Case Law Details
Ajaz Alam Vs Assessment Unit (ITAT Lucknow)
Summary : The Lucknow Bench of the Income Tax Appellate Tribunal (ITAT) deleted a penalty of ₹20,000 imposed under Section 272A(1)(d) of the Income-tax Act for non-compliance with notices issued under Section 142(1). The assessee had failed to respond to two statutory notices during reassessment proceedings, leading the Assessing Officer to levy the penalty. Before the Tribunal, the assessee contended that he was suffering from acute depression during the relevant period, which prevented him from complying with the notices. The Tribunal observed that although the non-compliance was undisputed, Section 273B provides protection from penalty where a taxpayer establishes a reasonable cause for the default. Taking note of the assessee’s medical condition and finding the explanation bona fide, the Tribunal held that the failure was not deliberate or intentional. Accordingly, it concluded that the case was not fit for penalty and directed deletion of the entire penalty amount, allowing the assessee’s appeal.
Core Issue: Whether penalty under section 272A(1)(d) for non-compliance with notices issued under section 142(1) can be sustained when the assessee establishes a reasonable cause under section 273B by demonstrating that the default occurred due to genuine medical incapacity and was neither deliberate nor intentional.
Facts: The assessee failed to file the return of income for AY 2019-20 and did not comply with two notices issued under section 142(1) dated 10.05.2024 and 22.10.2024. Consequently, the AO levied penalty of ₹20,000 under section 272A(1)(d). The assessee contended that during the relevant period he was suffering from acute depression and, therefore, could not properly respond to the statutory notices. The appeal before the Tribunal was filed with a delay of three days, which was explained on account of dehydration during Roza Iftar.
AO/CIT(A) Findings: The AO held that the assessee had failed to comply with statutory notices issued under section 142(1) and accordingly levied penalty of ₹20,000 under section 272A(1)(d). The CIT(A) upheld the penalty.
ITAT Findings: The Tribunal condoned the delay of three days by following the decision of the Supreme Court in Collector, Land Acquisition vs. Mst. Katiji and Others (167 ITR 471). On merits, it held that although non-compliance with the notices was undisputed, section 273B grants protection from penalty where the assessee proves reasonable cause for the failure. Considering the assessee’s medical condition and explanation that the default was not deliberate or intentional, the Tribunal accepted the existence of reasonable cause and held that the case was not fit for levy of penalty under section 272A(1)(d). Accordingly, the penalty was deleted.
Case Law Relied Upon: Collector, Land Acquisition vs. Mst. Katiji and Others – liberal approach in condonation of delay.
Relevant Paras: 4 and 8.
Held: Where the assessee demonstrates a bona fide medical condition constituting reasonable cause under section 273B, penalty under section 272A(1)(d) for non-compliance with notices under section 142(1) is not leviable. Accordingly, the penalty of ₹20,000 was deleted and the appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), New Delhi dated 19.12.2025, pertaining to the assessment year 2019-20. The assessee has raised the following grounds of appeal: –
“1. The Ld. CIT(A) NFAC, erred on facts and in law in upholding the penalty of Rs. 20,000/- u/s 272A(1)(d) of I. T. Act without appreciating that there was a reasonable cause being medical reason for non-compliance of the notices.
2. The Ld. CIT(A) failed to appreciate that due acute depression compliance could not be made during assessment proceeding, thus there was a reasonable cause for non-compliance of notices being medical reason.
3. The Ld. CIT(A) failed to appreciate that the assessment order passed u/s 147 r.w.s 144 of the IT Act, 1961 for the year under consideration dated 24.01.2025 has been set aside by Ld. CIT(A) NFA vide order dated 26.11.2025 hence the penalty upheld Rs. 20,000/- should be cancelled.”
2. The present appeal is barred by limitation for 3 days. The assessee has filed petition seeking condonation of delay in filing the present appeal. The Ld. Counsel for the assessee reiterated the submissions as made in the petition seeking condonation of delay and also the contents of the supporting affidavit. It is stated that the delay has occurred as the assessee was suffering from dehydration due to “Roza Iftar” and, therefore, could not file the appeal within the prescribed time limit. It is further submitted that the delay was neither deliberate nor intentional, but occurred due to bona fide medical reasons beyond the control of the assessee
3. On the other hand, the Ld. Departmental Representative for the Revenue opposed the submissions and contended that the assessee ought to have filed the appeal within the prescribed time. It was further submitted that the facts of the case do not warrant for taking a liberal view in the matter.
4. Heard the Ld. Representatives of the parties and perused the materials available on records. It is stated that the delay has occurred as the assessee was suffering from dehydration due to “Roza Iftar” and, therefore, could not file the appeal within the prescribed time limit. We, therefore, respectfully following the judgment of the Hon’ble Supreme Court in the case of Collector of Land Acquisition Vs. MST. Katiji & Ors 167 ITR 471 (SC) hereby condone the delay and admit the appeal for hearing on merits.
5. The facts giving rise to the present appeal are that the assessee did not file the return of income under section 139(1) of the Income Tax Act, 1961 (“Act”, for short) for A.Y. 2019-20. During the course of assessment proceedings, notices u/s 142(1) of the Act were issued on 10.05.2024 and 22.10.2024; however, there was no compliance on the part of the assessee. Consequently, the Assessing Officer (“AO”, for short) initiated penalty proceedings u/s 272A(1)(d) of the Act for failure to comply with the said notices and imposed the impugned penalty of Rs. 20,000/- vide order dated 18.07.2025. Aggrieved against this, the assessee preferred appeal before the Ld. CIT(A) who after considering the submissions, sustained the penalty and dismissed the appeal of the assessee. Aggrieved against the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal.
6. At the time of hearing, the Ld. Counsel for the assessee submitted that the assessee was suffering from acute depression during the relevant period and, therefore, could not properly comply with the notices issued by the Assessing Officer during the assessment proceedings. It was contended that the non-compliance with the notices was neither deliberate nor intentional, but was on account of genuine medical reasons, which constituted a reasonable cause within the meaning of section 273B of the Act. Therefore, according to the Ld. Counsel, the very foundation on the basis of which the penalty was levied no longer survives and, hence, the penalty imposed u/s 272A(1)(d) of the Act deserves to be deleted.
7. On the other hand, the Ld. Departmental Representative (“DR”) supported the orders of the lower authorities and submitted that ignorance of law is not an excuse and that the assessee ought to have been more vigilant in complying with the statutory notices. Therefore, the AO was justified in levying the penalty u/s 272A(1)(d) of the Act.
8. We have heard the rival submissions and perused the material available on record. The fact of non-compliance with the notices issued by the Assessing Officer is not denied. However, section 273B of the Act provides that notwithstanding anything contained in the provisions of various sections, no penalty shall be imposable on a person if such person proves that there was a reasonable cause for the failure to comply. It is a settled proposition of law that where the assessee demonstrates a reasonable cause for failure to comply with statutory notices, no penalty u/s 272A(1)(d) of the Act can be sustained. Therefore, considering the facts of the present case and more particularly, medical condition as stated hereinabove, we are of the view that this is not a fit case for imposition of penalty u/s 272A(1)(d) of the Act. Accordingly, we delete the penalty of Rs. 20,000/- levied by the Assessing Officer for the failure of the assessee to respond to the two notices issued u/s 142(1) of the Act and direct the AO to delete the same. The grounds raised in this appeal are allowed.
9. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 27/05/2026.
Author Bio
