TaxTMI 
TaxTMI 
1981 (8) TMI 30
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.... or when an assessee is not in default in making payment of tax irrespective of the provisions of section 220(6) of the said Act ? " In this reference we are concerned with the proper interpretation of s. 220(6) read with s. 221 of the I.T. Act, 1961. In order to appreciate the nuances of the arguments the facts may be briefly stated as under. We are concerned with the assessment year 1959-60. The net profit worked out by the assessee-company as per its profit and loss account for the year ended 31st March, 1969, was Rs. 41,394. The total income assessed by the ITO was Rs. 7,20,892, and on this footing the net tax payable worked out to Rs. 2,80,214. The ITO made the assessment on 23rd March, 1964, and served the notice of demand on th....
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.... the matter in appeal to the AAC, and by his order dated 30th April, 1968, the AAC cancelled the penalty of Rs. 10,000 levied by the said ITO. In his order the AAC applied his mind to, and discussed, the issues raised in the appeal by the assessee-company against the original assessment in which the total income was computed by the ITO at Rs. 7,20,892. The assessee-company represented to the AAC that the ITO had not exercised his discretion judicially in refusing the assessee-company's request to stay recovery. The assessee-company urged that the issues raised in the appeal against the assessment were substantial. The assessee-company also indicated why the appeal against the assessment still remained undisposed of, and it would appear that....
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.... in permitting an appeal from the levy of penalty under s. 221. In its view, since an appeal is provided in law from an order imposing penalty under s. 221, it was incumbent on the AAC in such an appeal to consider the question whether the assessee is in default. Whilst considering this question, according to the Tribunal, the AAC was entitled to consider whether the ITO had exercised his discretion under s. 220(6) properly or not. On the latter issue if the ITO had taken an erroneous view of the matter in the opinion of the AAC, then the AAC could review that decision, although technically he would be sitting in appeal only from the levy of penalty made under s. 221. Aggrieved by the said decision of the Income-tax Appellate Tribunal, t....
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....alty being imposed on such assessee subject to the pecuniary limitations provided under the said section. Section 221 specifically provides that before levying any such penalty the assessee has to be given a reasonable opportunity of being heard. This is in contrast to the absence of any such provision in sub-s. (6) of s. 220. It is in pursuance of the power conferred on him under s. 221 that the ITO in the instant case levied the penalty of Rs. 10,000. Now, when we turn to s. 246, which section indicates the appealable orders, we find that one of such orders is the order imposing penalty under s. 221. According to the Tribunal, if an appeal is provided to the AAC under s. 246 from the penalty levied by the ITO, under s. 221, in such ....