The Additional Commissioner has levied Rs 30,000 on me personally, as the chartered accountant representing my client, for not attending on three dates in answer to section 131 summons. Does he even have the power to pass that order?
On this reasoning, no. Because section 272A(1) imposes Rs 10,000 for each default, the penalty in law was Rs 10,000 per default and not Rs 30,000 in aggregate; and on the thresholds in section 274(2) a penalty of that amount is for the Income-tax Officer to impose, so the Tribunal held the Addl. CIT had no jurisdiction to pass the order. It also held there was reasonable cause under section 273B, that one show-cause notice cannot support penalties for three separate defaults, and that the completion of the client's assessment under section 143(3) rather than section 144 showed the subsequent compliance was good compliance.
Decided by the ITAT (Smt. P. Madhavi Devi, Judicial Member and Shri S. Rifaur Rahman, Accountant Member) on 2018-06-06, reported as ITA No. 1173/Hyd/2017 (ITAT Hyderabad 'A' Bench); no law-report citation traced. It bears on section 272A(1)(c), section 272A(3), section 272A(4), section 131(1), section 273B, section 274, section 274(2), section 143(3), section 144, section 133A of the Income Tax Act 1961, in Penalty, Search, Survey & Block Assessment, Evidence & Burden of Proof and Assessment & Scrutiny matters.
This is the entry point for the professional who finds a penalty in his own name rather than his client's — the section 272A(1)(c) summons penalty reaches the authorised representative personally, exactly as section 271J reaches the accountant, merchant banker or registered valuer. Four independent grounds are laid out and any one of them can carry an appeal. Handle the jurisdiction ground with care, however: section 272A(3) allocates the power to impose a section 272A(1) penalty and, for a clause (c) default, points to the Joint Director or Joint Commissioner, while the Tribunal decided the point by reference to the section 274(2) approval thresholds instead. Expect the Revenue to argue that section 272A(3) and not section 274(2) governs who may pass the order, and keep the reasonable-cause and one-notice-per-default grounds in reserve. The one-notice point is also expressly framed in the coordinate bench decision the Tribunal followed, which said that each non-compliance requires a separate show-cause notice and that the Assessing Officer cannot levy two penalties in one proceeding.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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A survey under section 133A was carried out on 25-05-2011 in the case of M/s. American Infoserv Pvt Ltd, whose return was then taken up for scrutiny. The appellant, a chartered accountant of M/s. P. Murali & Co. and the company's authorised representative, was issued summons under section 131 on 27-05-2011 to produce audit working sheets and copies of Forms 3CA, 3CD, 29B and 56F for financial years 2005-06 to 2010-11 on 03-06-2011. On 03-06-2011 a letter was filed on his behalf stating that he was out of the country and unavailable until 06-06-2011; the Dy. CIT adjourned the case to 06-06-2011, on which date he was again unavailable. Fresh summons issued on 07-06-2011 fixed 13-06-2011. On 16-06-2011 the Dy. CIT referred the matter to the Addl. CIT for penalty under section 272A(1)(c). The Addl. CIT issued notice on 17-06-2011 for hearing on 01-07-2011, on which date the appellant appeared and explained a communication gap, and levied Rs 30,000 — Rs 10,000 for each of the three dates. The CIT(A)-1, Hyderabad confirmed it by order dated 24-04-2017. The client company's assessment was ultimately completed under section 143(3).
The appeal was allowed and the penalty was deleted for all the defaults. The penalty levied being only Rs 10,000 per default, it was the Income-tax Officer or Assessing Officer who had the power to pass the penalty order and not the Addl. CIT, who accordingly had no jurisdiction (paragraph 9). Independently, the appellant had reasonable cause for the non-appearance on each date, only one notice had been issued for three defaults, and the completion of the client's assessment under section 143(3) showed that the relevant details had been furnished, so the penalty was not sustainable (paragraphs 6, 10 and 11).
