UJJAIN SAHAKARI DUGDH SANGH MARYADIT,UJJAIN V. DCIT/ACIT 1(1) UJJAIN, UJJAIN

ITA 154/IND/2025

AI Insights

The case involves Ujjain Dugdh Sangh (Sah) Maryadit, a cooperative society engaged in dairy operations, which appealed against a penalty imposed by the Deputy Commissioner of Income Tax (DCIT) for alleged non-compliance with notices under section 142(1) of the Income-tax Act, 1961. The penalty was initially upheld by the Commissioner of Income-Tax (Appeals) at the National Faceless Appeal Centre, Delhi. The Tribunal's decision was based on the finding that the assessee had indeed complied with the notices, as the responses were considered in the subsequent assessment order under section 143(3). Additionally, the Tribunal acknowledged the reasonable cause for the delays in compliance, citing administrative constraints and the absence of key personnel due to sanctioned leave.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841237 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2020-2021
• Appeal Filed On: 04-02-2025
• Other Referred Cases: Sabir Hussain Vs. Income-tax Officer, Ward-2, Bhilai
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORASSESSEECARRIEDUSTOPARAOFTHEPENALTYORDERPASSEDBY; FORREVENUERELIEDUPONORDEROFAOALTHOUGHHELEFTTHEMATTER
• Keywords: Reasonable cause; Valuation report
• Section: 143(3); 142(1); 273B

