Rupeshkumar Vs ITO ( ITAT Surat)
Summary: The ITAT Surat considered the quantum and penalty appeals of Rupeshkumar, a diamond trader, for Assessment Year 2022-23. The assessee had declared total income of Rs. 32,19,456 but did not comply with scrutiny notices, while suppliers also failed to respond to notices under Section 133(6). Treating purchases of Rs. 33,41,31,784 as having been made from the grey market, the Assessing Officer estimated gross profit at 3% against the declared 0.16% and added Rs. 94,89,342. He also disallowed the Rs. 1,50,000 deduction under Section 80C and house-property loss of Rs. 1,76,908 for want of supporting evidence, assessing total income at Rs. 1,30,35,706. Separately, a penalty of Rs. 50,000 was imposed under Section 272A(1)(d) for five notice defaults.
The CIT(A) dismissed both appeals for non-prosecution. Before the Tribunal, the assessee submitted that appellate hearing notices had been sent to an email address different from the address specified in Form No. 35 and challenged the appellate order against the requirement of a reasoned decision under Section 250(6). He further stated that relevant documents had now been collected and sought another opportunity before the Assessing Officer. Considering natural justice and the absence of prejudice to Revenue, the Tribunal restored the quantum matter for fresh adjudication, directing an adequate hearing and vigilant participation by the assessee. On penalty, it distinguished the default under Section 143(2) from the defaults under Section 142(1), but held that successive Section 142(1) notices examining similar issues constituted a single default. Relying on the two precedents discussed in the order and having regard to Section 273B, it confirmed Rs. 10,000 for the Section 143(2) default and Rs. 10,000 for the first Section 142(1) default, deleting Rs. 30,000 attributable to the remaining three notices. The quantum appeal was allowed for statistical purposes and the penalty appeal was partly allowed.
Cases Discussed
- Ganpat Singh Vs. ITO-3(1), Bhopal, ITA No. 158/Ind/2025 (ITAT Indore) — Relied upon to support the proposition that successive notices examining the same issues do not multiply the default or justify separate penalties for each repeated notice.
- Devraj Vishwasrao Jadhav Vs. ITO, Satara, ITA No. 1002/Pun/2025 (ITAT Pune) — Relied upon to support treating repeated notices on similar issues as a single default, since the object of Section 272A(1)(d) is compliance rather than multiplying penal consequences for a singular lapse.
FULL TEXT OF THE ORDER OF ITAT SURAT
The captioned two (2) appeals are filed by assessee for Assessment-Year [“AY”] 2022-23. The details of appeals are as under:
(i) ITA 650/SRT/2025 is a Quantum-Appeal directed against the order of first appeal dated 07.04.2025 passed by learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of the assessment-order dated 23.03.2024 passed by learned Assessment Unit of Income-tax Department [“Ld. AO”] u/s 143(3) r.w.s. 144B of the Income-tax Act, 1961 [“Act”].
(ii) ITA 651/SRT/2025 is a Penalty-Appeal directed against the order of first appeal dated 07.04.2025 passed by Ld. CIT(A), which in turn arises out of the penalty-order dated 05.09.2024 passed by Ld. AO u/s 272A(1)(d) of the Act imposing a penalty of Rs. 50,000/- upon assessee.
2. The background facts leading to these appeals are such that the assessee-individual, engaged in the business of diamond, filed his return of AY 2022-23 declaring a total income of Rs. 32,19,456/-. The case of assessee was selected for scrutiny and the Ld. AO issued notices u/s.143(2)/142(1) which remained uncompiled by assessee. The AO also issued notices u/s 133(6) to certain parties from whom the assessee made purchase transactions during the year, however those parties also did not respond to AO’s notices. Ultimately, the Ld. AO treated the total purchases of Rs. 33,41,31,784/- made by assessee from those parties as having been made from grey market and estimated gross-profit at 3% as against profit of 0.16% declared by assessee; made addition of Rs. 94,89,342/- on account of gross-profit. Further, the AO disallowed the deduction of Rs.1,50,000/- u/s 80C and loss of Rs. 1,76,908/- from house property, claimed by assessee in the return, for want of documentary evidences. Accordingly, the AO completed assessment u/s 144 through assessment- order dated 23.03.2024 assessing total income at Rs. 1,30,35,706/-.
Further, vide penalty-order dated 05.09.2024, the Ld. AO also imposed a penalty of Rs. 50,000/- u/s 272A(1)(d) for assessee’s failure to comply with five (5) notices issued u/s 143(2)/142(1). Aggrieved, the assessee carried matters in respective appeals before Ld. CIT(A). However, the Ld. CIT(A) dismissed assessee’s appeals for non-prosecution. Now, the assessee has come in next appeals before us.
3. Since these appeals are inter-related, they were heard together and are being disposed of by this common order for the sake of convenience, brevity and clarity. We firstly start with Quantum-Appeal and thereafter take up Penalty-Appeal.
