UPASANA CHOPRA,CHENNAI vs. ITO, NCW-12(1), CHENNAI

Pursuant thereto, an order u/s.148A(d) of the Act was passed on 12.04.2023, followed by issuance of notice u/s.148 of the Act on the same date. In response to the said notice, the assessee filed her return of income on 18.04.2023 declaring the same total income of Rs.3,37,920/- as originally returned.

During the course of reassessment proceedings, the AO issued notices under section 142(1) of the Act on 20.08.2024, 29.08.2024, 18.09.2024 and 11.11.2024 calling upon the assessee to furnish requisite details and explanations. The AO observed that there was no effective compliance to the aforesaid statutory notices. Accordingly, the reassessment was completed u/s.147 of the Act by determining the total income of the assessee at Rs.17,07,920/-, inter alia, making an addition of Rs.12,20,000/- by treating the alleged cash payments made to M/s. Omaxe Group as unexplained expenditure u/s.69C read with section 115BBE of the Act.

Simultaneously, in view of the alleged non-compliance with the aforesaid four notices issued u/s.142(1) of the Act, penalty proceedings u/s.272A(1)(d) of the Act were initiated. Thereafter, the AO passed a penalty order dated 18.06.2025 levying a penalty of Rs.40,000/-, being Rs.10,000/- for each instance of default. Aggrieved by the penalty order passed u/s.272A(1)(d) of the Act, the assessee preferred an appeal before the Ld.CIT(A).

The Ld.CIT(A) vide impugned appellate order dated 19.12.2025, dismissed the appeal and upheld the penalty levied by the AO. Being further aggrieved, the assessee is now in appeal before this Tribunal.

The Ld.AR submitted that the assessee was prevented by sufficient and reasonable cause from complying with the notices issued during the course of :-3-:

Per contra, the Ld.DR strongly relied upon the orders of the lower authorities. It was submitted that the assessee had consistently failed to comply with statutory notices issued not only during the assessment proceedings but also during the appellate proceedings. Therefore, according to the Ld.DR, the AO was fully justified in levying penalty u/s.272A(1)(d) of the Act and the Ld.CIT(A) had rightly confirmed the same.

We have heard the rival submissions and carefully perused the material available on record, including the orders of the authorities below. The undisputed fact emerging from the record is that the assessee failed to furnish compliance to four notices issued u/s.142(1) of the Act during the course of reassessment proceedings. Consequently, the AO levied penalty u/s. 272A(1)(d) of the Act at the rate of Rs.10,000/- for each default, aggregating to Rs.40,000/-. The said penalty was subsequently confirmed by the Ld.CIT(A).

On a careful consideration of the submissions advanced on behalf of the assessee and the material placed on record, we find merit in the contention of the assessee that the non-compliance was attributable to medical difficulties faced by her during the relevant period. It is well settled that penalty provisions, being quasi-criminal in nature, are not intended to punish every technical or venial breach of statutory obligations. The legislature itself has carved out an exception u/s.273B of the Act, whereby no penalty shall be imposable if the assessee proves that there was a reasonable cause for the failure.

In the facts and circumstances of the present case, we are of the considered opinion that the explanation furnished by the assessee constitutes a reasonable cause within the meaning of section 273B of the Act, at least

Accordingly, while holding that the assessee had demonstrated reasonable cause for three instances of non-compliance, we direct deletion of penalty amounting to Rs.30,000/-. However, the penalty of Rs.10,000/- u/s.272A(1)(d) of the Act is sustained. Consequently, the impugned order of the Ld.CIT(A) is set aside to the aforesaid extent and the AO is directed to grant consequential relief.

In the result, the appeal of the assessee is partly allowed.