TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1357
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.... ld. CIT(A) has erred in partially sustaining the penalty of Rs. 3,28,407 against the penalty levied by the A.O. of Rs. 16,42,037 although the assessee had established good and sufficient cause for non- imposition of penalty. 2. On the facts and in the circumstances of the case I the lei. CIT (A) has erred in holding that the A.O. was justified in including interest chargeable u/s 234B and 234C while imposing penalty although tax is defined u/s 2(43) of the Act means income tax chargeable under the provisions of the Act and does not include interest and penalty." 2. The facts, apropos the levy of penalty under section 221 of the Act are that, the assessee is a partnership firm engaged in the business of civil construction and real estate ....
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.... the delay in payment of self assessment tax and drop these proceedings." 3. The Assessing Officer rejected the assessee's explanation and held that there is no nexus between the Government tax dues and the reasons cited by the assessee. The tax dues under self-assessment tax is mandatory before filing of the return of income. After referring to the provisions of section 140A, he held that it is a fit case for levy of penalty under section 221(1) and levy 100% penalty of Rs. 16,42,037 being an amount equal to self assessment tax not paid before the filing of the return of income. The computation of the penalty has been done as under:- Return of income for A.Y. 2007-08 filed on 29.10.2007 Income declared : Rs. 47,15,420 Income tax on ret....
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....king to the fact that in the past, the assessee has never defaulted in complying with the payment of self- assessment tax nor it has been done in the subsequent years. Reliance was also placed on certain decisions wherein it has been held that penalty cannot be justified if there are sufficient or reasonable cause for the default committed by the assessee. These case laws have been mentioned in Para-2.2.2 of the appellate order. 5. The learned Commissioner (Appeals) called for the details of closing bank balances including cash in hand as per the books of account as on 1st April 2007 and 31st October 2007 the details of which have been reproduced at Page-5 of the appellate order in Para-2.3. After analyzing the aforesaid details, the learn....
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....he appellant was having acute financial difficulties or liquidity crunch to the extent that it could not make the payment of self assessment tax on time." 6. As regards chargeability of interest under section 234B and 234C, the learned Commissioner (Appeals) held that the provisions of the Act are very clear and they are consequential. However, the learned Commissioner (Appeals) reduced the quantum of penalty to 20% and restricted the penalty at Rs. 3,28,407 on the ground that the assessee has paid the entire self assessment tax with the marginal delay of three months and that the assessee has never been at default earlier and this was the first time default. 7. Before us, the learned Counsel, Mr. K.K. Lalkaka, on behalf of the assessee, ....
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....nk and, hence, such an interpretation by the learned Commissioner (Appeals) for coming to the conclusion that the assessee had sufficient funds, is not correct. Thus, he submitted that in view of the second proviso to section 221, no penalty should be levied as there was reasonable and sufficient cause for not making the payment of self assessment tax at the time of filing of the return of income. 9. On the other hand, the learned Departmental Representative submitted that it is a statutory mandate that the assessee has to file self assessment tax before filing of the return of income. Such self assessment tax cannot be waived off and there is no discretion provided under the law. If such tax has not been paid, then the assessee has to suf....
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....It is undisputed fact that the assessee had not paid the self assessment tax before the filing of the return of income on 29 th October 2007, wherein the admitted tax liability was Rs.15,87,211 along with the interest under section 234B. The assessee's case has been that at the time of filing of return of income, the assessee did not have sufficient fund for paying the self assessment tax. This has been demonstrated through various closing balances of the bank accounts as on 31st October 2007. The learned Commissioner (Appeals) too has examined the availability of funds at the time of filing of the return of income. However, instead of taking the aggregate position as on 31st October 2007 of all the bank accounts, he has drawn adverse infer....