ITAT Lucknow Deletes ₹40,000 Penalty Under Section 272A(1)(d) — Unnoticed Notices Due to Departed Employee's Email Account Constitute Reasonable Cause
Case Overview
Amar Liquors Vs DCIT/ACIT (ITAT Lucknow)
The Income Tax Appellate Tribunal, Lucknow Bench, recently adjudicated a penalty dispute arising out of an order dated 12.08.2025 passed by the Commissioner of Income-tax (Appeals)/NFAC pertaining to Assessment Year 2022-23. At the heart of the controversy was a penalty of ₹40,000 imposed under Section 272A(1)(d) of the Income-tax Act, 1961, on the ground that the assessee had allegedly failed to comply with statutory notices issued under Section 143(2) and Section 142(1) during the course of scrutiny assessment proceedings.
The Tribunal, after carefully evaluating the facts and rival contentions, ultimately deleted the penalty in its entirety, holding that the assessee had successfully demonstrated reasonable cause for the non-compliance, thereby attracting the protective shield of Section 273B.
Background and Factual Matrix
The assessee had duly filed its return of income under Section 139(1) on 19.10.2022, declaring a total income of ₹17,75,430. The case was subsequently selected for scrutiny assessment, and the Assessing Officer issued a notice under Section 143(2) dated 01.06.2023, followed by notices under Section 142(1) dated 26.07.2023, 31.08.2023, and 17.01.2024, seeking various details, information, and supporting documents.
According to the Assessing Officer, the assessee failed to respond to these notices within the stipulated timeframes. Treating this omission as deliberate non-compliance, the Assessing Officer initiated penalty proceedings under Section 272A(1)(d) of the Income-tax Act, 1961, and levied a penalty of ₹40,000. The CIT(A)/NFAC, upon hearing the assessee's challenge, upheld the penalty, prompting the assessee to carry the matter to the Tribunal.
Assessee's Contentions Before the Tribunal
Before the Tribunal, the assessee reiterated its earlier submissions and advanced several grounds in support of its plea for deletion of the penalty:
1. Notices Not Received or Accessible in Time
The assessee's primary argument was that the statutory notices — including the notice under Section 143(2) dated 01.06.2023 and those under Section 142(1) dated 26.07.2023, 31.08.2023, and 17.01.2024 — were either:
- Not physically received through postal channels or the notice server, or
- Delivered to an official email account that was exclusively operated and managed by an employee handling the firm's tax-related matters
The crucial element here was that this particular employee had left the firm after October 2023 without informing the management or other staff about the pending statutory notices that had arrived in the said email inbox.
2. Restricted Access to the Email Account
The assessee further clarified that the email account to which the notices had been delivered was not accessible to other members of staff. As a result, the notices lay unnoticed in the inbox of a dormant account, and no one within the firm had either the access or the knowledge to act upon them.