The Tribunal reproduced section 272A in full, including sub-section (1) clauses (a) to (d) with the charging words 'a sum of ten thousand rupees for each such default or failure', sub-section (2) clauses (a) to (m) with the proviso capping the penalty at the tax deductible or collectible and the second proviso barring the clause (k) penalty for statements relating to tax deducted or collected on or after 1 July 2012, and sub-sections (3) and (4); it noted that section 272A(1) is not automatic and compulsory and that clauses (c) and (d) of sub-section (1) are covered by section 273B. It then reproduced section 274 sub-sections (1), (2) and (3) and read sub-section (2) as meaning that no penalty order may be made by the ITO where the penalty exceeds Rs 10,000, and none by the Assistant or Deputy Commissioner where it exceeds Rs 20,000, except with the prior approval of the Joint Commissioner. Because the cause of action arose on each date of default and Rs 10,000 was levied for each, it treated the penalty as Rs 10,000 per default and held the power lay with the Income-tax Officer. On the facts it held that having been told in advance that the appellant would be abroad until 06-06-2011, it was not understandable why the next date was fixed on 06-06-2011, so there was reasonable cause for the first two dates and no wilful non-compliance for the third. It followed the coordinate bench in P.C. Pantulu v DCIT, which had held that where the assessment is completed under section 143(3) and not section 144, subsequent compliance may be treated as good compliance for earlier notices, and that each non-compliance technically requires a separate show-cause notice.
Therefore, in effect, the penalty levied is only Rs.10,000 per default and in such circumstances, it is the ITO/AO who has the power to pass the penalty order and not the Add. CIT.
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Handle my notice → Ask a CA on WhatsAppOn this reasoning, no. Because section 272A(1) imposes Rs 10,000 for each default, the penalty in law was Rs 10,000 per default and not Rs 30,000 in aggregate; and on the thresholds in section 274(2) a penalty of that amount is for the Income-tax Officer to impose, so the Tribunal held the Addl. CIT had no jurisdiction to pass the order. It also held there was reasonable cause under section 273B, that one show-cause notice cannot support penalties for three separate defaults, and that the completion of the client's assessment under section 143(3) rather than section 144 showed the subsequent compliance was good compliance. This was decided by the ITAT (Smt. P. Madhavi Devi, Judicial Member and Shri S. Rifaur Rahman, Accountant Member) and bears on section 272A(1)(c), section 272A(3), section 272A(4), section 131(1), section 273B, section 274, section 274(2), section 143(3), section 144, section 133A of the Income Tax Act 1961. It is reported as ITA No. 1173/Hyd/2017 (ITAT Hyderabad 'A' Bench); no law-report citation traced. This is the entry point for the professional who finds a penalty in his own name rather than his client's — the section 272A(1)(c) summons penalty reaches the authorised representative personally, exactly as section 271J reaches the accountant, merchant banker or registered valuer. Four independent grounds are laid out and any one of them can carry an appeal. Handle the jurisdiction ground with care, however: section 272A(3) allocates the power to impose a section 272A(1) penalty and, for a clause (c) default, points to the Joint Director or Joint Commissioner, while the Tribunal decided the point by reference to the section 274(2) approval thresholds instead. Expect the Revenue to argue that section 272A(3) and not section 274(2) governs who may pass the order, and keep the reasonable-cause and one-notice-per-default grounds in reserve. The one-notice point is also expressly framed in the coordinate bench decision the Tribunal followed, which said that each non-compliance requires a separate show-cause notice and that the Assessing Officer cannot levy two penalties in one proceeding. If it applies to you, the first step is this: Check who signed the penalty order against the amount: on the thresholds set out here the Income-tax Officer may impose up to Rs 10,000, and the Assistant or Deputy Commissioner up to Rs 20,000, beyond which the prior approval of the Joint Commissioner is needed.
A survey under section 133A was carried out on 25-05-2011 in the case of M/s. American Infoserv Pvt Ltd, whose return was then taken up for scrutiny. The appellant, a chartered accountant of M/s. P. Murali & Co. and the company's authorised representative, was issued summons under section 131 on 27-05-2011 to produce audit working sheets and copies of Forms 3CA, 3CD, 29B and 56F for financial years 2005-06 to 2010-11 on 03-06-2011. On 03-06-2011 a letter was filed on his behalf stating that he was out of the country and unavailable until 06-06-2011; the Dy. CIT adjourned the case to 06-06-2011, on which date he was again unavailable. Fresh summons issued on 07-06-2011 fixed 13-06-2011. On 16-06-2011 the Dy. CIT referred the matter to the Addl. CIT for penalty under section 272A(1)(c). The Addl. CIT issued notice on 17-06-2011 for hearing on 01-07-2011, on which date the appellant appeared and explained a communication gap, and levied Rs 30,000 — Rs 10,000 for each of the three dates. The CIT(A)-1, Hyderabad confirmed it by order dated 24-04-2017. The client company's assessment was ultimately completed under section 143(3). The matter was decided on 2018-06-06 by the ITAT (Smt. P. Madhavi Devi, Judicial Member and Shri S. Rifaur Rahman, Accountant Member). On those facts the ITAT held as follows. The appeal was allowed and the penalty was deleted for all the defaults. The penalty levied being only Rs 10,000 per default, it was the Income-tax Officer or Assessing Officer who had the power to pass the penalty order and not the Addl. CIT, who accordingly had no jurisdiction (paragraph 9). Independently, the appellant had reasonable cause for the non-appearance on each date, only one notice had been issued for three defaults, and the completion of the client's assessment under section 143(3) showed that the relevant details had been furnished, so the penalty was not sustainable (paragraphs 6, 10 and 11).
