2016 (11) TMI 1145 - AT - Income Tax

Penalty levy upheld for non-payment under Income Tax Act, 1961. Appellant failed to prove financial hardship.

Shri Vinay Vikram Oberoi Versus Income Tax Officer-22 (3) -4, Mumbai

The Tribunal upheld the penalty levy under section 221(1) of the Income Tax Act, 1961, amounting to Rs. 2,44,943 for A.Y. 2012-13. The appellant's ... Levy of penalty u/s 221(1) - failure to pay due taxed before filing of the return - Held that:- In the case on hand, is that the assessee did not pay due taxed before filing of the return of income for A.Y. 2012-13; wherein the tax liability to be paid under section 140A(3) of the Act was determined by the assessee himself at ₹ 2,44,943/-. In the light of the submissions of the assessee put forth before the authorities below and the facts on record, we concur with the view of the learned CIT(A) that the assessee has failed to establish with any material evidence that it was due to circumstances beyond his control and due to financial crunch that he was prevented from paying the determined/admitted tax liability of ₹ 2,44,943/-. We also find that, as observed by the learned CIT(A), the AO had levied the said penalty only after issue of show cause notice, affording the assessee opportunity of being heard in the matter; which is in accordance with the procedure laid down in the Act. In our view, on an appreciation of the orders of the authorities below, we find that the assessee, except for putting forth claims, has failed to discharge the onus upon him to prove the existence of good and sufficient reasons that prevented him from paying the said taxes - levy of penalty confirmed. Issues Involved:1. Levy of penalty under section 221(1) of the Income Tax Act, 1961.2. Non-payment of self-assessment tax before filing the return of income.3. Alleged financial crunch and its impact on tax payment.4. Procedural aspects of penalty imposition and the opportunity of being heard.Detailed Analysis:1. Levy of Penalty under Section 221(1) of the Income Tax Act, 1961:The primary issue in this appeal is the levy of penalty amounting to Rs. 2,44,943/- under section 221(1) of the Income Tax Act, 1961, for the assessment year (A.Y.) 2012-13. The appellant contends that the penalty was unjustly imposed, while the Revenue argues that the penalty was correctly levied due to the appellant's failure to pay the self-assessment tax.2. Non-payment of Self-Assessment Tax Before Filing the Return of Income:The appellant filed the return of income on 29.09.2012 but did not pay the self-assessment tax of Rs. 2,44,943/-. The Assessing Officer (AO) issued a show cause notice to the appellant, requesting proof of payment and an explanation for the non-payment. The appellant did not respond to these notices, leading the AO to impose the penalty.3. Alleged Financial Crunch and Its Impact on Tax Payment:The appellant argued that a financial crunch prevented the payment of the self-assessment tax. The appellant claimed to have orally requested an extension for the tax payment due to financial difficulties. However, the appellant failed to provide documentary evidence to substantiate the claim of financial hardship. The CIT(A) noted that the appellant did not demonstrate or explain the financial situation adequately.4. Procedural Aspects of Penalty Imposition and the Opportunity of Being Heard:The AO followed the procedure laid down in the Act by issuing a show cause notice and providing the appellant with an opportunity to be heard. The CIT(A) observed that the AO had levied the penalty for good and sufficient reasons and after affording the appellant an opportunity of being heard. The appellant's contention that the notices were not received was rejected based on the records showing that notices were sent to the address available in the PAN database.Conclusion:The Tribunal upheld the orders of the authorities below, confirming the levy of penalty under section 221(1) of the Act. It was concluded that the appellant failed to establish with material evidence that the non-payment of the tax was due to circumstances beyond control or financial crunch. The Tribunal found that the appellant did not discharge the onus of proving the existence of good and sufficient reasons for the default. Consequently, the appeal was dismissed, and the penalty of Rs. 2,44,943/- was upheld.Order Pronounced:The order was pronounced in the open court on 21st September 2016, dismissing the assessee’s appeal for A.Y. 2012-13.