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Facts
The assessee, a Securitisation Trust, failed to comply with a notice under section 142(1) for AY 2022-23, leading to an ex-parte assessment and a penalty order of Rs. 10,000 under section 272A(1)(d). The assessee argued that non-compliance was due to bona fide reasons, including frequent personnel changes, issues with email IDs, and an office shift, and that they had responded to penalty show-cause notices.
Held
The Tribunal held that the penalty under section 272A(1)(d) is not automatic and Section 273B allows for deletion of penalty if reasonable cause is proven. Considering the assessee's explanation of personnel changes, email issues, and office relocation, the Tribunal found that the non-compliance was not deliberate or contumacious and constituted a procedural default.
Key Issues
Whether the non-compliance with notice under section 142(1) was due to reasonable cause warranting deletion of penalty under section 273B.
Sections Cited
142(1), 143(2), 144, 144B, 10(23DA), 272A(1)(d), 273B, 139(1), 115TCA
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Income Tax Appellate Tribunal, “D” BENCH MUMBAI
आदेश / ORDER
PER MAKARAND VASANT MAHADEOKAR, AM:
This appeal is directed against the order passed under section 250 of the Income-tax Act, 1961[hereinafter referred to as “the Act”] by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”], dated 13.10.2025, arising out of the penalty order Mobil Trust Series 27 passed under section 272A(1)(d) of the Act dated 22.08.2024 for Assessment Year 2022–23. Facts of the Case 2. The assessee is a Securitisation Trust and a Special Purpose Entity/Vehicle as defined under 115TCA of the Act. For the Assessment Year 2022–23, it filed its return of income under section 139(1) of the Act on 30.07.2022 declaring total income at Rs. 0/-.The case was selected for scrutiny. Notice under section 143(2) was issued on 02.06.2023. Subsequently, notice under section 142(1) dated 28.08.2023 was issued calling for details. According to the Assessing Officer, the said notice was not complied with. A centralized communication letter was also sent to the assessee on 26.10.2023 at its registered address through speed post bearing consignment number JA500657802IN.Thereafter, show cause notice under section 144 of the Act was issued. In the absence of compliance, the assessment was thereafter completed under section 144 read with section 144B of the Act vide order dated 09.03.2024, determining total income at Rs. 67,58,18,756/- by disallowing exemption claimed under section 10(23DA) of the Act.
Penalty proceedings under section 272A(1)(d) were initiated for failure to comply with notice under section 142(1). The Assessing Officer passed a penalty order dated 22.08.2024 levying penalty of Rs. 10,000/- for one instance of non- compliance.
The assessee is now in further appeal before us raising following grounds of appeal:
1. Ground No 1: Erred in upholding the penalty u/s 272A(1)(d) of Rs.10,000/- On the facts and circumstances of the case, as well as in law, the Learned NFAC has erred in upholding the penalty of Rs.10,000/- imposed by the Learned Assessing Officer (AO) under section 272A(1)(d) of the Income Tax Act, 1961.
2. Ground No 2: Penalty order u/s 272A(1)(d) of the Act passed without granting an opportunity of personal hearing, despite specific request from the Appellant On the facts and circumstances of the case, as well as in law, the penalty order u/s 272A(1)(d) of the Act, has been passed by both the Learned AO and upheld by the Learned NFAC without granting the Appellant an opportunity of personal hearing to present the case, despite specific requests made for a hearing via video conferencing at both stages of the proceedings, thereby violating the principle of natural justice.
3. Ground No. 3: Inconsistent with the Taxpayers’ Charter On the facts and in the circumstances of the case, as well as in law, the order passed by the Learned NFAC is inconsistent with the principles laid out in the Taxpayers’ Charter. The Charter says that the Department shall provide prompt, courteous, and professional assistance in all dealings with the taxpayer, and the Department shall collect only the amount due as per the law.
Ground No. 4: Inconsistent with Income tax Circular No. 14, dated 11-04-1955 On the facts and circumstances of the case, as well as in law, the Learned NFAC did not follow the income tax Circular No. 14, dated 11.04.1955 issued by the department regarding the collection of exact Mobil Trust Series 27 tax amount. The Circulars explicitly states that Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him.
5. Ground No. 5: Leviability of penalty only for infraction of law It is a well settled principle that penal consequences, more importantly a fiscal statute like the Income-tax Act, does not automatically triggers merely due to non-compliance, such as failure to respond to a notice. The substantive issue in the present case is leviability of tax under Section 10(23DA) of the Act, by virtue of Article 265 of the Constitution of India — no tax shall be levied or collected except by authority of law.
During the course of hearing before us the learned Authorised Representative (AR) submitted that the non- compliance with notice issued under section 142(1) was neither deliberate nor wilful but occurred due to bona fide and reasonable causes beyond the control of the assessee.
