St. Joseph Educational Society Vs ITO (ITAT Chandigarh)
NIL Income, but Not a NIL Default—ITR-V Sleeping for 5½ Years Invites Penalty u/s 272A(2)(e); Section 273B Offers No Rescue
The Return Was Filed, but Not Verified
St. Joseph Educational Society challenged the penalty of ₹2,06,200 levied u/s 272A(2)(e) for failure to furnish its return of income within the prescribed time.
The Assessee had electronically filed its return for AY 2015-16 on 29.10.2015 under PAN AAMAS8435Q, declaring NIL income. However, the return was not electronically verified & the signed physical ITR-V was not submitted to CPC within the stipulated period.
The ITR-V was ultimately received by CPC only on 28.03.2022, nearly 5½ years later. Consequently, the original return was treated as invalid. CPC informed the Assessee that it would remain invalid unless an application for condonation of delay was filed & accepted by the competent authority.
Thus, though the return had entered the system in 2015, it had never acquired legal validity because the verification completing the filing process arrived several years late.
Two PANs Add Another Layer
The Assessee was found to possess two PANs—AAMAS8435Q & AACAS3273Q. Information concerning cash deposits in a bank account was associated with the latter PAN. Since no return was found under that PAN, notice u/s 148 was issued & reassessment proceedings commenced.
During those proceedings, the Department discovered that both PANs belonged to the same educational society. Separate penalty proceedings u/s 272B(1) were initiated for holding multiple PANs. However, the Tribunal clarified that the legality of such penalty was not the subject matter of the present appeal.
The reassessment order dated 29.03.2023 was passed in relation to PAN AACAS3273Q, whereas the impugned penalty u/s 272A(2)(e) concerned the invalid return filed under PAN AAMAS8435Q.
NIL Assessment Does Not Erase the Filing Default
The Assessee emphasized that its return disclosed NIL income & the assessment was also completed at NIL income without any addition. According to it, the delayed filing or verification was merely a technical default causing no loss to the Revenue.
It was further contended that the lapse occurred due to negligence of the accountant & procedural confusion arising from the existence of two PANs. Such circumstances, according to the Assessee, constituted reasonable cause u/s 273B.
The Assessee argued that penalty u/s 272A(2)(e) was not automatic. In the absence of deliberate, contumacious or mala fide conduct, a charitable educational society having no taxable income should not be punished merely because of a procedural irregularity.
The CIT(A), before whom there was no compliance by the Assessee, considered the explanation already furnished before the AO but rejected it. The penalty was accordingly confirmed.
Initiation Under the Other PAN Was Not Illegal
Before the ITAT, one issue was whether penalty proceedings concerning PAN AAMAS8435Q could validly arise from reassessment proceedings initiated with reference to PAN AACAS3273Q.
The Tribunal found no illegality. Both PANs admittedly belonged to the same Assessee, & the fact of holding two PANs came to light during reassessment. More importantly, the invalid return had been filed under the very PAN for which penalty u/s 272A(2)(e) was ultimately initiated.
The Tribunal noted that it was not informed whether one of the PANs had subsequently been cancelled or whether both continued to exist. Nevertheless, that uncertainty did not invalidate the present penalty proceedings. The multiple-PAN violation was a separate matter, while the delayed verification of the return had to be examined independently.
Reasonable Cause Collapses Under a 5½-Year Delay
The decisive question was whether the Assessee had demonstrated reasonable cause within the meaning of section 273B.
The Tribunal contrasted the dates. The return was uploaded on 29.10.2015, but the ITR-V was sent only on 28.03.2022. Notice u/s 148 was issued on 29.03.2022, immediately thereafter.
This chronology led the Tribunal to conclude that the Assessee apparently forwarded the long-pending ITR-V only when it became aware that reassessment proceedings were about to commence. The act was therefore not viewed as the correction of an innocent oversight discovered independently.
The Tribunal also made the significant observation that failure to submit the ITR-V had kept the return outside the effective processing system, thereby enabling the Assessee to escape the CASS cycle for possible selection of scrutiny.
An accountant’s negligence or confusion relating to dual PANs might explain a short or moderate delay. But a silence extending over 5½ years, followed by submission of the verification just one day before issuance of notice u/s 148, could not establish reasonable cause “by any stretch of imagination.”
The Final Verdict
The ITAT upheld the penalty of ₹2,06,200 u/s 272A(2)(e) & dismissed the Assessee’s appeal.
The ruling demonstrates that NIL income & NIL assessed liability do not automatically convert a mandatory filing obligation into an optional formality. Section 273B protects genuine & adequately explained lapses; it does not erase prolonged inaction merely because no tax addition was eventually made.
