TaxTMI 
TaxTMI 
TaxTMI 
2013 (10) TMI 831
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....sioner of Income-tax (Appeals) ought to have held as such. 1:4 The Appellant submits that the impugned order levying penalty u/s. 221(1) r.w.s. 140A(3) of the Income-tax Act, 1961 be struck down. 2:0 Re : General: 2:1 The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal. Brief facts of the case: 2. Assessee filed its return of income on 30.09.2009, declaring income of Rs. Nil.It computed liability on account of self-assessment tax (SAT) at Rs. 10.70 lacs.Assessing Officer (AO) found that SAT was not paid before filing of return of income u/s.139(1) of the Act. He issued a letter dated 20.01.2010 to the assessee and directed to furnish photocopy/(ies)of the challans evidencing the payment of SAT. Assessee, vide its letter dated 27.01.2010, furnished photocopies of challans showing payment of Rs. 11, 13, 008/-.AO was of the opinion that the assessee had default in making payment of SAT as required by the provisions of section 140A(1)of the Act.He issued a further letter, dated 4.02.2010, to the assessee asking him to show cause and explain as to why ....
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....ted by it was technical in nature.He relied upon the order of Bawa Paul Singh delivered by the Hon'ble High Court of Punjab reported in 62ITR at page no.147. Departmental Representative (DR) supported the order of the FAA. 5. We have heard and perused the material before us.Before proceeding further, we would like to consider the history, background and principles governing the provisions of the section 140A of the Act. Section 140A was introduced by the Taxation Laws (Amendment)Act, 1970, with effect from April 1, 1971 and has been amended fron time to time.The first major amendment to it was brought by the Taxation Laws(Amendment)Act, 1975, w.e.f.from April 1, 1976 and it was operative till 31st March, 1989.After the amendment, the assessee was required to pay the tax due on self-assessment and produce proof of such payment along with his return.In the earlier days, the entire tax was payable, only after the assessment was completed.Amendment to section, introduced in 1988, provided for 'recovery by way of penalty from an assessee' who failed to pay the tax or any part thereof in accordance with the provisions of sub-section (1).Explanation introduced by the amendment of 1989 pr....
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....The mere fact that it is not quantified by the department on that date would not make it anything less the tax due under section 140A(1). 5.1.a.If an assessee required to pay advance tax, does not do so, he is treated to be an assessee in default in respect of such instalment or instalments, as the case may be.As a result, penalty can be levied by the AO for said default. 5.1.b.A discretion is conferred upon the AO in the matter of levying the penalty. In a proper case, he may decline to levy any penalty.There is nothing in the provisions of section 140A that compel the AO to levy such a penalty in each and every case and/or up to the maximum limit.In other words failure to pay the tax, as provided in section 140A of the Act, does not automatically lead to the levy of penalty under sub-section(3).The proviso to Sec.140A(3)expressly provides for giving reasonable opportunity to the assessee before levying penalty.In short, the power to levy penalty u/s.140A(3) of the Act is not absolute but discretionary. 5.1.c.Even if there is a default, AO is bound to consider the circumstances of the case and give his reasons as to why the penalty should be imposed as per the provisions of sec....
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....ause of the mistake committed by the members of the staff tax could not be in time.FAA has clearly held that before him the assessee did not furnish any good or sufficient reason.Words 'Good and Sufficient reason' have not been defined in the Act.But, courts are of the view that beyond control of the assessee can be termed sufficient cause.We find that the assessee had not shown any cause as why it could not pay taxes in time.Assessee is a corporate entity paying tax of lacs of Rupees every year.It is not functioning from a remote village.It is not the case that assessee was facing financial crunch and because of that it could not pay taxes in time. As discussed earlier, paucity of funds or financial problems have been considered sufficient cause for not making payment of taxes by the Courts.In the matters of Indo American Electricals Ltd.(155ITR 63)Sreedharan and Company Ltd.(195 ITR 807) and Ramachandra Pesticides(285ITR45) Hon'ble High Courts of Calcutta, Kerala and Karnataka have held that siphoning off of funds or poor recoveries from consumers or shortage of fund due to natural calamities can be considered the reasonable cause for not paying advance tax.But, such extra ordina....