Case Law Details
Radhey Shyam Suthar Vs DCIT (ITAT Jodhpur)
Summary: In the Jodhpur Bench of the Income Tax Appellate Tribunal (ITAT) held that penalty under Section 272A(1)(d) for non-compliance with notices issued under Section 142(1) cannot survive where the assessee subsequently furnishes complete details and the assessment is ultimately completed under Section 143(3). The assessees had initially failed to respond to certain statutory notices due to heavy workload relating to audits, return filing, and pending assessments, but later submitted detailed replies with supporting documents, which were accepted by the Assessing Officer. The Tribunal observed that the assessment orders themselves recorded satisfaction with the explanations and evidence furnished, and the returned income was accepted without adverse inference. ITAT held that once the Assessing Officer proceeds with a regular assessment after considering the subsequent compliance, the earlier defaults are deemed to have been condoned and merged into the later compliance. Since the objective of the notices stood fulfilled and no prejudice was caused to the Revenue, levy of penalty was unjustified. Relying on the decision in Ramabhai Kanjibhai Patel v. DCIT, the Tribunal directed deletion of the ₹10,000 penalty in all connected appeals.
Core Issue. The issue before the Tribunal was whether penalty of ₹10,000 under section 272A(1)(d) for initial non-compliance with notices under section 142(1) was sustainable when the assessees later submitted detailed replies with supporting documents, those replies were accepted by the Assessing Officer, and assessments were completed under section 143(3) without adverse inference.
Facts of the Case. The appeals were filed by Radhey Shyam Suthar and other connected assessees. In the initial stages of scrutiny assessments, certain notices issued under section 142(1) were not complied with within the prescribed time. The assessees explained that the delay occurred because of heavy workload arising from audit assignments, income-tax return filing, and other pending assessments.
Subsequently, each assessee furnished detailed written submissions along with documentary evidence. The Assessing Officer considered the material, found the explanations acceptable, and completed the assessments under section 143(3), in the lead case accepting the returned income as declared.
Despite this, penalty of ₹10,000 under section 272A(1)(d) was levied for the earlier non-compliance and was confirmed by the CIT(A).
ITAT Jodhpur Findings
The Tribunal deleted the penalty. It observed that although there was initial non-compliance, the assessees later made full and effective compliance by submitting all details required for assessment.
The assessment order itself recorded that the replies were verified from the material on record, found tenable, and placed on record. The Assessing Officer thereafter completed the assessments under section 143(3), which demonstrated that the subsequent compliance was accepted as satisfactory.
The Tribunal held that once the Assessing Officer proceeded to complete a regular assessment after considering the material furnished, the earlier defaults stood merged in the later compliance. Such acceptance constituted deemed condonation of the initial non-compliance.
In these circumstances, there was no justification for imposing penalty under section 272A(1)(d), as the purpose of the notices had ultimately been fulfilled and the Revenue had suffered no prejudice.
Cases Relied Upon
The Tribunal followed Ramabhai Kanjibhai Patel v. DCIT, wherein it was held that where subsequent compliance is accepted and assessment is completed under section 143(3), penalty for earlier non-compliance is not warranted.
Conclusion. Where an assessee initially fails to comply with notices under section 142(1) but subsequently furnishes complete details, the Assessing Officer accepts the explanation and completes the assessment under section 143(3), the earlier default is deemed to have been condoned. In such a case, penalty under section 272A(1)(d) is not leviable. All the appeals were accordingly allowed.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
These captioned appeals have been filed by assessees against the separate order of the Commissioner of Income Tax, Appeal, Jaipur-5 [hereinafter referred to as CIT(A)] dated 29.09.2025 and 16.10.2025.
2. The assessees have raised common issues in the grounds of appeal in ITA Nos. 951 to 961/Jodh/2025, which reads as under:-
- That on the facts and in the circumstances of the case, the ld CIT (A) grossly erred in upholding the validity of penalty order passed by the Ld AO.
- That on the facts and in the circumstances of the case the Ld CIT(A) grossly erred in upholding the penalty for delay in compliance of notice understanding the facts and circumstantial evidences as demonstrated by assessee in the light of provisions of law and supported by the decision of the Hon’ble Apex Court.
- That on the facts and in the circumstances of the case the Ld CIT(A) grossly erred in confirming the penalty of Rs. 10,000/- u/s 2714(1)(d) of the Act.
- That on the facts and in the circumstances of the case the Ld CIT(A) grossly erred in recording the contrary findings in appellate order while confirming the penalty imposed by AO.
- That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing.
- The petitioner prays for justice & relief
3. Since the appellants have raised a sole and common issue, on identical facts in these appeals, therefore, all these appeals were heard together and disposed of by this consolidated order for the sake of brevity. The ITA No. 951/Jodh/2025 is taken as a lead case for discussion of the facts and adjudication of the issues.