ITA No. 650/SRT/2025 – Quantum-Appeal:
4. Ld. AR for assessee submitted that the Ld. CIT(A) passed ex-parte order dismissing assessee’s first appeal and merely approving the order of Ld. AO, although due to non-prosecution by assessee on the dates of hearing, but the order passed by Ld. CIT(A) is against the mandate of section 250(6) which provides: “The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision”. It is further submitted that the non-prosecution by assessee was due to bona fide reason as the Ld. CIT(A), while conducting first-appeal, has sent notices of hearing to e-mail address: [email protected] although the assessee has specifically mentioned email address: [email protected] in the space provided in Form No. 35. Therefore, due to non-service of notices at proper email address, the assessee could not attend hearings fixed by Ld. CIT(A), which has led to the passing of ex-parte order by Ld. CIT(A). Therefore, the impugned order of first-appeal passed by Ld. CIT(A) deserves to be set aside.
5. Ld. AR went ahead to demonstrate that the assessment-order passed by Ld. AO is also ex-parte due to lack of submissions but the same had occurred for the reason that the assessee was not able to collect and file confirmations from concerned parties at that time which is also evident from the fact that the Ld. AO also issued notices u/s 133(6) directly to the parties but they did not give any response to AO’s notices. However, the assessee has already collected all relevant details and documents and ready to make an effective representation before Ld. AO. Ld. AR, therefore, prayed that in the interest of justice, one more opportunity be given to assessee by way of restoring this matter at the level of Ld. AO. He acknowledged that the assessee shall definitely make a proper and effective representation before Ld. AO.
6. The Ld. DR for revenue, though not opposing the prayer of the assessee for restoration, submitted that the assessee had remained non- compliant during the assessment proceedings as well as proceedings of first- appeal, which constrained the lower authorities to pass ex-parte orders. It was, therefore, submitted that while restoring the matter, appropriate directions may be issued to ensure strict compliance by the assessee.
7. In view of above submissions of parties; having regard to the principle of natural justice and also bearing in mind that no prejudice would be caused to revenue if the present matter is restored at the level of Ld. AO, we restore this matter to the file of Ld. AO for adjudication afresh, at the risk and responsibility of assessee. The Ld. AO shall give necessary opportunity of hearing to assessee and pass an appropriate order uninfluenced by his earlier order. The assessee is also directed to remain vigilant and ensure participation in the hearings as may be fixed by Ld. AO without seeking unnecessary adjournments failing which the Ld. AO shall be at liberty to proceed in accordance with law. Ordered accordingly.
8. Consequently, this Appeal is allowed for statistical purposes.
ITA No. 651/SRT/2025 – Penalty-Appeal:
9. This appeal involves penalty of Rs. penalty of Rs. 50,000/- imposed by Ld. AO for non-compliances of five (5) notices issued by AO u/s 143(2)/142(1). The Ld. AR for assessee submitted that the AO issued five (5) successive notices dated 02.06.2023, 27.07.2023, 17.08.2023, 14.09.2023 and 03.10.2023 u/s 143(2)/142(1) to scrutinize identical issues. Accordingly, it was contended that where successive notices have been issued to examine identical issues, the alleged non-compliances partakes the character of a single continuing default and therefore the penalty cannot be levied separately for each notice.
10. On a careful consideration, we find that there are two types of notices issued by Ld. AO which had remained non-complied by assessee i.e. one notice issued u/s 143(2) and four notices issued u/s 142(1). We further find that the section 272A(1)(d) prescribes separate penalties for non-compliance of notice u/s 143(2) and 142(1). For an immediate reference, the section 272A(1)(d) is re-produced below:
“272A. (1) If any person,–
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(d) fails to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 …… he shall pay, by way of penalty, a sum of ten thousand rupees for each such default or failure.”
11. Further, we find that the notices u/s 142(1) issued by AO, one after another, for examination of similar issues, will not multiply the default and it would constitute a single default. The object of section 272A(1)(d) is to ensure compliance and not to multiply penal consequences for a singular lapse arising out of the same cause. This proposition is supported by plethora of decisions including Devraj Vishwasrao Jadhav Vs. ITO, Satara, ITA No. 1002/Pun/2025 and Ganpat Singh Vs. ITO-3(1), Bhopal, ITA No.158/Ind/2025.
12. Accordingly, in the light of legal provision of section 272A(1)(d) and the judicial decisions referred above and also having regard to the provisions of section 273B of the Act, we are of the view that the penalty of Rs. 10,000/- for non-compliance of notice issued u/s 143(2) and a further penalty of Rs. 10,000/- for non-compliance of the first notice issued u/s 142(1) deserve to be confirmed. As regards the remaining three notices issued u/s 142(1), the penalty deserves to be deleted. Accordingly, out of the total penalty of Rs. 50,000/- imposed by AO, we uphold the penalty to the extent of Rs. 20,000/- and delete the balance penalty of Rs. 30,000/-.
13. Consequently, this Appeal is partly allowed.
14. In result, the ITA No. 650/Surat/2025 is allowed for statistical purposes and ITA No. 651/SRT/2025 is partly allowed.
Order pronounced in open court on 03/09/2026
