Assessment u/s 143(3) Nullifies Section 272A(1)(d) Penalty: ITAT Cochin

Jomon John Vs NFAC (ITAT Cochin)

The case relates to a penalty of ₹10,000 levied on the assessee,  u/s 272A(1)(d), for alleged failure to comply with a statutory notice u/s 142(1). AO viewed this non-compliance as a default & issued a show cause notice, followed by the penalty order.  Despite filing a response, the AO found it unsatisfactory & imposed the penalty. CIT(A) upheld this decision, citing lack of explanation from the assessee for the default.

Before the Tribunal Assessee  argued that the he did ultimately comply with the Sec 142(1) notice during the assessment proceedings &  pointed out that the final assessment was made u/s 143(3), not Section 144 (best judgment), which implied the AO had considered the materials submitted & accepted the compliance.  Further,  subsequent compliance should be treated as sufficient, & no willful default was established.

ITAT accepted the argument that since the assessment was completed u/s 143(3), the AO had accepted the compliance.  Tribunal relied on the  ruling in Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. ACIT, where the Delhi ITAT held that mere issuance of a penalty notice is not equivalent to satisfaction for imposition of penalty. If the final order is passed u/s 143(3), it implies that any initial defaults were not treated as willful & were rectified during proceedings.