Judgement Text

"Page 1 of 6 आयकरअपीलीयअिधकरण, इंदौरɊायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI PARESH M. JOSHI, JUDICIAL MEMBER ITA No.154/Ind/2025 Assessment Year: 2020-21 Ujjain Dugdh Sangh (Sah) Maryadit, 1 Dairy Plant, Maxi Road, Naulakha BID, Ujjain बनाम/ Vs. DCIT/ACIT-1(1) Ujjain (Appellant / Assessee) (Respondent / Revenue) PAN: AAAAU0051C Assessee by Ms. Nupur Ladha, Shri Vaibhav Siroliya & Shri V.K. Ladha, ARs Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 17.02.2026 Date of Pronouncement 27/02/2026 आदेश/O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by appeal-order dated 27.12.2024 passed by learned Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [“CIT(A)”] by which the penalty-order dated 21.09.2022 passed by DCIT/ACIT-1(1), Ujjain [“AO”] for Assessment-Year [“AY”] 2020-21 imposing a penalty of Rs. 30,000/- u/s 272A(1)(d) of Income-tax Act, 1961 [“the act”] has been upheld, the assessee has filed this appeal on following grounds: Printed from counselvise.com Ujjain Dugdh Sangh (Sah) Maryadit, ITA No.154/Ind/2025 Assessment year 2020-21 Page 2 of 6 “1. Whether on the facts of case and in law, the Ld. CIT (A) is right in confirming the penalty levied u/s 272A(1)(d) without considering the fact that the assessment order was passed under section 143(3) on the basis of subsequent compliance to notices issued u/s 142(1) 2. Whether on the facts of case and in law, the Ld. CIT (A) is right in confirming the penalty order u/s 272A(1)(d) being the penalty order was passed by the DCIT without approval of Jt. Commissioner as envisaged in section 274(2) of Income Tax Act, 1961. 3. That no proper opportunity was allowed to the appellant to prove his case. 4. The appellant prays to alter, amend, add or delete any of the grounds of appeal.” 2. Heard the learned Representatives of both sides and the case records perused. 3. Ld. AR for assessee carried us to Para 4 of the penalty-order passed by AO to point out that the impugned penalty of Rs. 30,000/- has been imposed for alleged non-compliance of three notices dated 30.10.2021, 22.02.2022 and 26.07.2022 u/s 142(1) issued by AO @ Rs. 10,000/- per notice. Then, he assailed the penalty imposed by AO on following counts: (i) Firstly, she demonstrated that against notice dated 30.10.2021, the assessee e-filed a reply dated 26.11.2021 seeking adjournment on the reasoning that the assessee required some more time for preparation of submission. Copy of AO’s notice, Assessee’s reply and E-filing acknowledgement are placed at Pages 11-15 of Paper-Book. That, after notice dated 22.02.2022, the assessee e-filed reply giving various details/documents on 26.03.2022, the E-filing acknowledgement is placed at Pages 17-18 of Paper-Book. That, against notice dated Printed from counselvise.com Ujjain Dugdh Sangh (Sah) Maryadit, ITA No.154/Ind/2025 Assessment year 2020-21 Page 3 of 6 08.07.2022, the assessee e-filed replies dated 29.08.2022 & 05.09.2022 giving further details/documents, the copies of AO’s notice and E-filing acknowledgements are placed at Pages 19-22 & 26- 29 of Paper-Book. Thus, the assessee made compliances although there occurred some delays. (ii) Secondly, the AO has acknowledged and noted in Para 3 of assessment-order: “Assessee has submitted details and explanations from time to time including the reconciliation of opening and closing stock, stock valuation report, details of creditors, deduction claimed u/s 80P. The submissions of the assessee are kept on ITBA record.” Thereafter, in Para 4 / Pages 3 to 16 of assessment-order, the AO has taken into account the assessee’s replies/submission while completing assessment and passed assessment-order dated 23.09.2022 u/s 143(3) and not best judgement or ex-parte u/s 144. Therefore, the non-compliances/delay compliances of the notices, if any, have been dissolved and in such a situation, penalty cannot be imposed. To support her stand, Ld. AR relied upon the decision of ITAT, Nagpur in Sabir Hussain Vs. Income-tax Officer, Ward-2, Bhilai 25 ITC 184: “In the case of non-compliance of the first, second and third notices, the AO could have completed the assessment to the best of his judgement and intimated the penalty proceedings. Instead of doing that, the AO issued still another notice u/s 143(2) which could only mean that he had condoned the earlier default if any so far as the final notice was concerned, there was no default on the part of the assessee because he alongwith his counsel did attend the proceedings before the AO. The Printed from counselvise.com Ujjain Dugdh Sangh (Sah) Maryadit, ITA No.154/Ind/2025 Assessment year 2020-21 Page 4 of 6 assessment was made u/s 143(3) of the Act. In that view of the matter, I hold that the AO could not penalize the assessee for the default committed in the past which appeared to have been condoned by him.” (iii) Thirdly, she submitted that the assessee is a co-operative society registered under Madhya Pradesh Co-operative Societies Act, 1960. It is engaged in purchasing milk from farmers/milkmen through various collection centers and thereafter manufacturing/processing/ marketing of milk/milk products. That, an affidavit deposed by Shri Suresh Kumar Ahake, Manager (Finance) of assessee is filed at Pages 23-25 of Paper-Book. The solemnized averments in affidavit show that the deponent Shri Suresh Kumar Ahake holding post of Manager (Finance) was not in office and was on sanctioned leave. Further, Shri Kunal Kheradiya, working as AGM (Finance) was also holding additional charge of the Pension Department of State Government. Therefore, there were delays in collecting documents and information for submitting replies but otherwise there was nothing willful or deliberate. That there exists a reasonable cause which must be excused in terms of section 273B of the Act. 4. Ld. DR for revenue relied upon order of AO although he left the matter to the wisdom of bench. 5. We have considered rival submissions of both sides and perused the orders of lower authorities as well as the material placed on record. From the documentary evidences placed in the Paper-Book, it is evident that the assessee had responded to each of the notices issued u/s 142(1) although Printed from counselvise.com Ujjain Dugdh Sangh (Sah) Maryadit, ITA No.154/Ind/2025 Assessment year 2020-21 Page 5 of 6 there were some delays. The replies dated 26.11.2021, 26.03.2022, 29.08.2022 and 05.09.2022 along with supporting documents were admittedly taken on record and considered by the AO while completing the assessment u/s 143(3). In such circumstances, where the assessment itself has been completed u/s 143(3) after taking into account the material furnished by the assessee, it can reasonably be inferred that the AO had accepted the subsequent compliances and thereby condoned the earlier defaults, if any. The ratio laid down by the Coordinate Bench in Sabir Hussain (supra) squarely applies, wherein it was held that once the AO proceeds to complete assessment u/s 143(3) after considering the assessee’s participation, the earlier non-compliances stand regularised and penalty for such defaults cannot be sustained. Apart from the above, the assessee is a co-operative society for the benefit of farmers/milkmen and the affidavit placed on record explaining the administrative constraints and absence of key finance personnel establishes the existence of a “reasonable cause” within the meaning of section 273B of the Act. The Revenue has not brought any material to demonstrate that the delay was willful or contumacious. In view of the totality of facts and circumstances, we are of the considered opinion that the impugned penalty is not sustainable. Accordingly, the penalty is directed to be deleted. The assessee succeeds in this appeal. Printed from counselvise.com Ujjain Dugdh Sangh (Sah) Maryadit, ITA No.154/Ind/2025 Assessment year 2020-21 Page 6 of 6 6. Resultantly, this appeal is allowed. Order pronounced in the open court on 27/02/2026 Sd/- Sd/- (PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/Dated : 27/02/2026 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore Printed from counselvise.com "