ABHISHEK AGRAL,GIRIDIH vs. DY. C. I. T, CENTRAL CIRCLE, VARANASI

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI BENCH, VARANASI (Through Virtual Hearing) BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA Nos.58, 59 & 60/VNS/2026 A.Ys. 2020-21, 2021-22 & 2022-23 Abhishek Agrawal, vs. Dy. Commissioner of Income Tax, Surya, Giridih, Jharkhand Central Circle, Varanasi PAN: BBYPA9729A (Appellant) (Respondent) Assessee by: Sh. O.P. Shukla, & Abadhesh Dubey, Advocates Revenue by: Sh. Koushlendra Tewari, CIT DR Date of hearing: 11.05.2026 Date of pronouncement: 23.07.2026 O R D E R PER BENCH: These three appeals have been filed by the assessee against the separate orders of the ld. CIT(A), NFAC, all dated 14.08.2025, wherein the ld. CIT(A)-3, Lucknow has dismissed the appeals of the assessee against levy of penalty under section 272A(1)(d) of the Income Tax Act, 1961 levied on the assessee for the assessment years 2020-21, 2021-22 and 2022-23. The grounds of appeal are as under:- ITA Nos.58, 59 & 60/VNS/2026 (A.Ys. 2020-21, 2021-22 & 2022-23 “1. Because the Ld. Commissioner of (A) was not justified to confirm the penalty u/s 272A(1)(d) of the income tax Act Rs 10000/- imposed by the assessing officer for non-compliance of notice u/s 142(1) Though the order has been passed by the assessing officer u/s 143(3) of the income tax Act. 2. Because the Ld. Commissioner of (A) was not justified to placed reliance on the judgment of Hon'ble ITAT Allahabad Bench and Hon'ble Delhi ITAT in case of Pratima Agrawal and Akhil Bhartiya Samyak Bhawan Trust.

ITA Nos. 58, 59 & 60/VNS/2026 Abhishek Agrawal 3. Because, the appellant craves for a right to raise any additional ground during the course of hearing of the case. 4. Because the order passed by the Ld. Assessing officer is erroneous, bad in law and on facts and is liable to be deleted.”

ITA Nos. 58, 59 & 60/VNS/2026 Abhishek Agrawal technical considerations, we admit these appeals of the assessee for adjudication. 4. The facts of the case are that following a requisition of cash from the GRP, proceedings of the assessee were taken up for assessment in various assessment years. During the course of assessment proceedings for the A.Y. 2020-21, a notice under section under section 142(1) was issued to the assessee on 25.09.2024, fixing the date of compliance on 4.10.2024. The Assessing Officer records that the assessee failed to comply with this notice. Therefore, he initiated penalty proceedings under section 272A(1)(b) vide notice dated 22.11.2024, asking the assessee to show cause why an order imposing penalty should not be levied. The date of compliance was fixed on 29.11.2024. On the said date, the assessee sought adjournment and the AO records that he did not furnish any acceptable reasons for non-compliance of notice dated 142(1) dated 4.10.2024. However, he did not state in his order as to what these reasons were. Be that as it may, the Assessing Officer proceeded to levy a penalty of Rs. 10,000/- for the failure to comply to notice under section 142(1) dated 25.09.2024 during the assessment proceedings under section 2020-21. 5. Similarly, in the A.Y. 2021-22 also, a notice under section 142(1) was issued fixing the date of compliance on 4.10.2024, which the assessee did not comply with. A show cause notice was issued to the assessee asking why the order of penalty under section 272A(1)(d) should not be imposed upon it for the non-compliance. But on the appointed date, the assessee filed a reply stating that the information was already available on the portal. The AO pointed out that the said reply was incorrect and only made with a view for avoiding furnishing any reason for the non-compliance of 142(1). He further pointed out that the assessee had not furnished complete compliance to the