The Tribunal reproduced section 272A in full, including sub-section (1) clauses (a) to (d) with the charging words 'a sum of ten thousand rupees for each such default or failure', sub-section (2) clauses (a) to (m) with the proviso capping the penalty at the tax deductible or collectible and the second proviso barring the clause (k) penalty for statements relating to tax deducted or collected on or after 1 July 2012, and sub-sections (3) and (4); it noted that section 272A(1) is not automatic and compulsory and that clauses (c) and (d) of sub-section (1) are covered by section 273B. It then reproduced section 274 sub-sections (1), (2) and (3) and read sub-section (2) as meaning that no penalty order may be made by the ITO where the penalty exceeds Rs 10,000, and none by the Assistant or Deputy Commissioner where it exceeds Rs 20,000, except with the prior approval of the Joint Commissioner. Because the cause of action arose on each date of default and Rs 10,000 was levied for each, it treated the penalty as Rs 10,000 per default and held the power lay with the Income-tax Officer. On the facts it held that having been told in advance that the appellant would be abroad until 06-06-2011, it was not understandable why the next date was fixed on 06-06-2011, so there was reasonable cause for the first two dates and no wilful non-compliance for the third. It followed the coordinate bench in P.C. Pantulu v DCIT, which had held that where the assessment is completed under section 143(3) and not section 144, subsequent compliance may be treated as good compliance for earlier notices, and that each non-compliance technically requires a separate show-cause notice. In the words reproduced by the source cited on this page: "Therefore, in effect, the penalty levied is only Rs.10,000 per default and in such circumstances, it is the ITO/AO who has the power to pass the penalty order and not the Add. CIT." The decision followed or applied P.C. Pantulu v. DCIT, ITA No. 276/Hyd/2017, order dated 11-04-2018 (ITAT Hyderabad) — followed; Gloubs Infocom Limited v. DCIT — relied on within the P.C. Pantulu passage reproduced by the Tribunal; Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v. ACIT, 5 DTR 429 (Delhi Tribunal) — relied on within the P.C. Pantulu passage; CIT v. Ram Commercial Enterprises Ltd. (2000) 246 ITR 568 (Delhi) — cited within that passage for the proposition that mere initiation of penalty is not satisfaction.
It was decided by the ITAT on 2018-06-06 and is reported as ITA No. 1173/Hyd/2017 (ITAT Hyderabad 'A' Bench); no law-report citation traced. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 272A(1)(c), section 272A(3), section 272A(4), section 131(1), section 273B, section 274, section 274(2), section 143(3), section 144, section 133A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed and the penalty was deleted for all the defaults. The penalty levied being only Rs 10,000 per default, it was the Income-tax Officer or Assessing Officer who had the power to pass the penalty order and not the Addl. CIT, who accordingly had no jurisdiction (paragraph 9). Independently, the appellant had reasonable cause for the non-appearance on each date, only one notice had been issued for three defaults, and the completion of the client's assessment under section 143(3) showed that the relevant details had been furnished, so the penalty was not sustainable (paragraphs 6, 10 and 11). It arises in Penalty, Search, Survey & Block Assessment, Evidence & Burden of Proof and Assessment & Scrutiny matters, on section 272A(1)(c), section 272A(3), section 272A(4), section 131(1), section 273B, section 274, section 274(2), section 143(3), section 144, section 133A of the Income Tax Act 1961, and was decided by Smt. P. Madhavi Devi, Judicial Member and Shri S. Rifaur Rahman, Accountant Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Count show-cause notices against defaults. If one notice was issued but several penalties levied, take the point that each non-compliance requires its own proceeding. For a summons default, put on record any letter filed before the appointed date explaining unavailability — the Tribunal found it 'not understandable' that the next date was fixed on a day the officer already knew the representative would be abroad. Establish whether the client's assessment was completed under section 143(3) or under section 144: completion under section 143(3) is the evidence that the details were ultimately furnished and the earlier defaults treated as cured. If the summons required a representative to produce his client's books, take the point that an authorised representative is not the custodian of his client's books and documents — it was pleaded here, though the appeal was allowed on other grounds.
