TaxTMI 
TaxTMI 
TaxTMI 
2010 (1) TMI 667
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....the assessee, particularly when it has been clarified in the Explanation to section 221 of the IT Act, that an assessee shall not cease to be liable to any penalty under this sub-section merely by reason of the fact that before the levy of such penalty he has paid the tax." 3. The brief facts of the case are that the assessee before us is a co-operative society of farmers under the control of State Federation of Co-operative Sugar Mill, effectively under the contral of State Government. The assessee runs a sugar mill at Shahbad Markanda, Kurukshetra, Haryana. The assessment relating to assessment year 2006-07 was completed under section 143(3) of the IT Act creating a demand of Rs. 1,60,84,670, out of which Rs. 67,59,460 was adjusted again....
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....essee was that the penalty under section 221(1) of the Act was imposed without any notice issued under section 221(1) of the Act and the first notice was given in respect of higher amount than the reduced amount of Rs. 93,25,210. Before the CIT(A), the plea of the assessee was that the application endorsed on 17-3-2009 by the Jt. CIT to the Assessing Officer for stay of demand was still pending and the order of penalty under section 220(5) of the Act was passed on 18-3-2009, though it was in the knowledge of Assessing Officer that application dated 17-3-2009 was pending. It was further contended by the learned Authorised Representative before the CIT(A) that section 220(5) of the Act analyses the default of the assessee, but does not empowe....
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.... date, whereas, without disposing this application the penalty was levied. The CIT(A) observed that it is also undisputed that for levying the penalty on 18-3-2009, no fresh notice under section 221(1) was issued and therefore, no opportunity was given of being heard to the assessee, before levy of the penalty, whereas, a fresh notice and opportunity of being heard was required to be given before levy of penalty and the same is clearly provided by proviso to section 221(1). The CIT(A) cancelled the penalty levied under section 221(1) of the IT Act holding that the assessee had good and sufficient reasons to prove that no penalty was required to be levied in the case. The assessee (sic-Revenue) is in appeal against the said deletion of penal....
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....e cancelled and the amount of penalty paid shall be refunded. 7. In the facts of the present case, the assessment in the case was completed vide order dated 24-12-2008 and total demand of Rs. 1,60,84,670 was created against which the refund totalling Rs. 67,59,460 was adjusted and the balance demand payable was Rs. 93,25,210. The Assessing Officer issued a notice under section 221(1) dated 4-2-2009 for the recovery of demand of Rs. 1,09,88,280 (before adjustment of refund of Rs. 16,63,070). The assessee moved an application for stay of demand dated 16-2-2009 which was rejected by the Assessing Officer on 18-2-2009. The assessee thereafter moved an application before the Jt. CIT, Kurukshetra on 24-2-2009 and instalments of Rs. 10 lakhs each....
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....and the Commissioner (Appeals) had asked for remand report. The assessee was confident that majority of demands would be reduced pursuant to appeal effect and reduction in taxes. In the circumstances, there was justification in the plea of the assessee for the stay of recovery of balance demand. We also find merit in the plea of the assessee that in all such cases where the assessee proves to the satisfaction of Assessing Officer that the default, if any, was for good and sufficient reason, no penalty is leviable under the section. The Jt. CIT, Kurukshetra had granted the instalments to the assessee to pay the demand on 16-3-2009 and 25-3-2009. The assessee thus could not be held to be in default on 16-3-2009 i.e., the date on which the ins....