The learned AR submitted that the notices were sent to certain email IDs such as sukanyapadwal08@gmail.com and reports@biyanmittal.com, which did not belong to the assessee but were mentioned in the ITR by the trust auditor. The assessee was unaware of these email IDs and, therefore, did not receive the notices. It was submitted that due to restrictions on the number of PAN/TAN registrations linked to a single email ID and mobile number, multiple email IDs had to be created and maintained. Given the volume of trusts handled and the limited shelf life of securitisation trusts, tracking all such credentials became difficult.
Mobil Trust Series 27 8. The AR submitted that during the period April 2021 to June 2024, there were substantial changes in key personnel, including senior officers handling taxation matters. A tabular statement of officers, their designations, relieving dates, and responsibilities was furnished. It was contended that frequent changes in senior management led to operational disruptions and delay in responding to notices. It was also submitted that the office shifted premises in January 2023. Consequently, postal communications sent to the earlier address did not reach the assessee in time.
The AR submitted that upon becoming aware of the assessment notices in February–March 2024, the assessee promptly consulted its auditors, collated information, and submitted responses. In some cases, however, orders had already been passed before the assessee could respond. It was pointed out that all penalty show cause notices issued under section 272A(1)(d) were duly responded to. Submissions were made on 20.03.2024 and 12.07.2024, and video conference was attended on 08.08.2024. This, according to the AR, demonstrates the assessee’s bona fide intention to cooperate with the Department.
The learned Departmental Representative (DR) strongly supported the orders of the Assessing Officer as well as the learned CIT(A).The learned DR further pointed out that there were multiple instances of default during the assessment proceedings. Nevertheless, the Assessing Officer exercised restraint and levied penalty under section 272A(1)(d) only for one instance of non- compliance. Thus, according to the learned DR, the levy of Mobil Trust Series 27 penalty of Rs. 10,000/- is reasonable and cannot be said to be excessive or arbitrary.
We have carefully considered the rival submissions and perused the material available on record, including the assessment order, the penalty order passed under section 272A(1)(d) dated 22.08.2024, and the appellate order passed under section 250 dated 13.10.2025.
At the outset, it is noted that the penalty has been levied for alleged non-compliance with notice issued under section 142(1) dated 28.08.2023 during the course of assessment proceedings for A.Y. 2022–23. It is further evident from the record that though there were multiple notices issued during the assessment proceedings, the Assessing Officer has ultimately levied penalty only for one instance of default and that too at the minimum prescribed amount of Rs. 10,000/-.
The limited issue before us is whether, on the facts of the present case, the assessee has established reasonable cause within the meaning of section 273B so as to warrant deletion of the penalty.
From the material placed before us, it is observed that the notices were issued through the e-filing portal and also sent to email IDs which, as stated by the assessee, were mentioned in the return of income by the auditor but were not operational or within the control of the trustee at the relevant time.The assessee has demonstrated that during the relevant period there were Mobil Trust Series 27 significant changes in key personnel handling taxation matters. A tabulated statement of officers who left the organization between April 2021 and June 2024 has been placed on record. The frequent change in senior officials, including those specifically entrusted with taxation and compliance functions, has not been controverted by the Revenue. It has also been brought on record that the trustee entity was handling a very large number of securitisation trusts and had received an unprecedented volume of notices during the relevant financial year, particularly under CASS for “Large Claim of Exemption u/s 10”. The factual assertion that more than 100 trusts were selected for scrutiny in the relevant year has not been disputed. The assessee has further demonstrated that upon becoming aware of the notices, it promptly consulted the auditor, gathered details, and filed submissions. The penalty show cause notices were duly responded to, written submissions were filed on multiple dates, and even a video conference hearing was attended. The assessment itself was completed ex parte under section 144 read with section 144B on 09.03.2024 and the substantive issue relating to exemption under section 10(23DA) was carried in appeal. The penalty proceedings are thus ancillary and arise only from procedural default.
It is a settled principle that penalty under section 272A(1)(d) is not automatic. Section 273B clearly provides that no penalty shall be imposed if the assessee proves that there was reasonable cause for the failure. The expression “reasonable cause” must Mobil Trust Series 27 receive a liberal construction so as to advance substantial justice. Penalty provisions are intended to ensure compliance and not to punish venial or technical breaches where absence of mala fides is evident.
In the present case, the material on record indicates that the non-compliance was not deliberate or contumacious. The explanation of the assessee regarding change in personnel, multiplicity of notices, technical issues in email registration, and change of office premises constitutes a plausible and bona fide explanation. There is nothing on record to show that the assessee derived any advantage from such non-compliance or that there was any conscious disregard of statutory obligation.
It is also relevant that despite multiple notices, the Assessing Officer has levied penalty only for one instance, which itself indicates that the overall conduct of the assessee was not found to be entirely non-cooperative.
Considering the totality of facts and circumstances, we are satisfied that the assessee has demonstrated reasonable cause within the meaning of section 273B for the failure to comply with the notice dated 28.08.2023. The default, in our considered view, is procedural and does not warrant imposition of penalty.
Accordingly, the penalty of Rs. 10,000/- levied under section 272A(1)(d) and sustained by the learned CIT(A) is hereby deleted.
In the result, the appeal of the assessee is allowed.