TaxTMI 
TaxTMI 
2021 (12) TMI 974
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.... 76,92,033/- for F.Y. 2013-14 and Rs. 1,36,43,263/- for F.Y. 2012-13. On such failure, the AO passed, orders u/s 201(1) and 201(1A) on 07.10.2013 treating the appellant as assessee in default. It did not file any appeal against the orders u/s 201(1) 86 201(1A) dated 07.10.2013. The appellant remitted the tax deducted at source along with the interest. The AO thereafter initiated penalty proceedings u/s 221 of the I.T. Act. The appellant's main arguments before the AO were that it was facing severe financial hardship and that the same constitutes a 'good and sufficient reason' for not levying the penalty. The AO after considering the appellant's submissions rebutted the same and held that financial hardship is not reflected in the appellant's books of account and that financial hardship cannot be taken as good and sufficient reason for not remitting the tax deducted at source. Referring also to the past conduct of the companies under the same management, he levied a penalty u/s 221 of Rs. 1,08,38,662/- for F.Y. 2013-14 and Rs. 29,06,500/- for A.Y. 2014-15. 3. Aggrieved, the assessee went in appeal before the CIT(A). The CIT(A) confirmed the levy of penalty u/s....
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....es the employees themselves have offered the appellant company to work for a reduced salary considering the financial position of the appellant. [vii]. It is submitted that the financial difficulties which -the appellant faced are for the following reasons: • Aviation Turbine Fuel [ATE] is one of the significant components of the operating expenditure for providing charter services. The ATF prices were very high and there was a steep increase in the price which badly affected the margins of the appellant. • The competition in the charter service business increased as new competitors entered in this particular service industry and started giving very - low prices which eventually forced the appellant even to revise its tariff and which resulted in very less margin in earning profits. • The appellant had started a project in the state of Gujarat and substantial amount of investments were made. Due to certain diverse reasons which included regulatory hurdles and certain political dispensations, the said project could not materialise. • The appellant was operating lucrative charter service contract between Katra and Shri Math....
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....se his discretion in invoking and levying penalty under the provisions of section 221 of the Act. [ii] In the instant case the learned assessing officer and the learned commissioner of income-tax [Appeals] has not exercised their discretion and levied penalty as if it is automatic and on an erroneous appreciation of the fact as regard to the financial position of the appellant without properly appreciating that the appellant had infact was and is in the financial difficulty. The learned authorities below without looking into the facts and circumstances of the case and further not appreciating the fact that the penalty proceeding under section 221 is independent proceedings to that of the assessment proceedings without applying his mind, invoked and levied penalty under section 221 of the Act and failed to exercise the discretion provided in the statute. [iii] Reliance is placed on the parity of reasoning of the decision of the Hon'ble Jurisdictional High Court of Karnataka decision in the case of CIT Vs. Manjunatha Cotton Et Ginning Factory [2013] 359 ITR 565 [Kar], though the said decision is in the context of section 271[1][c] of the Act, wherein the Hon'....
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....tion has been brought into to the statute which has been reproduced in the above paragraph. [v] It is submitted that the financial difficulty and paucity of funds does constitute 'good and sufficient reason' and ground for not imposing penalty under section 221 of the Act. It is submitted that the statute does not provide for distinguishing between penalty liveable when an assessee defaults in payment of his own taxes i.e. self assessment tax, advance taxes, etc., and the payment of TDS. It is submitted that the provisions of section 221 is applicable for all the cases irrespective of the fact whether the default is towards non-payment of self assessment tax, advance tax, etc., not even for default in payment of advance tax. Thus, there is no distinction as held by the learned Commissioner of Income-tax [Appeals] that the immunity provided in the second proviso to section 221 of the Act is not applicable is far from the right conferred in the statute. [vi] As contended and also submitted and demonstrated before the authorities below the financial difficulty .and paucity of funds as per the second proviso to section 221 of the Act amounts to "good and suffi....
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....the learned assessing officer has not considered the cash credit limit which has been obtained by the appellant from its bankers and further the learned Commissioner of Income-tax [Appeals] has not considered the items on the liability side of the balance sheet. Thus, the learned Commissioner of Income-tax [Appeals] is not justified on facts in holding that there was a huge availability of cash as at 31/03/2013. [iv] It is submitted that the learned Commissioner of Income-tax [Appeals] has stated that there was huge net cash generated from investing activities [sic] operational activities. In this regard the appellant wishes to state and submit that the appellant had made provisions towards its day to day activities and the same are recurring in nature for its operational activities and for the appellant to be a going concern. It is submitted that though there may be cash and bank balance as at 31/03/2013 the appellant for the purposes of operational cost has to have certain minimum amount to meet the operational cost and as could be seen from the ledger account of the appellant for the month of April there will be lot of disbursement of payments towards its operational co....
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.... financial hardship which the appellant was facing, which fact had been completely ignored by the learned authorities below and thereby imposed huge penalty under section 221[1] of the Act without even considering the discretion granted by the statute to the learned assessing officer not to impose penalty under certain circumstances. 18. The Appellant hereby denies every contention against the Appellant in the order of the authorities below which has not been specifically traversed above and prays liberty to address the same if raised by revenue at the time of hearing of the appeal. 19. In view of the above, the learned Commissioner of Income-tax [Appeals] has erred in denying relief to the Appellant and consequently, has passed a perverse order and which requires to be set aside for substantial cause of Justice and Equity. 4. The Ld.AR of assessee submitted that there is reasonable cause for remitting the TDS amount to the government exchequer belatedly and assessee has already paid the tax and interest amount and penalty may be deleted. On the other hand, the Ld.DR submitted that financial stringency cannot be accepted as a good and sufficient reason in matte....