Karthikaraj Premalatha Vs ITO (ITAT Chennai)
The Chennai ITAT partly allowed the assessee’s appeal against the CIT(A), NFAC order dated 21.08.2025 concerning penalty under Section 272A(1)(d) of the Income-tax Act, 1961. The assessee had failed to comply with notices under Section 142(1) dated 09.08.2024 and 07.10.2024 seeking information relating to the sale of an immovable property. The AO treated the failures as separate defaults and imposed a penalty of ₹20,000, which the CIT(A) confirmed.
Before the Tribunal, the assessee submitted that there was sufficient cause for the non-compliance. The Department supported the orders of the lower authorities.
The Tribunal noted that the assessee appeared before the AO on 23.10.2024 and sought an adjournment. This subsequent appearance indicated that the assessee had not completely abandoned the assessment proceedings and supported the plea that a reasonable cause existed for the initial non-compliance with the 09.08.2024 notice. Accordingly, the Tribunal deleted the ₹10,000 penalty attributable to the first default.
However, regarding the second notice dated 07.10.2024, the assessee had neither produced material nor provided a satisfactory explanation demonstrating reasonable cause for continued non-compliance. The Tribunal held that subsequent appearance before the AO, without explaining the failure to comply with the second statutory notice, could not by itself absolve the assessee from the consequences under Section 272A(1)(d).
Consequently, the Tribunal deleted ₹10,000 relating to the first default but upheld ₹10,000 relating to the second default, restricting the total penalty from ₹20,000 to ₹10,000. The appeal was therefore partly allowed. The order was pronounced on 08.07.2026.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
The captioned appeal filed by the Assessee is directed against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi, [hereinafter referred to as “CIT(A)”] dated 21.08.2025 for Assessment Year 2020-21.
2. The Appellant filed her return of income u/s. 139 for the Assessment Year (A.Y.) 2021–22, declaring a total income of Rs.3,05,550/-. As per information on record, the Appellant had sold an immovable property for a consideration of Rs. 49,50,000/- but failed to offer the resulting capital gains in the return of income. Consequently, a notice u/s. 148 was issued on March 28, 2024. During the assessment proceedings, notices dated 09.08.2024 and 07.10.2024 u/s. 142(1) were issued requiring the Appellant to furnish details and documents related to the sale. However, the Appellant’s continuous non-compliance led to the imposition of a penalty of Rs.20,000/- u/s. 272A(1)(d) of the Act.
3. Aggrieved by the assessment order, the assessee preferred an appeal before the ld. Commissioner of Income Tax (Appeals). However, the ld.CIT(A) dismissed the appeal of the appellant by holding that during the appellate proceedings, the appellant failed to respond the notice issued without any reasons. Consequently, the penalty made by the Assessing Officer was confirmed. Now, the assessee is in appeal before this Tribunal.
4. Before us, the ld. Authorised Representative (AR) argued that the Ld.CIT(A) erred in upholding the assessment order without appreciating the sufficient cause of failure to comply the notices issued during the assessment proceedings.
5. The ld. Departmental Representative (DR), on the other hand, relied upon the orders of the lower authorities and pleased for dismissal of the instant appeal.
6. We have heard the rival submissions, perused the orders of the authorities below and carefully examined the material available on record. The issue for our consideration is whether the penalty levied u/s.272A(1)(d) of the Income Tax Act, 1961, for the alleged noncompliance with notices issued u/s.142(1), is sustainable in the facts and circumstances of the present case.
7. It is an admitted position that the Assessing Officer (AO) issued notices u/s.142(1) dated 09.08.2024 and 07.10.2024 requiring the assessee to furnish information relating to the sale of immovable property. The AO, treating the assessee’s failure to comply with both notices as separate defaults, levied a penalty of Rs.20,000/-u/s.272A(1)(d), which came to be confirmed by the ld.CIT(A). On a careful consideration of the record, we notice that the assessee appeared before the AO on 23.10.2024 and sought an adjournment. The subsequent appearance of the assessee before the AO indicates that the assessee had not completely abandoned the assessment proceedings and was desirous of participating therein. This conduct lends support to the plea that there existed a reasonable cause for the initial non-compliance with the notice dated 09.08.2024. It is well settled that where the surrounding circumstances indicate the existence of a bona fide and reasonable cause, the penal provisions should not be invoked in a mechanical manner. Therefore, extending the benefit of doubt to the assessee, we are of the considered opinion that the penalty of Rs.10,000/- levied in respect of the first default deserves to be deleted.
8.However, so far as the second notice dated 07.10.2024 is concerned, the assessee has neither placed any material on record nor advanced any satisfactory explanation demonstrating reasonable cause for the continued non-compliance. Mere subsequent appearance before the AO seeking adjournment, without explaining the failure to comply with the second statutory notice, cannot by itself absolve the assessee from the consequences contemplated u/s.272A(1)(d). In the absence of any cogent or convincing explanation, the default relating to the notice dated 07.10.2024 remains unexplained. Accordingly, we hold that the penalty levied for the first default relating to the notice dated 09.08.2024 is liable to be deleted, whereas the penalty in respect of the second default relating to the notice dated 07.10.2024 is justified. Consequently, the penalty is restricted to Rs.10,000/- as against Rs.20,000/- levied by the AO and confirmed by the ld.CIT(A).
9. In the result, appeal filed by the assessee is partly allowed.
Order pronounced in the open court on the 08th day of July 2026 at Chennai.
