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Facts
The assessee failed to file his return of income despite being informed about cash deposits and foreign currency purchases. The AO added these amounts as unexplained income and levied a penalty of Rs. 40,000/- under Section 272A(1)(d) for non-compliance with statutory notices. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal held that since the quantum addition was deleted by the CIT(A) and the assessee's appeal was allowed, the penalty levied also cannot survive. Consequently, the penalty of Rs. 40,000/- under Section 272A(1)(d) deserves to be deleted.
Key Issues
Whether the penalty under Section 272A(1)(d) can survive when the underlying addition has been deleted by the appellate authority. Whether the assessee had a reasonable cause for not responding to statutory notices.
Sections Cited
272A(1)(d), 148A, 148, 144, 147, 144B, 142(1), 69A, 115BBE, 271AAC(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: SH. S. RIFAUR RAHMAN & SH. SUDHIR KUMAR
25/02/2026 Date of hearing: 13/03/2026 Date of Pronouncement: ORDER
PER SUDHIR KUMAR, JM:
This appeal by the assessee is directed against the order of Ld. National Faceless Appeal Centre (NFAC), Delhi dated 4.9.2025 pertaining to A.Y. 2019-20 and arises out of the penalty order dated 10.9.2024 passed by the Assessing Officer under Section 272A(1)(d) of the Income Tax Act, 1961 [hereinafter referred as ‘the Act’].
The assessee has raised the following grounds of appeal :
1. Under the facts and circumstances of the case, Ld. CIT(A) has erred in sustaining the penalty imposed by the AO, u/s. 272A(1)(d) of the Act vide his order u/s. 250 dated 4.9.2025, which is unjust and unwarranted.
2. Under the facts and circumstances of the case, Ld. CIT(A) has erred in not considering the written submission regarding reasonable and bonafide cause filed by the appellant on 19.8.2025 in a right prospective.
3. Under the facts and circumstances of the case, the Ld. CIT(A) did not consider the facts that being an illiterate person farmer, ill health, the appellant did not response the statutory notices as he was not aware about government ITD portal and even prior to filer not inform about the notices and has a reasonable cause for not attending the assessment proceedings before the AO who has passed even order u/s. 144/147/144B of the Act.
4. Under the facts and circumstances of the case Ld. CIT(A) has erred in not establish the facts on records that statutory notices u/s. 142(1) were not got served properly upon the assessee during the course of assessment proceedings.
3. The brief facts of the case are that the AO has received information that the assessee has made cash deposit of Rs. 45,99,500/- in his bank account maintained with Bank of Baroda and also purchased foreign currency amounting to Rs. 11,00,000/- from Supreme Securities Limited during the year and failed to file return of income. The assessee’s case was reopened after following due procedure prescribed u/s. 148A and notice u/s. 148 of the Act was issued to the assessee on 26.3.2023 and was asked to file return of income. In response, the assessee did not file his return of income. During assessment proceedings, the AO has asked the assessee to provide the details regarding the huge cash deposits in the above bank account and explanation regarding purchase of Foreign Currency. However, the assessee could not provide necessary document and evidences to support his claim. Since the assessee could not establish and prove the identity, genuineness and creditworthiness of these cash deposits amounting to Rs. 45,99,500/-, and did not file any explanation regarding purchase of foreign currency and its source for aggregating the amount of Rs. 11,00,000/-. Therefore, the AO has added the amount of Rs. 56,99,500/- u/s. 69A r.w.s. 115BBE of the Act as unexplained money in the hands of the assessee. Subsequently, the AO has initiated penalty u/s. 272A(1)(d) for noncompliance of the statutory notice u/s. 142(1) and issued show cause notices. The assessee has not submitted any submission also during penalty proceedings. Hence, the AO proceeded to levy penalty u/s. 272A(1)(d) of the Act and levied penalty of Rs. 40,000/-. Against the same, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 4.9.2025 dismissed the appeal of the assessee. Aggrieved, assessee is in appeal before the Tribunal.
The Ld. AR has submitted that the quantum addition has been deleted vide order dated 13.8.2025 and appeal of the assessee was allowed by the Ld. CIT(A). He further submitted that AO made the penalty u/s. 271AAC(1) of the Act and against which the assessee appealed before the Ld. CIT(A), who vide his order dated 4.9.2025 deleted the penalty in dispute and allowed the appeal of the assessee by holding that when the relevant addition is allowed, the penalty levied there also cannot survive. Further, it was the contention of the Ld. AR that Ld. CIT(A) has erred in not considering the written submission regarding reasonable and bonafide cause filed by the appellant on 19.8.2025 in a right prospective and also did not consider the facts that being an illiterate person farmer, ill health, the assessee did not response the statutory notices as he was not aware about government ITD portal and even prior to filer not inform about the notices and has a reasonable cause for not attending the assessment proceedings before the AO who has passed even order u/s. 144/147/144B of the Act. Further it was the contention that Ld. CIT(A) has erred in not establishing the facts on records that statutory notices u/s. 142(1) were not got served properly upon the assessee during the course of assessment proceedings. In view of above, Ld. AR has requested to set aside the orders of the authorities below by deleting the penalty of Rs. 40,000/- confirmed by the Ld. CIT(A).
The Ld. Sr. DR relied upon the orders of the authorities below.
We have heard the rival contentions and gone through the material available on record. We find force in the contention of the Ld. AR that in this case the quantum addition has been deleted vide order dated 13.8.2025 and appeal of the assessee was allowed by the Ld. CIT(A) and consequently, penalty imposed u/s. 271AAC(1) of the Act by the AO was deleted by the Ld. CIT(A) vide his order dated 4.9.2025 by allowing the appeal of the assessee. Since quantum and penalty has been deleted, as aforesaid, the penalty amounting to Rs. 40,000/- imposed u/s. 272A(1)(d) also does not survive, hence, the same deserve to be deleted. We hold and direct accordingly.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 13.03.2026.