ITA Nos. 58, 59 & 60/VNS/2026 Abhishek Agrawal notice dated 25.09.2024. Therefore, he levied a penalty of Rs. 10,000/- for the failure to make compliance to the notice under section 142(1) dated 25.09.2024. 6. In the A.Y. 2022-23 also, the assessee was issued with a notice under section 142(1) on 25.09.2024 for compliance on 4.10.2024 but the assessee did not make compliance to the same. Accordingly, the Assessing Officer issued a notice under section 272A(1)(d) in response to which the assessee submitted that the information was already available on the portal. However, the Assessing Officer pointed out that the same was incorrect and only an attempt to avoid furnishing documents. He further recorded the fact that the assesee had not furnished the complete documents in compliance to the notice under section 142(1). Therefore, he levied penalty of Rs. 10,000/- for the said failure to comply with the notice under section 142(1) dated 25.09.2024. 7. Aggrieved with all these penalty orders, the assessee went in appeal before the ld. CIT(A)-3, Lucknow. Before the ld. CIT(A)-3, Lucknow, the order of the ITAT Allahabad Bench in the case of Pratima Agarwal vide ITA No. 163/ALLD/2014 was placed, whereby the Hon’ble ITAT Allahabad had held that since their assessment in the case had been completed under section 143(3) therefore, it was clear that the assessee had subsequently attended the assessment proceeding and there was no reason to come to the conclusion that the default was willful. Reliance was also placed on the judgment of the Hon’ble Delhi High Court in the case of Akhil Bhartiya Prathmik Shmshak Sangh Bhawan Trust vs. ADIT 115 TTJ 419 (Del) wherein the Hon’ble Delhi High Court had held that since the order was passed under section 143(3) and not under section 144 of the Act, this meant that subsequent compliance in the assessment proceedings was considered as

ITA Nos. 58, 59 & 60/VNS/2026 Abhishek Agrawal good compliance and default committed earlier was ignored by the Assessing Officer. The Hon’ble High Court held that in the circumstances, there was no reason to come to the conclusion that, the default was willful. Accordingly, it was prayed that the fact that the orders in the assessee’s case were passed under section 143(3) and that the assessee had made detailed compliances to the notices issued by the Assessing Officer, it should not be saddled with a penalty in any of the assessment years. The ld. CIT(A) considered the submissions of the assessee and noted that the record show that the notice had duly been served upon the assessee and no satisfactory explanation for non-compliance of the said notice had been furnished before the AO on or before the date fixed. Furthermore, he observed that during the appeal proceedings, he had not submitted any evidence to justify any reasonable cause for the default in not producing the documents asked for in the said notice. The ld. CIT(A) further held that unless the assessee were to demonstrate reasonable cause for such failure, the penalty under section 272A(1)(d) was leviable and in the instant case, the assessee had not even complied with the penalty notice in a meaningful manner. Therefore, the ld. CIT(A) confirmed the penalty orders in all three assessment years. 8. The assessee is aggrieved with these orders passed by the ld. CIT(A) and has accordingly come in appeal before us. Sh. O.P. Shukla, Advocate (hereinafter referred to as the ld. AR) appearing on behalf of the assessee invited our attention to the following judgments. i. Chudaji Thakar Basajada vs. Income Tax Officer (ITA No.2049/AHD/2025) ii. Anshu Sharma vs. ITO, Ward-1(3), Jaipur (ITA No.73/JP/2023 iii. Geetu Kamara vs. ITO, Ward-58(3), Delhi (ITA No.5144/DEL/2024 iv. Pratima Agrawal vs. DCIT, Circle-3, Varanasi (ITA No. 163/ALLD/2014) 5

ITA Nos. 58, 59 & 60/VNS/2026 Abhishek Agrawal v. Akhil Bhartiya Prathmik Shmshak Sangh Bhawan Trust vs. ADIT 115 TTJ 419 (ITAT Del) The ld. AR submitted that the assessee filed a return in compliance to notice under section 142(1) and had duly complied with the query raised by the Assessing Officer. The ld. AO had passed the order under section 144 due to initial non-compliance by the assessee. This was on account of the fact that the assessee belonged to the State of Jharkhand. But after receiving the notices, the assessee had made full compliance. After compliance made by the assessee, the Assessing Officer had only estimated the extra profit addition in the assessee’s case and no other addition / disallowance had been made. Copies of the respective assessment orders were enclosed with the submission. It was further submitted that the assessee had submitted the documents on 21.02.2025 i.e. well before the order passed on 28.02.2025. The ld. AR draw our attention to the decision of the ITAT Ahmedabad in the case of Chudaji Thakar Basajada vs. Income Tax Officer (supra) where the Hon’ble Court had held that where the Hon’ble Court had held that where the tax payer failed to comply initially but later cooperated, it was held that where an assessee demonstrated reasonable cause such as lack of knowledge of electronic notice, under section 273B penalty was not justified. It was submitted that the assessee was residing in a remote area near Dhanbad and the distance from Varanasi to Dhanbad was more than 600 kilometers. Hence the assessee’s case was fully covered by the said judgment and penalty under section 272A(1)(d) deserved to be quashed. The ld. AR also placed reliance on the judgment of ITAT Jaipur in the case of Anshu Sharma vs. ITO, Ward-1(3), Jaipur (supra), the judgment in the case of the Delhi Bench in the case of Geetu Kamara vs. ITO, Ward-58(3), Delhi (supra). The judgment of the ITAT Allahabad Bench in the case of Pratima Agrawal vs. DCIT, Circle-3, Varanasi (supra) and the judgment of Hon’ble Delhi High 6

