Laxmi Narain Kesrwani vs Dy. CIT

PER RAMIT KOCHAR, AM:

Both theses appeals are filed by the assessee against separate appellate order(s) passed by Learned Commissioner of Income Tax (Appeals)-27, New Delhi Delhi [CIT(A), in short) both dated 27.03.2026 in Appeal No. CIT(A), Delhi-27/10993/2018-19 and CIT(A),Delhi-27/10709/2019-20 for assessment years 2019-20 and 2020-21 respectively, confirming penalty levied by Assessing Officer(In short “AO”) u/s 272A(1)(d) of the Income-tax Act,1961(hereinafter called “the 1961 Act”) of Rs.10,000/- in each of the aforesaid assessment years , vide separate penalty orders, both dated 07.11.2025 passed by the AO u/s 272A(1)(d) of the 1961 Act (DIN:ITBA/PNL/F/272(1)(d)/2025-26/ 1082375253(1) and DIN:ITBA/PNL/F/272A(1)(d)/2025-26/ 1082377724(1) respectively).

Facts in both the cases are similar and hence these appeals are taken up together and decided by this common order. Separate proceedings for framing reassessment u/s 147 were initiated by the AO for both the assessment years 2019-20 and 2020-21 respectively, which culminated into two separate assessment orders, both dated 25.02.2026 passed by the AO u/s 147 r.w.Sec 143(3) of the 1961 Act with respect to both the assessment years viz. ay’s: 2019-20 and 2020-21. During the course of re-assessment proceedings conducted by the AO , Statutory notices were issued by the AO , inter-alia, u/s 142(1) of the Act, but there were non-compliance by the assessee to the separate notices both dated 29.05.2025 issued by the AO for ay’s 2019-20 and 2020-21 respectively, against which separate penalty proceedings u/s 272A(1)(d) of the 1961Act were initiated by the AO for the aforesaid assessment years. It is an admitted position that the aforesaid notices were served on the assessee and also that there was a non-compliance by the asssessee to the aforesaid notices issued by the AO u/s 142(1) both dated 29.05.2025 , which culminated into separate penalty orders both dated 07.11.2025 passed by the AO levying penalty of Rs.10,000/- for each of the aforesaid assessment years against the assessee. The Ld. CIT(A) has confirmed the penalty vide separate appellate orders both dated 27.03.2026 for ay’s: 2019-20 and 2020-21 respectively . Aggrieved , the assessee has filed two separate appeals with the Delhi Tribunal. During the course of hearing before us, the Ld. Counsel for the assessee submitted that the assessment orders were passed by the AO u/s 147 r.w.s 143(3) of the Act. It was pointed out that the assessment was not framed u/s 144 of the 1961 Act as the assessee has duly complied with the subsequent notices issued by the AO during the course of reassessment proceedings , as later on the assessee filed all the replies. Our attention was drawn to the reply filed on 11.11.2025 for assessment year 2019-20(Page No. 42 of the assessment order), reply dated 05.02.2026 filed for ay:2019-20(Page No.44 of the assessment order) and reply dated 12.02.2026 filed for ay:2019-20( Page No. 47 of the assessment order). Similarly replies were filed for ay:2020-21 which are recorded in the assessment order for ay:2020-21. It was submitted that the assessee has duly complied with all the requirements of the AO , and has submitted the complete replies during the assessment proceedings. It was submitted that this fact is also recorded by the AO in its assessment order in para 2.2 that the assessee has duly filed replies during the course of re-assessment proceedings. Thus, it was submitted that due to some unavoidable reasons, the assessee could not file replies in response to the notices issued by the AO u/s 142(1) both dated 29.05.2025 for ay’s:2019-20 and 2020-21, but later on the assessee duly complied with the notices issued by the AO from time to time during assessment proceedings, and filed the replies before the AO which were taken on record by the AO and the assessment was framed u/s 143(3) r.w.sec 147 of the 1961 Act. It was submitted that thus, it could not be said that due to the continuous non-compliance of the assessee, the assessment was framed by the AO ex-parte u/s 144 of the 1961 Act, but rather the assessment was framed u/s 147 r.w.s. 143(3) of the 1961 Act. The Ld. Counsel for the assessee also pointed out that in the case of the assessee itself for assessment year 2023-24 , the ld. CIT(A) has deleted the penalty of Rs. 10,000/- levied by the AO u/s 272A(1)(d) for non compliance of notice u/s 142(1) , vide orders dated 31.12.2025, copy of appeal effect order dated 09.04.2026 passed by the AO is placed on record in file(DIN & Letter No. ITBA/PNL/M/250/2026-27/1088372374(1)(copy placed on record in file). It was submitted that AO has dropped penalty proceedings initiated u/s 271(1)(b) of the 1961 Act for non compliance of notice issued by the AO u/s 142(1) dated 29.05.2025 for assessment year 2016-17 in the case of the assessee iteself, vide orders dated 23.03.2026 (DIN: ITBA/ PNL/F/271(1)(b)_1/2025-26/1087784057(1)(copy placed on record in file) . It was submitted that similarly in the case of Mr. Vivek Kesarwani ( belonging to the same group) , the AO has dropped penalty proceedings initiated u/s 271(1)(b) of the 1961 Act for assessment years 2015-16 and 2016-17 for non compliances of notices issued by the AO u/s 142(1) of the 1961 Act(copies placed on record in file: DIN : ITBA/PNL/F/271(1)(b)_1/2026-27/1093832820(1) dated 23.09.2026 for assessment year 2016-17 and DIN: ITBA/PNL/F/271(1)(b)_1/2026-27/1093819618(1) for assessment year 2015-16).

