Ex-Parte Dismissal Without Merits Invalid And Successive Non-Compliances Under Section 142(1) Constitute Single Default

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Ex-Parte Dismissal Without Merits Invalid And Successive Non-Compliances Under Section 142(1) Constitute Single Default

Ex-Parte Dismissal Without Merits Invalid And Successive Non-Compliances Under Section 142(1) Constitute Single Default
Issue
  1. Whether an ex-parte order passed by CIT(A) dismissing an appeal for non-prosecution without deciding it on merits as required under Section 250(6) is legally sustainable.
  2. Whether penalty under Section 272A(1)(d) can be levied separately for each non-compliance when successive notices under Section 142(1) are issued one after another for examining similar issues.
Facts
  • Ex-Parte Assessment & CIT(A) Order:
    • The assessee filed a return declaring a total income of Rs. 32.19 lakhs for AY 2022-23.
    • Due to non-compliance with notices under Sections 143(2) and 142(1), the Assessing Officer completed a best-judgment assessment under Section 144 at a total income of Rs. 1.30 crores.
    • The Assessing Officer estimated gross profit at 3% on alleged grey market purchases of Rs. 33.41 crores (addition of Rs. 94.89 lakhs) and disallowed deductions of Rs. 1.50 lakhs under Section 80C and house property loss of Rs. 1.77 lakhs.
    • The CIT(A) dismissed the assessee’s quantum appeal ex-parte for non-prosecution without deciding the issues on merits.
  • Penalty under Section 272A(1)(d):
    • The Assessing Officer issued five successive notices—one under Section 143(2) and four under Section 142(1).
    • Upon failure to comply, the Assessing Officer levied a total penalty of Rs. 50,000 under Section 272A(1)(d) (Rs. 10,000 for each of the 5 notices).
    • The assessee contended that issuing successive notices under Section 142(1) for similar issues represents a single continuing default rather than multiple separate defaults.
Decision
  • Regarding Quantum Assessment (Section 250 Mandate): Held, yes. Dismissal of an appeal for non-prosecution violates Section 250(6), which obligates the first appellate authority to decide the appeal on merits; the matter was accordingly restored to the Assessing Officer for fresh adjudication after affording a fair hearing to the assessee.
  • Regarding Section 272A(1)(d) Penalty: Held, yes. Successive notices under Section 142(1) issued for examining similar issues do not multiply defaults and constitute only a single default. Consequently, penalty was confirmed for non-compliance with the Section 143(2) notice (Rs. 10,000) and the first Section 142(1) notice (Rs. 10,000), while penalties for the remaining three Section 142(1) notices (Rs. 30,000) were deleted.
Key Takeaways
  • Mandatory Merit-Based Disposal by CIT(A): An appellate authority under Section 250(6) cannot dismiss an appeal in limine or for non-prosecution; it must independently pass a reasoned order on the points for determination and merits.
  • Single Default Principle for Successive Notices: Repeated issuance of notices under Section 142(1) during the same assessment proceedings for identical/similar inquiries constitutes a single default for penalty purposes under Section 272A(1)(d), preventing cumulative penalties for each follow-up notice.
IN THE ITAT SURAT BENCH ‘DB’
Rupeshkumar
v.
Income-tax Officer
Ms. Suchitra Kamble, Judicial Member
and B.M. Biyani, Accountant Member
IT Appeal Nos. 650 & 651 (SRT) of 2025
[Assessment year 2022-23]
SEPTEMBER  3, 2026
P.M. Jagasheth, CA for the Appellant. Ashish Kumar, Sr. DR for the Respondent.
ORDER
B.M. Biyani, Accountant Member.- The captioned two (2) appeals are filed by assessee for Assessment-Year [“AY”] 2022-23. The details of appeals are as under:
(i) ITA 650/SRT/2025 is a Quantum-Appeal directed against the order of first appeal dated 07.04.2025 passed by learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of the assessment-order dated 23.03.2024 passed by learned Assessment Unit of Income-tax Department [“Ld. AO”] u/s 143(3) r.w.s. 144B of the Income-tax Act, 1961 [“Act”].
(ii) ITA 651/SRT/2025 is a Penalty-Appeal directed against the order of first appeal dated 07.04.2025 passed by Ld. CIT(A), which in turn arises out of the penalty-order dated 05.09.2024 passed by Ld. AO u/s 272A(1)(d) of the Act imposing a penalty of Rs. 50,000/- upon assessee.
2. The background facts leading to these appeals are such that the assessee-individual, engaged in the business of diamond, filed his return of AY 2022-23 declaring a total income of Rs. 32,19,456/-. The case of assessee was selected for scrutiny and the Ld. AO issued notices u/s.143(2)/142(1) which remained uncompiled by assessee. The AO also issued notices u/s 133(6) to certain parties from whom the assessee made purchase transactions during the year, however those parties also did not respond to AO’s notices. Ultimately, the Ld. AO treated the total purchases of Rs. 33,41,31,784/- made by assessee from those parties as having been made from grey market and estimated gross-profit at 3% as against profit of 0.16% declared by assessee; made addition of Rs. 94,89,342/- on account of gross-profit. Further, the AO disallowed the deduction of Rs.1,50,000/- u/s 80C and loss of Rs. 1,76,908/- from house property, claimed by assessee in the return, for want of documentary evidences. Accordingly, the AO completed assessment u/s 144 through assessmentorder dated 23.03.2024 assessing total income at Rs. 1,30,35,706/-. Further, vide penalty-order dated 05.09.2024, the Ld. AO also imposed a penalty of Rs. 50,000/- u/s 272A(1)(d) for assessee’s failure to comply with five (5) notices issued u/s 143(2)/142(1). Aggrieved, the assessee carried matters in respective appeals before Ld. CIT(A). However, the Ld. CIT(A) dismissed assessee’s appeals for non-prosecution. Now, the assessee has come in next appeals before us.
