DHANASEKARAN SENGODAN,DHARMAPURI vs. ITO WARD I, DHARMAPURI

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ITA 747/CHNY/2026Status: DisposedITAT Chennai18 August 2026AY 2016-174 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the non-compliance was not willful and not detrimental to revenue, especially as the assessee was residing abroad. The penalty was deleted considering the assessee's explanation and subsequent compliance.

What were the facts?

The assessee was a non-filer and did not comply with notices issued under Section 142(1) of the Income Tax Act, leading to an ex-parte assessment and penalty. The assessee claimed non-compliance was due to residing in the USA.

What were the issues?

Whether the penalty under Section 271(1)(b) for non-compliance with notices is justified when the non-compliance was not willful and the assessee was residing abroad.

Which sections of the Income-tax Act were involved?

Section 142(1),Section 147,Section 144,Section 69,Section 271(1)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: HONOURABLE SHRI S.S. VISWANETHRA RAVI & SHRI GAGAN GOYAL

Hearing: 11.08.2026Pronounced: 18.08.2026

आयकर अपीलीय अधिकरण, ‘ए’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI माननीय श्री यस. यस. विश्वनेत्र रवि, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 747/Chny/2026 यनिाारण वर्ा /Assessment Years: 2016-17

Dhanasekaran Sengodan v. Income Tax Officer, No.1/567, Old No.1/34, Arikkadu, Ward-1, Pattukonampatty V& PO, PR Patty Tk., Dharmapuri. Dharmapuri Dist, Tamil Nadu-636 905. [PAN: BFHPS1227Q] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : None प्रत्यर्थी की ओर से /Revenue by : Ms. Anshu Sharawat, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 11.08.2026 घोषणाकीतारीख /Date of Pronouncement : 18.08.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (A) / NFAC, (hereinafter referred as the ‘Ld. CIT(A)’), Delhi dated 25.11.2025 for the Assessment Year (hereinafter referred as the ‘AY’) 2016-17.

GROUDS OF APPEAL 1. The commissioner of (Appeal) was not justified in passing the penalty order on the basis facts and the circumstance of the assessee. 2. The commissioner of (Appeal) was not correct in confirming the part penalty levied under section 271(1) (b) on the basis facts and the circumstance of the assessee.

ITA No.747/Chny/2026 (2016-17) Dhanasekaran Sengodan 3. The Commissioner of (Appeal) was not correct in confirming the part penalty levied observing the fact that, in paragraph 6.1 in his order, technical default was established. 4. The Commissioner of (Appeal) was not correct in confirming the part penalty levied after observing the fact that, in paragraph 6.4 in his order, subsequent compliance was made 2008 TTJ 419 (Delhi ITAT) 5. The Commissioner of (Appeal) was not correct in confirming the part penalty levied as there was no deliberate and willful default. 2010 101 taxman.com 244 (Delhi ITAT) 2018 170 ITD 558(Nagpur ITAT) 6. The Commissioner of (Appeal) was not correct in justified in levying the penalty when he approve the default for one notice, on the same facts and circumstance, not applying it for another notice. For these reasons and other reason that may put forth at the time of hearing, it is prayed that the penalty confirmed under section 271(1) (b) may be cancelled.

2.

The brief facts of the case are that the assessee was amongst the non-filer of the return, but a specific information was there in the case of the assessee as per RMS formulated by the board that the assessee has carried the following transactions:- Sl. Information Information Source Count Amount Amount (Rs) No. Code Description Description 1. TDS- TDS statement – Dhanasekaran 1 Amount 194IA(P) Payment of Sengodan Paid or consideration for credited Rs.55,00,000/- purchase of immovable property (Section 194IA). 2. TDS-195 TDS Statement – CITI Bank N.A 1 Amount Payment made to Paid or Rs.1,542/- non-residents credited (Section 195).

3.

Based on the above information, a notice u/s. 148 of the Act vide dated 31.03.2023 was issued and number of opportunities were given to the assessee vide para-2 of the assessment order, but none of them complied by the assessee. Ultimately, the case of the assessee was assessed ex-parte u/s. 147 r.w.s. 144 of the Act after making addition of Rs. 55 lakhs u/s. 69 of the Act and a penalty u/s. 271(1) (b) of the Act is also initiated alongwith other penalties for non-compliance of the notices issued u/s. 142(1) of the Act. As the penalty was initiated during the assessment proceedings an order u/s. 271(1) (b) of the Act was also passed levying penalty of Rs. 20,000/- vide dated 16.05.2024. The assessee being aggrieved with Page 2 of 4

ITA No.747/Chny/2026 (2016-17) Dhanasekaran Sengodan this penalty order, preferred an appeal before the Ld. CIT (A), who in turn partly allowed the appeal and amount of penalty was reduced to Rs. 10,000/- from earlier amount of Rs. 20, 000/-. The assessee being further aggrieved preferred the present appeal before us.

4.

We have gone through the assessment order passed u/s. 147 r.w.s. 144 of the Act, penalty order passed u/s. 271(1) (b) of the Act, order of the Ld. CIT (A) and submissions of the assessee along with grounds taken before us. It is observed that the assessee was a resident of the USA during the proceedings period and due to this reason, he could not gather the details or respond during the assessment proceedings. The AO enforced the penalty because nothing was there on record before him but the Ld. CIT (A) has gone through the facts of the case prudently and in a justifiable manner and applied the law that the penalty u/s. 271(1) (b) of the Act cannot be enforced for each and every notice issued. It was also observed by the Ld. CIT (A) that the assessee has afford an explanation, supported by documents and has made subsequently compliance during penalty stage. In view of this he restricted penalty upto to Rs. 10, 000/- only.

5.

In the penalty proceedings, the assessee submitted the following documents as required by the AO as under:-

1.

Copy of the reply dated 30.01.2024 to the earlier penalty notice issued under section 271 (1) (b). 2. Copy of the VISA is enclosed to confirm the assessee was not staying in India. 3. Copy of the Form 35 is enclosed. 4. Copy of the Appeal filed ARN is enclosed. 6. We have thoroughly considered the facts of the case and law applicable. It is observed that non-compliance by the assessee u/s. 142(1) of the Act was not willful and the same was not detrimental to the interest of the Revenue as there was no income in the hands of the assessee which is chargeable to tax in India at that time. In view of this, the balance amount of penalty i.e. Rs. 10,000/- is also deleted considering our observations and facts of the case enumerated (supra). The

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ITA No.747/Chny/2026 (2016-17) Dhanasekaran Sengodan grounds raised by the assessee are allowed and the AO is directed to delete the penalty of Rs. 10,000/- u/s. 271(1) (b) of the Act. 7. In the result, the appeal of the assessee is allowed in above terms. Order pronounced on the 18th day of August, 2026, in Chennai.

Sd/- Sd/- (यस. यस. विश्वनेत्र रवि) (गगन गोयल) (S.S. VISWANETHRA RAVI) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 18th August, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR 5. गार्ड फाईल/GF K Digitally signed by K BABU BABU Date: 2026.08.24 14:44:02 +05'30'

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