2015 (11) TMI 738

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....221(1) of the Income-tax Act, 1961 and found that the assessee had chosen not to pay assessment tax on one pretext or the other. The assessee was given a show-cause notice why penalty of 20 per cent. of the assessment tax, i.e., Rs. 8.14 crores should not be levied under section 221(1) of the Income-tax Act. The Assessing Officer vide order under section 221(1) of the Act levied penalty of Rs. 1.62 crores, i.e., 20 per cent. of Rs. 8.14 crores under section 221(1) of the Act for failure of the assessee to pay assessment tax for the assessment year under appeal. 3. The assessee challenged the penalty order before the learned Commissioner of Income-tax (Appeals) and explained that the Assessing Officer had not acceded to the request of the assessee for adjustment of refund for the assessment year 2007-08 against the demand due for the assessment year under appeal. The submissions of the assessee are reproduced in the impugned order in which the assessee briefly explained that the assessee has paid the amount of Rs. 1 crore by way of two equal instalments of Rs. 50 lakhs each on February 24, 2011 and February 25, 2011. The refund of Rs. 6.99 crores in respect of the assessment year....

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....0-11. As per the provisions of the Act, the assessee is considered to be in default for failure to pay the whole or a part of self-assessment tax payable under section 140A(1)(i) and thereby rendering itself liable for penalty under section 221(1). The circumstances, viz., demand in dispute in appeal, etc., under which an assessee may not be deemed to be in default does not come to the aid of the assessee. The self-assess ment tax was payable as per the determined total income for the year worked out by the assessee himself. No doubt section 245 requires the previous intimation in writing of the proposed action to set off the refund against the sum payable under Income-tax Act. However, I find that the Assessing Officer had clearly explained the position and the circumstances under which the adjustment was being made. Para 5 of the impugned order is reproduced below : '5. Vide this office letter dated March 15, 2011, it was brought to the notice of the assessee that it had claimed loss of Rs. 18,21,20,035 in its return of income for the assessment year 2006-07. This loss was disallowed by the Assessing Officer in the order dated December 30, 2008 passed under section 143(....

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....g the return, or at least when called upon to do so by the Assessing Officer, which has not been done. Hence, I am inclined to confirm the penalty levied under section 221(1) by the Assessing Officer." 5. The assessee challenged the levy of penalty under section 221(1) of the Act. The Revenue filed the cross-objection challenging that since the assessee did not pay self-assessment tax on the returned income, therefore, the learned Commissioner of Income-tax (Appeals) has erred in admitting the appeal in contravention of the provisions of section 249(4)(a) of the Act. 6. The cross-objection is filed by the Revenue-Department in the office of the Tribunal on May 29, 2014. The Revenue in the cross-objection itself requested for condonation of delay of 426 days in filing the cross-objection by the Revenue-Department. It is stated in the cross-objection that delay of 426 days may be condoned in filing the cross-objection as legal point is involved in the matter and further this matter was noticed only when the appeal of the assessee was taken up for hearing by the Tribunal. Same was conveyed by the Commissioner of Income-tax (ITAT)-II, Chandigarh to Commissioner of Income-tax (Cen....

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....e Assessing Officer on receipt of the notice that an appeal against the order of the learned Commissioner of Income-tax (Appeals) has been preferred by other party, may notwithstanding that he may not have appealed against such order or other part thereof within 30 days of the receipt of the notice, file a memorandum of cross-objection." Sub-section (5) of section 253 of the Income-tax Act provides that the Appellate Tribunal may admit an appeal or permit filing of the memorandum of cross-objection after the expiry of the relevant period if it is satisfied that there was sufficient cause for not presenting it within that period. The appeal of the assessee in I. T. A. No. 348 of 2013 against the penalty order under section 221(1) was taken up for hearing by the Appellate Tribunal on July 4, 2013. On this date, Shri Sudhir Sehgal appeared for the assessee and Shri Manjit Singh, Departmental representative appeared for the Revenue-Department. The appeal of the assessee was adjourned time to time on several dates. Therefore, it is clear that the Assessing Officer received the notice of appeal of the assessee because the Departmental representative appeared on behalf of the Assessing Of....

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....y taking appropriate steps. The persons concerned were well aware or conversant with the issues involved including the prescribed period of limitation for taking up the matter by way of filing a special leave petition in the Supreme Court. In the absence of plausible and acceptable explanation, the delay could not be condoned mechani cally merely because the Government or a wing of the Government was a party before the court. Though in a matter of condonation of delay when there was no gross negligence or deliberate inaction lack of bona fide, a liberal concession had to be adopted to advance substantial justice, in the facts and circumstances, the claim on account of impersonal machinery and inherited bureaucratic meth odology of making several notes could not be accepted in view of the modern technologies being used and available. Considering the fact that there was no proper explanation offered by the Department for the delay except mentioning of various dates, the Department had failed to give acceptable and cogent reasons sufficient to condone such a huge delay. By the court : Unless Government bodies, their agencies and instrumentalities have reasonable and acceptable expl....

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....(1) of the Act if the assessee is able to prove to the satisfaction of the Assessing Officer that the default was for good and sufficient reasons. Section 221(1) also did not provide any minimum penalty in the matter and it is the discretion of the Assessing Officer to levy the particular amount as penalty, however the penalty amount would not exceed the amount of tax in arrears. In the case of the present assessee, the Assessing Officer has levied penalty of 20 per cent. of the arrears of taxes, i.e., 8.41 crores and levied the penalty of Rs. 1.62 crores. Therefore, it is to be considered whether the assessee has any good and sufficient reasons for default in payment of taxes or whether the Assessing Officer has correctly levied the penalty of 20 per cent. of the arrears of taxes. 15. The assessee pleaded before the authorities below that the Assessing Officer did not accept the request of the assessee for adjustment of refund for the assessment year 2007-08 against the demand due for the assessment year under appeal. The assessee also pleaded that Rs. 1 crore was paid in two instalments and balance of Rs. 14.67 lakhs was also paid. Therefore, the assessee pleaded that due to t....