanjibhai Patel v. DCIT [IT Appeal No. 106 to 110 (SRT) of 2023, dated 11-05-2023] with respect to assessment year 2013-14 to 2017-18 .

10. We, therefore, direct the AO to delete the said penalty levied u/s 272A(1)(d) of the Act. Thus the ground of the appeal of the assessee is allowed.

11. The issue raised in ITA Nos. 813 to 821/Jodh/2025 are exactly identical on facts as that discussed in ITA No. 812/Jodh/2025 and, therefore, our observation and finding given in ITA No. 812/Jodh/2025 shall apply to ITA Nos. 813 to 821/Jodh/2025 in mutatis mutandis, ordered accordingly.

12. In the result, these appeals filed by the assessee in ITA Nos. 812 to 821/Jodh/2025 are allowed.