Case Law Details
Amar Liquors Vs DCIT/ACIT (ITAT Lucknow)
The appeal before the Income Tax Appellate Tribunal, Lucknow Bench, arose from the order dated 12.08.2025 passed by the Commissioner of Income-tax (Appeals)/NFAC for AY 2022-23, confirming a penalty of ₹40,000 imposed under Section 272A(1)(d) of the Income-tax Act for alleged non-compliance with a notice issued under Section 143(2) and notices issued under Section 142(1).
The assessee had filed its return of income under Section 139(1) on 19.10.2022, declaring total income of ₹17,75,430. During scrutiny assessment, the Assessing Officer issued statutory notices requiring information and documents. According to the Assessing Officer, the assessee failed to comply with these notices, resulting in initiation of penalty proceedings under Section 272A(1)(d). The penalty was confirmed by the CIT(A), leading to the present appeal.
Before the Tribunal, the assessee reiterated the submissions made before the CIT(A). The principal contention was that the notices under Section 143(2) dated 01.06.2023 and under Section 142(1) dated 26.07.2023, 31.08.2023, and 17.01.2024 were not deliberately ignored and could not be complied with as they had not come to the assessee’s knowledge in time. The assessee explained that the notices had either not been received through post or notice server or had been delivered to an e-mail account operated by an employee responsible for taxation matters who had left the firm after October 2023 without informing the assessee about the notices. The assessee further submitted that the e-mail account was not accessible to other staff members and, consequently, the notices remained unnoticed.
The assessee also stated that after becoming aware of the proceedings, it sought adjournment, gathered information from various sources, and subsequently participated in the assessment proceedings. It contended that the defaults were neither intentional nor designed to obstruct the assessment proceedings and that there was reasonable cause within the meaning of Section 273B. The assessee further argued that the assessment was ultimately completed after compliance, demonstrating that there was no deliberate disregard of the statutory notices.
In addition, the assessee challenged the penalty relating to the notice under Section 143(2) by submitting that no satisfaction regarding such default had been recorded in the assessment order and that the alleged default had not been specifically reflected in the penalty show cause notice. It also contended that the penalty proceedings were concluded without properly considering the explanations furnished during the penalty proceedings.
The Departmental Representative supported the orders of the Assessing Officer and the CIT(A).
After considering the rival submissions and examining the record, the Tribunal observed that the penalty under Section 272A(1)(d) had been levied for alleged non-compliance with the notices issued under Sections 143(2) and 142(1). The Tribunal noted that the assessee had explained the circumstances that prevented timely compliance and that the explanation furnished had not been found to be false or mala fide. It observed that penalty provisions are not intended to punish every technical or venial breach of statutory obligations and that where an assessee establishes reasonable cause for failure, the protection available under Section 273B applies.
The Tribunal further observed that, regarding the alleged non-compliance with the notice under Section 143(2), neither any satisfaction had been recorded in the assessment order nor had the alleged default been specifically referred to in the penalty show cause notice. According to the Tribunal, the levy of penalty on that count was legally unsustainable.
The Tribunal also noted that the assessee subsequently participated in the assessment proceedings and that the assessment was ultimately completed on the basis of the information available on record. It further observed that the Revenue had not produced any material to establish that the alleged non-compliance was deliberate, wilful or contumacious. Considering the totality of the facts and circumstances and the applicability of Section 273B, the Tribunal held that the assessee had established reasonable cause for the alleged defaults.
Accordingly, the Tribunal held that the penalty levied under Section 272A(1)(d) was not sustainable, deleted the penalty of ₹40,000, allowed the grounds of appeal raised by the assessee, and allowed the appeal. The order was pronounced on 30.06.2026.
Cases Discussed
- Commissioner of Income-tax vs. Jai Laxmi Rice Mills Ambala City, (SC), [2015] 64 taxmann.com 75 (SC)
- Madhushree Gupta vs. Union of India (Delhi HC), reported in (2009) 317 ITR 107 (Del.)
- Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. Assistant Director of Income Tax, reported in [2008] 115 TTJ 419 (Delhi)
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