Uploading a return without completing its verification is like filing an appeal without signing it—the document may reach the portal, but it has not legally arrived. When the missing ITR-V wakes up only after 5½ years, just as notice u/s 148 knocks on the door, the explanation may be charitable—but the default is not.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT CHANDIGARH
This is an appeal against the penalty order under section 272A(2)(e) of the Income Tax Act, 1961, imposed for late filing of the return.
2. In the present appeal the Assessee has raised the following grounds:
1. That the learned CIT(A) erred in law and on facts in confirming the penalty of Rs. 2,06,200/- levied under section 272A(2)(e). which is illegal, arbitrary and unsustainable.
2. That the authorities below failed to appreciate that the return of income for AY 2015-16 was filed at NIL and the assessment was completed at NIL income, and therefore levy of penalty for a purely technical default is unjustified.
3. That the learned CIT(A) erred in upholding the penalty by mechanically relying on the length of delay, without examining the surrounding circumstances, bona fides of the appellant. abeence of mens rea, and the fact that the appellant is an educational society with no taxable income.
4. That the learned CIT(A) failed to appreciate that negligence of an accountant, coupled with procedural confusion arising from dual PANs, constitutes a reasonable cause within the meaning of section 273B, and the appellant ought not to be penalised for acts beyond its direct control.
5. That the learned CIT(A) failed to apply settled law that penalty under section 272A(2)(e) is not automatic and canmot be levied in the absence of deliberate, contumacious OR. mala fide conduct.
6. That the impugned penalty order and appellate order suffer from non-application of mind and deserve to be quashed.
7. That the appellant craves leave to add OR amend the grounds of appeal before the appeal is finally heard OR. disposed off.
3. Before the AO it was explained that the assessee had two PAN Nos. i.e; AAMAS8435Q and AACAS3273Q. The assessment order dt. 29/03/2023 was passed for PAN No. AACAS3273Q, as the assessee had not filed the return of income and notice under section 148 was issued. The AO had received an information for cash deposits in the bank account with this PAN.
4. Two PANs were noticed during the course of assessment proceeding and penalty proceeding under section 272B(1) were also initiated. The assessee had filed return for A.Y 2015-16 for the new PAN No. AAMAS8435Q on 29/10/2015. However, this return was treated as invalid as ITR V signed by the assessee was not submitted within the prescribed limit for this PAN. It was received on 28/03/2022 that means the delay in filing ITR V made the return invalid, till an application for condonation of delay is filed and delay condoned by the competent authority. The communication from CPC advised the assessee accordingly.
5. Since for the PAN No. AACAS3273Q, no return was filed and for the PAN No. AAMAS8435Q the return was filed but it was invalid return as the ITR V was not submitted, the penalty proceedings under section 272A(2)(e) were initiated while passing the assessment order dt. 29/03/2023 for PAN No. AAMAS8435Q. The total income was however assessed at NIL, which means no addition was made.
6. The present penalty has been imposed for the PAN No. AAMAS8435Q. Before the Ld. CIT(A) there has been no compliance. However, the Ld. CIT(A) has discussed the assessee’s version apparently from the reply furnished before the AO. The moot question in this case is whether the circumstances establish reasonable cause for failure under section 273B or not. The Ld. CIT(A) held that the explanation furnished by the assessee does not establish the same. The conduct of the assessee in having two PANs is a separate violation of statutory provisions for which the AO has initiated penalty proceeding under section 272(B)(1), we are not concerned with the said issue.
7. The, penalty proceeding for the PAN No. AAMAS8435Q was initiated during the assessment proceeding conducted in the PAN No. AACAS3273Q. Since notice under section 148 was issued in the PAN No. AACAS3273Q and the cash was deposited in the bank account in which the PAN No. AACAS3273Q was given. We do not find any thing illegal in initiation of penalty proceeding in AAMAS8435Q as both PANs were belonging to the assessee and the fact of having two PANs was noticed during the reassessment proceeding. Moreover, the invalid return was filed I the PAN in which the penalty proceedings were initiated. We are not aware which of the PAN has been cancelled as on date or whether both the PANs still continue. However, we do not find anything wrong in the initiation of penalty proceeding. The issue of reasonable cause is to be seen from the fact that the return in the PAN No. AAMAS8435Q was filed on 29/10/2015, while its ITR V was sent on 28/03/2022 i.e; after a gap of almost 5½ year. Since the notice under section 148 was issued on 29/03/2022, the assessee apparently submitted ITR V of the 5½ years, when it came to know that notice under section 148 is in the process of being issued. By not filing ITR V it escaped the CASS cycle of selection of case for scrutiny also. Such long delay goes against the presumption of reasonable cause by any stretch of imagination. Therefore the penalty imposed is confirmed and the appeal is dismissed.
8. In the result, appeal is dismissed.
Order pronounced on 03/09/2026
