Ajaz Alam Vs Assessment Unit (ITAT Lucknow)
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.
