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Facts
The assessee appealed against a penalty of Rs. 50,000 confirmed by the CIT(A), which was levied by the AO under Section 272(1)(d) read with Section 274. The penalty arose because the assessee failed to comply with 5 hearing notices issued under Section 142(1) during assessment proceedings, leading to a best judgment assessment under Section 144. The CIT(A) upheld the penalty, finding no reasonable cause for non-appearance as notices were received by the assessee's CA.
Held
The Tribunal noted that the penalty was for five identical and recurring defaults. It held that the AO could have completed the best judgment assessment after the initial non-compliance. Consequently, the Tribunal restricted the penalty to Rs.10,000/-, applicable only for the first default.
Key Issues
Whether the penalty levied under Section 272(1)(d) for multiple identical defaults in responding to notices under Section 142(1) was justified, or if it should be restricted to a single default.
Sections Cited
272(1)(d), 274, 144, 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रण वष� / Assessment Year: 2017-18) Shri Ravinder Singh ITO-Ward-3(5) (Prop. M/s Nirmal Fashions) Ludhiana. बनाम/ Beas Hosiery Complex, Kailash Nagar Road, Vs. Opp. Radha Swami Satsang Bhawan, Ludhiana-141007. �थायीलेखासं./जीआइआरसं./PAN/GIR No. BRZPS-2060-R (अपीलाथ�/Appellant) (��थ� / Respondent) : अपीलाथ�कीओरसे/ Appellant by : Sh. Amarjit Kamboj (CA) (Virtual Mode) – Ld. AR ��थ�कीओरसे/Respondent by : Dr. Ranjit Kaur (Addl. CIT) – Ld. Sr. DR सुनवाई की तारीख / Date of Hearing : 25-08-2025 घोषणा की तारीख / Date of Pronouncement : 02-09-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 14-01-2025 confirming penalty of Rs.50,000/- as levied by Ld. Assessing Officer [AO] u/s. 272(1)(d) r.w.s. 274 of the Act vide order Assessment Year: 2017-18 dated 02-02-2022. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.
An assessment has been framed against the assessee on best judgment basis u/s 144 on 04-12-2019 wherein returned income of Rs.10.49 Lacs was assessed at Rs.132.81 Lacs. The assessee failed to appear during assessment proceedings. Since the assessee did not comply with 5 hearing notices as issued by Ld. AO u/s 142(1) on various dates, impugned penalty was initiated for non-compliance of these notices. The Ld. AO imposed penalty of Rs.10,000/- for each of the five defaults on the ground that the assessee failed to establish reasonable cause for non-appearances. The Ld. CIT(A) confirmed the same on the ground that the notices were received on email id of assessee’s Chartered Accountant and there was no reasonable cause. Aggrieved, the assessee is in further appeal before us.
The assessee, indeed, has defaulted in complying with identical notices as issued by Ld. AO u/s 142(1) from time to time. However, it could be seen that penalty has been levied for five identical defaults which are recurring in nature. The Ld. AO could have framed best judgment assessment immediately after serving initial notice only. Therefore, we restrict the impugned penalty to the extent of Rs.10,000/- only for first default. No other ground has been urged in the appeal.