Institute Management Committee ITI Kalamnuri Vs ITO (ITAT Pune Bench)
Same Question Twice Cannot Create Two Defaults: Penalty u/s 272A(1)(d) Cut by Half
Summary:
Background
The assessee was a Government institute registered under the Bombay Public Trusts Act, 1950. It provided vocational training & skill-development facilities to students on a “no profit, no loss” basis.
For the years under consideration, the assessee received funds of approximately ₹2.50 crore from the Directorate General of Employment & Training, Shram Shakti Bhawan, under the Ministry of Labour & Employment. The funds were intended for implementing an Institute Development Plan.
Pending utilisation, the funds were invested with the State Bank of India. The assessee earned interest income of ₹27,51,075 for AY 2019-20 & ₹29,07,067 for AY 2018-19. However, it did not file returns of income u/s 139 for the relevant years.
Based on information regarding the interest receipts, the AO reopened the assessments. In response to the notices u/s 148, the assessee filed returns declaring nil income & claimed that the interest income was exempt u/s 10(23C)(iiiab).
Notices Remained Unanswered
During the reassessment proceedings, the AO issued notices u/ss 143(2) & 142(1) calling upon the assessee to furnish information. As the assessee did not comply with those notices, the AO completed the assessments ex parte u/s 147 r.w.s. 144 & 144B, treating the entire interest receipts as income from other sources.
The AO also initiated penalty proceedings for failure to comply with the statutory notices. Since there was no satisfactory compliance even during the penalty proceedings, he invoked s.272A(1)(d).
Penalty of ₹10,000 for each default was levied for non-compliance with the notices u/ss 143(2) & 142(1). Thus, penalty aggregating to ₹20,000 for each AY was imposed.
Appeals Dismissed on Limitation
The assessee challenged the penalty orders before the CIT(A). However, the appeals were delayed by 246 days & 522 days, respectively.
The assessee explained the circumstances which had prevented it from approaching the CIT(A) within the prescribed period. The CIT(A), however, declined to condone the substantial delays. Consequently, the appeals were dismissed without an effective adjudication of the penalty dispute on merits.
The assessee then approached the Tribunal. Even the appeals before the ITAT were delayed by two days. An affidavit explaining the delay was filed.
Following the justice-oriented principles laid down by the Supreme Court in Collector, Land Acquisition, Anantnag v. Mst. Katiji & Inder Singh v. State of Madhya Pradesh, the Tribunal held that the two-day delay was neither intentional nor deliberate. It therefore condoned the delay & admitted the appeals.
Substantial Delays Before CIT(A) Also Condoned
The Tribunal separately considered the explanations furnished for the delays of 246 days & 522 days before the CIT(A). It found that the assessee had been prevented by reasonable cause from filing the first appeals within time.
Adopting a justice-oriented approach, the ITAT condoned those delays as well. Instead of remanding the proceedings merely for the CIT(A) to examine the penalty, it proceeded to decide the substantive controversy.
Can Two Similar Notices Produce Two Penalties?
The assessee contended that the AO had issued successive notices on two different occasions seeking substantially the same information. Although there had been non-compliance, repetition of a request could not multiply a single continuing failure into several independent defaults.
According to the assessee, when notices are issued one after another for identical information, the failure constitutes one default, not separate defaults for every repeated notice. Reliance was placed upon various Tribunal decisions holding that repeated notices seeking the same particulars cannot generate multiple penalties mechanically.
The Revenue supported the levy of ₹20,000 & the orders of the lower authorities.
Repetition of Notice Does Not Multiply Default
The ITAT accepted the assessee’s contention in part.
It acknowledged that the assessee had failed to comply with the statutory notices during the assessment proceedings. Therefore, complete deletion of the penalty was not justified merely because the assessee was a Government institute or because it claimed exemption for its income.
At the same time, the Tribunal held that successive notices seeking the same information could not be treated as multiple independent defaults. Where an AO issues one notice after another requiring identical particulars, the subsequent notice is essentially a continuation or repetition of the original requirement.
The issue was no longer res integra, as various Benches of the Tribunal had held that the number of defaults cannot be artificially multiplied merely through repeated notices.
The Tribunal also considered s.273B, which protects an assessee from specified penalties where it proves that the failure occurred due to reasonable cause. Balancing the assessee’s explanation against its admitted non-compliance, the ITAT concluded that penalty should survive only for the first default.
Final Verdict
The penalty of ₹10,000 for the first non-compliance was confirmed. The additional penalty of ₹10,000 for the subsequent non-compliance was deleted for each AY.
Thus, the penalty u/s 272A(1)(d) was reduced from ₹20,000 to ₹10,000 for each assessment year, & both appeals were partly allowed.
Author’s Comments
The decision prevents a procedural failure from becoming a penalty multiplication table. An AO may issue reminders or repeated notices to secure compliance, but where every notice seeks the same information, each reminder does not necessarily create a fresh default carrying another penalty.
At the same time, the ruling does not excuse complete non-compliance. The Tribunal confirmed penalty for the initial failure because statutory notices cannot simply be ignored. The relief was confined to eliminating the duplicated consequence flowing from the repeated request.
The order also reflects a liberal approach towards condonation. Despite delays of 246 days & 522 days before the CIT(A), the Tribunal preferred adjudication on merits after finding reasonable cause. Procedural timelines remain important, but they should facilitate justice—not prevent consideration of an otherwise arguable case.
A minor drafting inconsistency appears in the order, which occasionally refers to s.271(1)(d). The applicable penalty provision for non-compliance with notices u/ss 142(1) & 143(2) is s.272A(1)(d), read with the reasonable-cause protection contained in s.273B.
