ITAT Cuts Section 272A(1)(d) Penalty From Rs 30,000 to Rs 10,000 for Income Tax Notice Default After Assessee Cooperates in Assessment:

The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, has reduced the penalty imposed on Sara Garg for failing to comply with three statutory income tax notices. The Tribunal noted that although the assessee initially failed to respond, she later cooperated with the assessment proceedings and provided the required information.

During the assessment proceedings, the assessee was served with notices dated June 19, 2024; August 28, 2024; and October 03, 2024, issued under Sections 143(2) and 142(1) of the Income Tax Act. However, the assessee failed to respond to the notices. Consequently, the Assessing Officer (AO) initiated penalty proceedings under Section 272A(1)(d) and show-caused the assessee. The assessee filed a response on June 16, 2025, claiming that the statutory notices were not served properly.

In response to the same, the Assessing Officer (AO) rejected the assessee's claim and stated that the notices were delivered to a valid registered email address used for filing the income tax returns and claiming tax refunds. Therefore, the AO, through an order dated August 20, 2025, imposed penalties of Rs 10,000 each, totalling Rs 30,000.

The aggrieved assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. However, the appeal was dismissed and upheld the impugned penalty of Rs 30,000. Thereafter, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Chandigarh.

During the personal hearing, the assessee submitted that she was not completely non-compliant. She had subsequently responded to a notice under Section 142(1) dated January 30, 2025, and a show-cause notice dated February 11, 2025, by submitting the required documents and information. It was also highlighted that the assessment was completed without making any addition to her returned income.

The ITAT observed that the assessee had indeed failed to comply with the initial notices, and her non-receipt argument was not acceptable. However, considering her subsequent cooperation and the fact that no addition was made during assessment, the Tribunal held that the cumulative penalty of Rs 30,000 was harsh. It therefore directed the AO to restrict the penalty to a consolidated amount of Rs 10,000. The appeal was partly allowed.