TaxTMI 
TaxTMI 
2012 (10) TMI 1121
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....alty u/s 221(1) of the Income Tax Act as he has failed to consider and appreciate the following in right perspective and misdirected himself, as shall be evident from the followings: i) That section 221(2) specifically provided that as a result of final order the amount of tax, with respect to the default in the payment of which the penalty was levied, has been wholly reduced, the penalty shall be cancelled and the amount of penalty paid shall be refunded; and ii) Whereas there was no default in payment of taxes as the deductee assessees had paid entire taxes due on their income on which fact the relief has been allowed by CIT(Appeals) himself vide his orders dated 20.06.2009. iii) That section 221(2) envisaged the payment of taxes an....
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.... 221(2) of the Act and as such his orders are contrary to the very spirit of section 221(2) of the Act and perverse in law. 3. That the assessee craves and prays to add, modify, delete any grounds of appeal during the course of appellate proceedings." 3. The brief facts in all the appeals of the assessee are that an inspection u/s 133A of the Act was carried out at the office of the assessee company on 24.02.2009 to verify the compliance of the assessee company with the provisions of the TDS. During the course of inspection, it was found that the assessee had failed to deduct tax at source u/s 194A out of the payment of interest to certain persons. The assessee was, consequently, held to be an assessee in default and the AO passed orders....
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....ny at that stage had been that it was not required to deduct the tax at source u/s 194A in respect of the payments of interest under consideration. He rejected, therefore, the contention that the fact of the demand having been paid by the deductees was already on record. The AO held that at the stage of the reply dated 8/5/2009 also, the claim that the deductees had paid the tax was not substantiated with any evidence. Hence, the AO rejected the submissions of the assessee company and imposed a penalty of ₹ 5000/- in respect of the default for each of the assessment years. 4. The Ld. CIT(A) confirmed the action of the Assessing Officer vide paras 5, 6 & 7 of his order. 5. The Ld. counsel for the assessee, Sh. S.K. Vatta, CA, relied ....