2015 (2) TMI 409

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....venue are aggrieved by order dated 02.08.2013 passed by the Income Tax Appellate Tribunal, Chandigarh (for short "the Tribunal"). Counsel for the assessee states that she has instructions to state that the assessee gives up challenge to the assessee's exigibility to penalty but confines her argument to a plea that the quantum of penalty has been rightly determined by the Tribunal and in case it is proposed to remit the matter to the Tribunal on the quantum of penalty, the assessee's argument that penalty can be lower than the Rs. 10 lacs, assessed by the Tribunal, may be left open. Counsel for the revenue submits that though the Tribunal has rightly held that the assessee is liable to pay penalty but while doing so, has arbitr....

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....e taxes before filing the return of income. The Courts have time and again laid down the proposition that liberal interpretation should be given to the provisions of section 140A(3) with section 221(1) of the Act. The list of cases have been referred by the CIT (Appeals). There is no dispute regarding the said issue. However, the perusal of the financial statements of the assessee company for the financial year 2007-08 and 2008-09 reflect the availability of the funds with the assessee which in-turn have been utilized for expansion purposes. The assessee had also borrowed funds from the banks as is apparent from the perusal of the balance sheet for the two financial years. However, in the totality of the facts and circumstances of the ca....

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.... each financial year without assigning any reason other than holding that "the ends of justice" and a "liberal interpretation" require that the penalty be reduced. The words "ends of justice" and "applying a liberal interpretation" are meaningless if they do not refer to relevant facts or factors that underline "the ends of justice" and " a liberal interpretation". The mere use of the words "the ends of justice" and "a liberal interpretation" while reducing penalty from Rs. 66 lacs to Rs. 10 lacs each, particularly when the Tribunal had accepted that the assessee has not discharged onus to explain its default, are insufficient to infer a legal exercise of discretion to determine the quantum of penalty. The impugned order, therefore, does....