Cases Discussed
- Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. (1987) 2 SCC 107
- Inder Singh Vs. State of Madhya Pradesh, judgment dated 21.03.2025 (2025 INSC 382)
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT PUNE
1. The captioned appeals at the instance of assessee pertaining to A.Ys.2019-20 and 2018-19 are directed against the separate orders dated 19.09.2025 framed by the National Faceless Appeal Centre, Delhi arising out of respective Penalty orders passed 272A(1)(d) of the Income Tax Act, 1961 (in short ‘the Act).
2. Registry has pointed that the appeals are time barred by limitation as the assessee has filed the appeals before this Tribunal with delay of 2 days. Assessee has filed Affidavit explaining the reason for delay. On due consideration of the said reasons, we are satisfied that due to ‘reasonable cause’ assessee could not file the appeals within the stipulated time and the delay in filing of appeals is neither deliberate nor intentions. We therefore condone the delay in filing of appeals placing reliance on the judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382 and admit the appeals adjudication.
3. The only issued raised in the instant appeals is whether the ld.CIT(A) erred in confirming the penalty levied by the Assessing Officer at Rs.20,000/- u/s.272A(1)(d) of the Act for failure to comply with notices issued u/s.143(2) and 142(1) of the Act.
4. Facts of the case as emanating from the record are that the assessee is a Government Institute registered under the Bombay Public Trusts Act, 1950. It provides vocational Training and Skill development to the students and works under the principle of ‘no profit no loss’. Assessee has not filed the return of income u/s.139 of the Act. We note that case of the assessee has been reopened based on the information that assessee has received interest income of Rs.27,51,075/- for A.Y. 2019-20 and Rs.29,07,067/- for A.Y. 2018-19 from the State Bank of India and the assessee has not filed the return of income. There was no compliance from the side of assessee which resulted into culmination of assessment proceedings u/s.147 r.w.s.177 r.w.s.144 r.w.s.144B of the Act making addition of said interest income as Income from Other Sources as against the Nil income returned by the assessee. Ld. Assessing Officer initiated penalty proceedings u/s.270A of the Act for failure to comply with notices issued u/s.143(2) and 142(1) of the Act. In absence of any compliance during the penalty proceedings, ld. Assessing Officer levied penalty u/s.272A(1)(d) of the Act at Rs.20,000/-, i.e. @Rs.10,000/-each for failure to make compliance with notices issued u/s.143(2) and 142(1) of the Act.
5. Aggrieved assessee preferred appeals before ld.CIT(A)but with delay of 246 days and 522 days respectively which has not been condoned by ld.CIT(A), resulting into dismissal of appeals. Now the assessee has approached this Tribunal.
6. Ld. Counsel for the assessee submitted that in these appeals there is delay in filing of appeals before ld.CIT(A) which has not been condoned by ld.CIT(A) despite ‘reasonable cause’ exists for not filing the appeals within the stipulated time. A prayer is made to condone the delay and admit the appeals for adjudication. Further, ld. Counsel for the assessee vehemently argued referring to the submissions filed before the lower authorities and further submitted that where the notices have been issued by the ld. AO, one after the another, on two different occasions seeking the same information, it will not multiply the default and it would constitute a single default and therefore prayed for deletion of the penalty by virtue of various decisions passed by this Tribunal on this very issue.
7. On the other hand, ld. DR supported the orders of ld.CIT(A).
8. We have heard the rival contentions and perused the record placed before us. We observe that the assessee is a Government Institute and for the years under consideration, assessee has received funds to the tune of Rs.2.50 crore from the Directorate General of Employment and Training Shram Shakti Bhawan under the Ministry of Labour & Employment for Institute Development Plan and upon investment of the said sum assessee has received the interest income and claimed to be exempt u/s.10(23C)(iiiab) of the Act in the return filed in response to the notice u/s.148 of the Act.
9. We observe that for non-compliance to the notices u/s.143(2) and 142(1) of the Act issued by ld. AO, the penalty u/s.271(1)(d) of the Act @ Rs.10,000/- for each non-compliance has been imposed totalling to Rs.20,000/-. Assessee failed to succeed as ld.CIT(A) has not condoned the delay in filing of the appeals.
10. We have gone through the reasons furnished by the assessee for filing of appeals before ld.CIT(A) and we are satisfied that reasonable cause prevented the assessee from filing of the appeals before ld.CIT(A) within the stipulated time. Adopting justice oriented approach, we condone the delay in filing of the appeals before ld.CIT(A).
11. We however note that at the time of assessment proceedings, there was non-compliance to the notices issued by ld. Assessing Officer. It has also been claimed that assessee has been prevented for ‘reasonable cause’ for not appearing on the dates of hearing fixed by ld. Assessing Officer. We find merit in the contention of the ld. Counsel for the assessee that where the notices have been issued by the AO, one after the another, on two different occasions seeking the same information, it will not multiply the default and it would constitute a single default and the issue is no longer res integra by virtue of plethora of decisions passed by various Benches of this Tribunal. In light of the same and considering the provisions of section 273B of the Act, we are of the view that penalty for the first non-compliance deserves to be confirmed and for the subsequent non-compliance penalty deserves to be deleted. We therefore restrict the penalty levied u/s.271(1)(d) of the Act to one default as against two defaults treated by the ld.Assessing Officer for both the assessment years under appeal. Accordingly, the penalty u/s.271(1)(d) of the Act is confirmed to the extent of Rs.10,000/- and remaining penalty of Rs.10,000/- for both the assessment years is hereby directed to be deleted.
12. In the result, both the appeals of the assessee are partly allowed.
Order pronounced on this 02nd day of September, 2026.
