The Income Tax Department has dropped penalty proceedings initiated under Section 272A(1)(d) of the Income Tax Act, 1961, after finding that the taxpayer had ultimately complied with the notice issued under Section 142(1), although the required information was furnished after the prescribed deadline.
The Assessment Unit observed that the case involved delayed compliance rather than a complete or deliberate failure to respond. Taking note of the subsequent submission of all the required information and documents, the authority held that imposing a penalty was not warranted.
The order was passed on August 27, 2026, in the case of Dhru Sanjaykumar Soni for Assessment Year 2024-25. The amount of penalty imposed was recorded as “nil”.
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Penalty Proceedings Initiated After Scrutiny Assessment
The taxpayer’s case had been selected for scrutiny assessment. An assessment order under Section 143(3), read with Section 144B of the Income Tax Act, was subsequently passed on January 31, 2026, determining the total income at ₹21,00,800.
During the assessment proceedings, the Department issued a notice under Section 142(1) on January 2, 2026, requiring compliance by January 5, 2026.
The taxpayer did not submit the response within that deadline. The required reply was ultimately furnished on January 16, 2026.
Considering the delay, the Department initiated penalty proceedings by issuing a show-cause notice on January 31, 2026, under Section 274, read with Section 272A(1)(d) of the Income Tax Act.
A further show-cause notice was issued on May 19, 2026. The Department’s records stated that no response was received to the two show-cause notices. However, after another communication concerning the alleged non-compliance was issued on July 3, 2026, the taxpayer furnished a detailed response on July 7, 2026.
Taxpayer Cites Extremely Short Compliance Window
In the response, the taxpayer pointed out that the Section 142(1) notice had been digitally generated on Friday, January 2, 2026, at 7:53 pm, which was beyond normal business hours.
The deadline prescribed in the notice was January 5, 2026, at 4:59 pm. The intervening days—January 3 and January 4—were Saturday and Sunday.
According to the taxpayer, the practical time available during working hours to collect and submit the requested documents was therefore restricted to a few hours on Monday morning. It was argued that this severely limited opportunity was not reasonable and made timely compliance practically difficult.
The taxpayer further submitted that the automated email containing the notice link had been filtered into the spam folder of the registered email account. The combination of the weekend, the brief compliance period and the email-related technical issue was cited as the reason for the delay.
“Not Non-Compliance, But Delayed Compliance”
The taxpayer emphasised that a response to the Section 142(1) notice had ultimately been furnished on January 16, 2026, before the scrutiny assessment was completed on January 31, 2026.
It was accordingly argued that the case could not be treated as one of total non-compliance. Rather, it was a case of delayed compliance supported by reasonable cause.
The taxpayer also invoked Section 273B of the Income Tax Act, which protects an assessee from certain penalties where a reasonable cause for the relevant failure is established. Section 272A(1)(d) is among the penalty provisions covered by that statutory protection.
According to the submission, the unusually short deadline, the intervening non-working weekend, the email landing in the spam folder and the eventual submission of the information before completion of the assessment collectively constituted reasonable cause for the procedural delay.
The taxpayer further contended that the delayed response had not caused any prejudice to the Revenue because the material sought by the Department was placed on record before the assessment order was passed.
Department Distinguishes Delay From Deliberate Refusal
After considering the facts, the Assessment Unit concluded that the taxpayer had duly complied with the Section 142(1) notice, although the compliance had occurred after some delay.
The authority recorded that the taxpayer had ultimately furnished the required information and documents and satisfied the requirements of the notice. It therefore found that this was not a case in which the taxpayer had completely failed or deliberately refused to comply with a statutory notice.
“The penalty provision is intended to address failure to comply with a statutory notice,” the Assessment Unit observed. In the present matter, however, there had been eventual compliance, distinguishing it from cases involving a complete failure to respond.
The authority also took into account the taxpayer’s bona fide conduct, the subsequent and complete submission of the requested material, and the absence of any deliberate or wilful disregard of the notice.
On that basis, it held that a penalty under Section 272A(1)(d) was not justified.
Penalty Proceedings Dropped
The Income Tax Department consequently dropped the penalty proceedings for Assessment Year 2024-25 and imposed no penalty on the taxpayer.
The order underscores that, for the purpose of Section 272A(1)(d), the surrounding facts and the taxpayer’s subsequent conduct are relevant. Where the required information is ultimately furnished, the delay is supported by a bona fide explanation, and there is no deliberate or wilful disregard of the notice, the case may be distinguished from complete statutory non-compliance.
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