Validity check could not be completed. Validity check could not be completed. No later treatment was searched for or found. The jurisdiction holding sits uneasily with section 272A(3), which the same order reproduces and which allocates the power to impose a section 272A(1) penalty to the income-tax authority before whom the default occurred, to the authority who issued the notice in a clause (d) case, and otherwise to the Joint Director or Joint Commissioner; the Tribunal decided the point on the section 274(2) thresholds without reconciling the two. Treat the jurisdiction ground as arguable rather than settled and plead the reasonable-cause and separate-notice grounds alongside it. The tension with section 272A(3) is sharper than the entry first suggested. The current text of section 272A(3), read this pass on the department's page incometaxindia.gov.in/w/section-272a-52 ('Year: 2026', heading and Act name demanded and printed), provides at clause (c) that in any case other than a clause (1)(d) case, a clause (2)(f) case, or a default occurring before an authority not lower in rank than a Joint Director or Joint Commissioner, the penalty is to be imposed 'by the Joint Director or the Joint Commissioner'. A section 272A(1)(c) summons default before a Dy. CIT falls in that residuary clause, which points to precisely the rank the Tribunal held incompetent. Whether an Additional Commissioner is a 'Joint Commissioner' for this purpose turns on the definition in section 2(28C), which was NOT read this pass — check it before pleading the jurisdiction ground, and lead instead with the reasonable-cause and separate-notice grounds, which are unaffected. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order runs to twelve numbered paragraphs. The reproduction of section 272A at paragraph 7 carries obvious transcription slips in the source ('section 142 o4 sub-section (2) of section 143'), and paragraph 11 reads 'the AR hasd bonafide reasons'; both are reproduced as printed. The reproduction of section 274 at paragraph 8 gives sub-section (2)(b) as 'by the Assistant Commissioner' where the departmental text reads 'by the Assistant Commissioner or Deputy Commissioner'; the Tribunal's own discussion at paragraph 9 uses 'Asstt. Commissioner/Dy. Commissioner'. Whether section 274 has been further amended since 2018 HAS now been checked. Sub-section (2) is unchanged: the department's pages for Year 2001, 2002, 2009, 2016, 2022, 2023 and 2024 (No. 1) all print the same thresholds — Income-tax Officer above ten thousand rupees, Assistant Commissioner or Deputy Commissioner above twenty thousand rupees, except with the prior approval of the Joint Commissioner. The section HAS however been amended in another respect: from the Year 2022 page onward it carries sub-sections (2A), (2B) and (2C), the faceless penalty scheme, which the Year 2000 page does not have. Nothing in this entry turns on those sub-sections. On the internal structure: the block appearing at the Tribunal's paragraph 10 and numbered 6, 6.1 and 7 is the coordinate bench's order in P.C. Pantulu v DCIT — the closing quotation mark after 'completing penalty proceedings' marks where the quotation ends — and citing those numbers as this Tribunal's would be a fabricated locator. A further block numbered 2.4 and 2.5 sits inside that quotation; one reading attributed it to the Delhi Bench in Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust and a second reading attributed it to Gloubs Infocom Limited, so the attribution of those two numbers is NOT established and should not be cited. The Tribunal's own numbering runs 1 to 12, paragraph 12 being the disposal. The appellant appeared party-in-person. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the penalty was deleted for all the defaults. The penalty levied being only Rs 10,000 per default, it was the Income-tax Officer or Assessing Officer who had the power to pass the penalty order and not the Addl. CIT, who accordingly had no jurisdiction (paragraph 9). Independently, the appellant had reasonable cause for the non-appearance on each date, only one notice had been issued for three defaults, and the completion of the client's assessment under section 143(3) showed that the relevant details had been furnished, so the penalty was not sustainable (paragraphs 6, 10 and 11).
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We charge fees for our public utility work. Does that cost us charitable status under s.2(15)?
My return was only processed under 143(1). Does that stop the department reopening it later?
You took a cash loan and now face penalty equal to the whole amount. Is there any relief?
No s.143(2) notice was issued at all. Does s.292BB save the assessment?