The Ld. Sr. DR on the other hand, relied upon the orders of the Ld. CIT(A).

We have considered rival submissions and perused the materials available on record. The facts are briefly recorded in the preceding para’s of this order, and are not repeated. We have observed that the separate re-assessment proceedings were initiated by the AO against the assessee u/s 147 of the 1961 Act, for both the assessment years 2019-20 and 2020-21. Separate notices have been issued by the AO u/s 142(1) of the 1961 Act , dated 29.05.2025 for both the aforesaid assessment years, but there was no compliance of the notices dated 29.05.2025 by the assessee. This led to imposition of penalty of Rs. 10,000/- each for both the assessment years by the AO u/s 272A(1)(d) of the 1961 Act vide separate orders, which later stood confirmed by ld. CIT(A) by separate orders. It is also equally true that after the non compliance to notices issued by the AO u/s 142(1) dated 29.05.2025, the assessee later came forward and participated in the assessment proceedings by filing replies from time to time. The details are recorded in preceding para’s of this order The Ld. AO passed assessment order u/s 147 r.w.s. 143(3) of the Act, and no best judgment assessment u/s 144 were passed. The AO himself has recorded in the assessment order(s) that the assessee has filed replies before him during reassessment proceedings vide para 2.2 of the assessment orders. Thus, it could not be said that the assessee continued to be in default , although it is an admitted position that the assessee received notices dated 29.05.2025 u/s 142(1) of the 1961 Act but did not comply with the said notices. It is explained that due to non availability of assistant of counsel for the assessee, the compliance could not be made.The explanation given by the assessee is plausible more-so keeping in view subsequent conduct of the assessee wherein the assessee duly co-operated with the AO and filed replies as required by the AO. The assessment order was not passed exparte u/s 144 of the 1961 Act as best judgment assessment. The AO has himself dropped penalty proceedings in the case of the assessee as well Shri Vivek Kesarwani belonging to the same group . The details are in preceding para’s of this order. Section 272A(1)(d) is subject to Section 273B. The reasonable explanation is given by the assessee which is a plausible explanation, and further conduct of the assessee was to co-operate with AO and submit all the requisite details as called for by the AO. After considering the entire material on record and after considering the conduct of the assessee, we are of the considered view that the penalty levied by the AO is not sustainable , and we hereby order deletion of penalty levied by the AO to the tune of Rs. 10,000/- each u/s 272A(1)(d) for assessment years 2019-20 and 2020-21respectively , and hence we order deletion of the aforesaid penalty for both the assessment years 2019-20 and 2020-21 respectively. We order accordingly.

In the result, both the appeals filed by the assessee are allowed.