4. The appellant assessee has filed its return of income for the year under consideration disclosing total income of Rs. 3,73,890/- on 26.07.2022. The case of the assessee was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer (in short the “AO”) has issued notice u/s 142(1) of the Act, requiring the assessee to furnish details, information/submissions from time to time in all eleven cases where notices issued u/s 142(1) of the Income Tax Act. The AO stated that a penalty show cause notice has also been issued for noncompliance of notice u/s 142(1) and levied a penalty of Rs. 10,000/- u/s 272A(1)(d) for non-compliances to the said statutory notices. However, the assessment has been completed u/s 143(3) of the Income Tax Act accepting the returned income shown by the assessee at Rs. 3,73,890/-.
5. Aggrieved assessee went in appeal before the Ld. CIT(A) who has summarily rejected the appeal of the assessee by observing that the appellant has no explanation to offer in the matter and there is no factual basis of the claim raised in the grounds of appeal and accordingly, he confirmed the penalty u/s 272A(1)(d) of the IT Act of Rs. 10,000/-.
6. The Ld. Counsel for the assessee has submitted that it was due to overload of the work of audit and ITR filing and pending assessment proceedings that the early notices remained non-complied during the course of assessment proceedings. However, the detailed compliance have been furnished with a written reply in the course of assessment proceedings with the supporting documentary evidence to assist the AO for the purpose of completion of the assessment after considering the submissions of the assessee. The AO has accepted the returned income of the assessee by passing regular assessment order u/s 143(3) of the Act. Thus, the AR contended that the details furnished by the assessee and assessments finally completed u/s 143(3) of the Act evidences that the AO has deemed condoned the non-compliance of the notices by the assessee on the earlier occasions. Accordingly, he requested that the penalty levied u/s 272A(1)(d) may kindly be deleted.
7. The Ld. DR on the other hand rely on the impugned order, however, she did not controvert the appellants contentions.
8. We have heard both the sides and perused the material on record. Admittedly, the issues of levy of penalty u/s 272A(1)(d) is common on identical facts in all the appeals. It is seen that in the early part of the assessment proceedings, the assessee could not make compliance to the notices issued u/s 142(1) of the IT Act. Subsequently, the assessee has made detailed compliance by way of furnishing a detailed reply with the support of the documentary evidence in the course of assessment proceedings. From the assessment order passed by the AO for the year under consideration, it is evident that after considering the submissions of the assessee, the AO has observed that the assessee is an individual entity and derived his income from agriculture in addition to that he has also derived income from other sources i.e. interest income which have been shown in the ITR for the year under consideration. The AO further stated in the assessment order that the reply filed by the assessee has been verified from the material available on record and the same has been found tenable and placed on record. After considering the detailed reply filed by the assessee, the AO has passed the assessment order u/s 143(3) of the Act after considering the details filed by the assessee in compliance to the subsequent notices and show cause notice. Thus, the earlier non-compliance to the notices is deemed merged with the subsequent replied filed by the assessee as being duly considered by the AO while passing the regular assessment order u/s 143(3) of the Act.
9. Thus, it is evident from the assessment order that assessee has made sufficient compliance of the notices issued by the AO culminating into deemed compliance to the notices issued u/s 142(1) by the AO. In our view, no penalty u/s 272A(1)(d) could be levied when the assessment order has been completed u/s 143(3) of the Act, wherein the AO is deemed to have condoned the absence of assessee or his Authorized Representative (AR) on earlier occasions by subsequently accepting the details furnished by the assessee and that assessment were being completed u/s 143(3) of the Act by considering the details furnished by the assessee. Our view gets support from the decision delivered by coordinate bench Surat in the case of Ramabhai Kanjibhai Patel Vs. DCIT in ITA Nos. 106 to 110/srt/2023 with respect to assessment year 2013-14 to 2017-18 dated 11.05.2023.
10. We, therefore, direct the AO to delete the said penalty levied u/s 272A(1)(d) of the Act. Thus the ground of the appeal of the assessee is allowed.
11. The issue raised in ITA Nos. 952 to 961/Jodh/2025 are exactly identical on facts as that discussed in ITA No. 951/Jodh/2025 except variation in the assessed income u/s 143(3) of the Act and, therefore, our observation and finding given in ITA No. 951/Jodh/2025 shall apply to ITA Nos. 952 to 961/Jodh/2025 in mutatis mutandis, ordered accordingly.
12. In the result, these appeals filed by the assessee in ITA Nos. 951 to 961/Jodh/2025 are allowed.
Order pronounced in the open court on 07/05/2026.
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