2014 (2) TMI 126

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ing substantial questions of law:-      "(a) Whether the Hon'ble ITAT Amritsar Bench, Armitsar erred in law and on facts in deleting the penalty of Rs. 11,50,000/-imposed by the Assessing Officer under section 221 of the IT Act, 1961 and duly confirmed by the learned CIT(A), without appreciating the fact that the assessee was treated in default under section 140A(3) of the IT Act, 1961 for non payment of tax due on returned income which also includes interest payment under section 234B and 2334C of the IT Act, 1961?      (b) Whether the ITAT erred both in law and on fact in not correctly appreciating the provisions of Section 140A(3) of the IT Act, 1961 which clearly states that for default of w....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....4,400/-. Since the assessee firm failed to pay the tax of Rs. 11,54,400/- under Section 140A(1) of the Act before filing the return of income, it was treated as an assessee in default and penalty of Rs. 11,50,000/-was imposed under section 221(1) of the Act vide order dated 8.6.2007, Annexure A.1. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 20.11.2007, Annexure A.2, the appeal was dismissed and the penalty of Rs. 11,50,000/- was confirmed. Still not satisfied, the assessee filed appeal before the Tribunal. Vide order dated 8.10.2008, Annexure A.3, the Tribunal allowed the appeal and deleted the penalty. Hence the present appeal by the revenue. 3. Learned cou....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nbsp; "221 Penalty payable when tax in default.-(1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of section 220, be liable, by way of penalty, to pay such amount as the Assessing Officer may direct and in the case of continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so however, that the total amount of penalty does not exceed the amount of tax in arrears." 7. According to the aforesaid provision, wherever there is default in deposit of the tax, the assessee in addition to the amount of arrears and the amount of interest payable und....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....;   (43) 'tax' in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date :"      Reading the two provisions together, it is clear that, unless the assessee is or is deemed to be in default in making a payment of "tax", as defined in section 2(43) of the Act, which means that he is in default or in deemed default in payment of income-tax chargeable under the provisions of the Act or super-tax chargeable under the provisions of the Act, depending upon the as....