ITA Nos. 58, 59 & 60/VNS/2026 Abhishek Agrawal Court in the case of Akhil Bhartiya Prathmik Shmshak Sangh Bhawan Trust vs. ADIT (supra) in all of which the Courts had held that where the assessee made compliance later, the earlier compliance could not be held to be willful and therefore, no penalty was leviable. Accordingly, it was prayed that the penalty may not be levied in its case. 9. On the other hand, Sh. Koushlendra Tewari, CIT DR (hereinafter referred to as the ld. DR) pointed out that the ld. CIT(A) had very correctly pointed out that penalty under section 272A(1)(d) could only be waived if the assessee were to prove reasonable cause for the default. The ld. CIT(A) had also pointed out that neither had the assessee made compliance before the Assessing Officer, nor had he submitted any reasonable cause for the non-compliance before the Assessing Officer or the ld. CIT(A) at the time of the levy of an appeal against the penalty. In these circumstances, later compliance could not substitute for the fact of non-compliance to the particular notice. In the circumstances, the ld. CIT DR held that the levy of penalty by the Assessing Officer was justified and should be confirmed. 10. We have duly considered the facts and circumstances of the case. It is seen that after initial non-compliance to the notices, when served with a show cause notice, the assessee made compliance to the Assessing Officer on 21.02.2025 i.e. a week before the passing of the assessment order on 28.02.2025. The ld. AO did not find the reply to be satisfactory, which is why he rejected the books of the assessee and he estimated the profit of the assessee by invoking the provisions of section 145(3). In view of the fact that the assessee had not furnished its return under section 148 of the Income Tax Act, the AO proceeded to complete the assessment under section 147 r.w.s. 144(4). The assessee has invited our attention to various case laws wherein it has been held that where the assessee could not make initial

ITA Nos. 58, 59 & 60/VNS/2026 Abhishek Agrawal compliance due to various reasons but subsequently made substantive compliance to the contents of the notice, penalties under section 272(A)(1)(d) could not be levied upon the assessee because the compliance had been made. However, we note that the assessee does not fall within the ambit of those case laws. In the first place, the assessee did not comply with the direction of the Assessing Officer to file a return of income and did not file the necessary details in response to the notice under section 142(1). We find that even when a reply was filed, the Assessing Officer did not hold the same to be satisfactory and pointed out that it was incomplete in that the assessee had not furnished the details of his creditors, alongwith the confirmation of accounts, he had not furnished the mode of receipt and repayment of unsecured loans and he had failed to furnish the bills and vouchers for the expenses debited in his profit and loss account. He had also failed to produce his books of accounts. On account of all these factors, the Assessing Officer rejected the books of the assessee and completed a best judgment assessment under section 144. In all other cases, cited by the assessee, the assessments were ultimately completed under section 143(3) and from the same, the Courts concluded that the assessee had subsequently made substantive compliance to the notices issued by the Assessing Officer. But in the case of the assessee, the assessments had to be completed under section 144 and the Assessing Officer has clearly pointed out the shortcomings in the reply. Therefore, the said case laws will not help the assessee and we in are in agreement with the ld. CIT DR that unless the assessee were to show reasonable cause for the non-compliance, it is liable to be saddled with the penalty. Accordingly, we confirm the orders of the lower authorities and dismiss all three appeals of the assessee against the levy of penalty of Rs. 10,000/- under section 272(A)(1)(d) of the Income Tax

ITA Nos. 58, 59 & 60/VNS/2026 Abhishek Agrawal Act for failure to make compliance to the notices issued to him under section 142(1). 11. In the result, all three appeals are dismissed. Orders pronounced on 23.07.2026 in the open Court.

Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23/07/2026 Sh- Sd/- Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT DR, ITAT, 4. CIT, 5. The CIT(A) By order Sr. P.S.