TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 275
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....s that the appellant has filed its return of income for Assessment Year 2008-09 on 30.08.2010 where self assessment tax of Rs. 11341820/- was payable. This tax was paid along with interest. Further as the same was not paid at the time of filing of return of income then the Assessing Officer issued show cause notice for levy of the penalty. Before the ld AO, it was submitted that the assessee has already paid the tax on 11.11.2011 along with interest. Reasonable cause was explained that the assessee is suffering from liquidity crunch and all the banking account of the assessee were seized by the Income Tax Department and due to which the assessee was left with no means to pay the tax. It was further submitted that admission for tax has arisen due to surrender made at the time of search. Therefore, there is some delay in payment of the tax. The ld AO rejected the explanation of the assessee and levied a penalty of Rs. 11341820/- vide order dated 31.05.2012. 6. Aggrieved by the order of the ld AO the assessee has challenged the same before the ld CIT(A) who confirmed the penalty to the extent of 100% of tax liability and restricted the original penalty levied of Rs. 11341820/- to Rs.....
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....him for not complying with the provisions of section 140A(1) of the Act. From operative part of the penalty order para 6, it is also clear that the AO imposed penalty with a bottom line that the assessee is held in default for not making payment of admitted tax liability within the time limit as prescribed by the provisions of the Act. The AO in the last line of the operative part of the order has mentioned that a penalty of an amount equal to admitted tax liability is imposed u/s 140A(3) of the Act. 19. In view of above noted facts, we observe that the section 140A of the Act is placed in chapter XIV titled as "procedure for assessment", whereas section 221 of the Act has been placed in chapter XVII "collection and recovery of tax" part "D-collection and recovery". From vigilant reading of provision of section 140A & 221 of the Act, we note that section 140A(3) stipulates that if any assessee fails to pay the whole or any part of such tax or interest or both in accordance with provisions of sub section (1), he shall, without prejudice to any other consequence which he may incur, be deemed to be an assessee in default in respect of the tax or interest or both remained unpaid, an....
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....making a payment of tax then he shall be liable to pay such amount as the AO may direct by way of penalty and the total amount of penalty does not exceed the amount of tax in arrears. First proviso to section 221(1) of the Act provides that before levying any such penalty the assessee shall be given a reasonable opportunity of being heard and second proviso provides that where the assessee proves to the satisfaction of the AO that the default was due to "good for sufficient reasons" no penalty shall be levied under this section. The legislation has also provides an explanation removing doubt that an assessee was not ceased to be liable to any penalty under this sub section merely by reason of the fact that before the levy of such penalty he has paid the tax. Sub section (2) of sec. 221 of the Act further provides that where as a result of any 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 levied shall be cancelled and the amount of penalty paid shall be refunded. 21. Turning to the legal issue before us as we have already noted that the AO issued show cause notice to the assessee u/s....
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.... rejected the plea of the assessee that the assessee's bank accounts were attached by the Department for recovery of outstanding demand by observing that the bank accounts of the assessee were attached in the month of March, 2011 as the assessee was not making payment of demand raised after completion of assessment proceedings. The AO has also turned down the another plea of the assessee that the huge undisclosed income was admitted by the assessee and he voluntarily admitted and surrendered big amounts to cover up the incriminating documents found during the search operation which further resulted into huge tax demand which was obviously an abnormal demand and the same was not related with the normal business of the assessee. The AO has rejected this contention of the assessee by observing that in the return of income said income was voluntarily surrendered and offered for tax and the assessee was under obligation to pay tax on the admitted and surrendered income before filing the return and, therefore, assessee is liable to pay penalty u/s 140A(3) of the Act. 24. From vigilant perusal from the operative part of the impugned order of the CIT(A), we note that undisputedly all du....
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..... On a specific query from the bench the ld. DR could not assist us whether any defect notice as per Explanation (aa) of section 139(9) of the Act was issued to the assessee pointing out defects in the return by the Department. In absence of any detail, we may observe that the Department has not issued any notice under said provision of the Act pointing out defect in the return filed by the assessee. At the cost of repetition, we may again point out that the AO neither issued any notice u/s 221 of the Act nor levied penalty u/s 221 of the Act which resulted a great prejudice against the assessee because the assessee was not provided due opportunity of hearing as to why penalty u/s 221 of the Act should not be imposed upon him and at the same time assessee was also prevented to establish, prove and to discharge its onus to show that there was a good and sufficient reason for non payment of tax as required as per second proviso to sec. 221(1) of the Act. 27. In view of above, we respectfully follow the ratio of the decision of ITAT Mumbai 'A' Bench in the case of AGO Pharmaceuticals Ltd. Vs. ACIT (supra), wherein it was held that where the assessee has filed the return of income o....