3. Since these appeals are inter-related, they were heard together and are being disposed of by this common order for the sake of convenience, brevity and clarity. We firstly start with Quantum-Appeal and thereafter take up Penalty-Appeal.
ITA No. 650/SRT/2025 – Quantum-Appeal:
4. Ld. AR for assessee submitted that the Ld. CIT(A) passed ex-parte order dismissing assessee’s first appeal and merely approving the order of Ld. AO, although due to non-prosecution by assessee on the dates of hearing, but the order passed by Ld. CIT(A) is against the mandate of section 250(6) which provides: “The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon, and the reason for the decision”. It is further submitted that the non-prosecution by assessee was due to bona fide reason as the Ld. CIT(A), while conducting first-appeal, has sent notices of hearing to e-mail address: tanvicorporation@gmail.com although the assessee has specifically mentioned email address: acc.tally83@gmail.com in the space provided in Form No. 35. Therefore, due to non-service of notices at proper email address, the assessee could not attend hearings fixed by Ld. CIT(A), which has led to the passing of ex-parte order by Ld. CIT(A). Therefore, the impugned order of first-appeal passed by Ld. CIT(A) deserves to be set aside.
5. Ld. AR went ahead to demonstrate that the assessment-order passed by Ld. AO is also ex-parte due to lack of submissions but the same had occurred for the reason that the assessee was not able to collect and file confirmations from concerned parties at that time which is also evident from the fact that the Ld. AO also issued notices u/s 133(6) directly to the parties but they did not give any response to AO’s notices. However, the assessee has already collected all relevant details and documents and ready to make an effective representation before Ld. AO. Ld. AR, therefore, prayed that in the interest of justice, one more opportunity be given to assessee by way of restoring this matter at the level of Ld. AO. He acknowledged that the assessee shall definitely make a proper and effective representation before Ld. AO.
6. The Ld. DR for revenue, though not opposing the prayer of the assessee for restoration, submitted that the assessee had remained non-compliant during the assessment proceedings as well as proceedings of first-appeal, which constrained the lower authorities to pass ex-parte orders. It was, therefore, submitted that while restoring the matter, appropriate directions may be issued to ensure strict compliance by the assessee.
7. In view of above submissions of parties; having regard to the principle of natural justice and also bearing in mind that no prejudice would be caused to revenue if the present matter is restored at the level of Ld. AO, we restore this matter to the file of Ld. AO for adjudication afresh, at the risk and responsibility of assessee. The Ld. AO shall give necessary opportunity of hearing to assessee and pass an appropriate order uninfluenced by his earlier order. The assessee is also directed to remain vigilant and ensure participation in the hearings as may be fixed by Ld. AO without seeking unnecessary adjournments failing which the Ld. AO shall be at liberty to proceed in accordance with law. Ordered accordingly.
8. Consequently, this Appeal is allowed for statistical purposes.
ITA No. 651/SRT/2025 – Penalty-Appeal:
9. This appeal involves penalty of Rs. penalty of Rs. 50,000/- imposed by Ld. AO for non-compliances of five (5) notices issued by AO u/s 143(2)/142(1). The Ld. AR for assessee submitted that the AO issued five (5) successive notices dated 02.06.2023, 27.07.2023, 17.08.2023, 14.09.2023 and 03.10.2023 u/s 143(2)/142(1) to scrutinize identical issues. Accordingly, it was contended that where successive notices have been issued to examine identical issues, the alleged non-compliances partakes the character of a single continuing default and therefore the penalty cannot be levied separately for each notice.
10. On a careful consideration, we find that there are two types of notices issued by Ld. AO which had remained non-complied by assessee i.e. one notice issued u/s 143(2) and four notices issued u/s 142(1). We further find that the section 272A(1)(d) prescribes separate penalties for non-compliance of notice u/s 143(2) and 142(1). For an immediate reference, the section 272A(1)(d) is re-produced below:
“272A. (1) If any person,–
XXX
(d) fails to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143.
he shall pay, by way of penalty, a sum often thousand rupees for each such default or failure. “
11. Further, we find that the notices u/s 142(1) issued by AO, one after another, for examination of similar issues, will not multiply the default and it would constitute a single default. The object of section 272A(1)(d) is to ensure compliance and not to multiply penal consequences for a singular lapse arising out of the same cause. This proposition is supported by plethora of decisions including ,Devraj Vishwasrao Jadhav v. ITO [ITA No. 1002/pun/2025, dated 14-10-2025] and Ganpat Singh v. ITO [ITA No.158/Ind/2025, dated 28-11-2025].
12. Accordingly, in the light of legal provision of section 272A(1)(d) and the judicial decisions referred above and also having regard to the provisions of section 273B of the Act, we are of the view that the penalty of Rs. 10,000/-for non-compliance of notice issued u/s 143(2) and a further penalty of Rs. 10,000/- for non-compliance of the first notice issued u/s 142(1) deserve to be confirmed. As regards the remaining three notices issued u/s 142(1), the penalty deserves to be deleted. Accordingly, out of the total penalty of Rs. 50,000/- imposed by AO, we uphold the penalty to the extent of Rs. 20,000/- and delete the balance penalty of Rs. 30,000/-.
13. Consequently, this Appeal is partly allowed.
14. In result, the ITA No. 650/Surat/2025 is allowed for statistical purposes and ITA No. 651/SRT/2025 is partly allowed.