2005 (9) TMI 515 - AT - Income Tax

Penalty levied u/s 221(1) - Collection and recovery of tax - HELD THAT - In the absence of any finding to the contrary by either of the lower authorities, we have no reason to dis-believe the same. Penal provisions are quasi-criminal in character, and notwithstanding the applicability (of the relevant provision) on satisfaction of the definite parameter(s) as laid down for example, non-payment of self-assessment tax as in the instant case, can be invoked, only where there is an element of deliberateness on the part of the assessee in committing the breach of the relevant provision(s) of law, i.e., it is guilty of a conduct contumacious or a conscious disregard to its obligation under the law. In the present case the default arose on account of the admitted situation of the assessee being placed under acute financial constraint(s). There is no evidence of the assessee s request (for allowing time) being motivated by extraneous reasons; the same, as remarked earlier, having not been examined on merits, would have to be taken as warranted by its circumstances. Secondly, it places a schedule of payment of the admitted tax before the authorities, which it observes; which only suggests an honest attempt on its part to liquidate its tax liability, leading to an inference of a bona fide conduct. The Assessing Officer s ground of the Government being entitled to compensation in view of the delayed payment, is misplaced, as the statute has a separate provision for interest (on the assessee being in default) section 220(2) , and which is applicable independent of the penalty proceedings, and meant only for the purpose of the said compensation. Rather, the same too has a waiver clause Section 220(2A) , for application, on the assessee showing a case of genuine hardship and an attitude of co-operation. The law in the matter of penalty stands expounded by the Hon ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa 1969 (8) TMI 31 - SUPREME COURT and, for the reasons aforementioned, we find the present case as one which stands qualified for the saving from penalty in view of the said law; the default in the compliance of the relevant provision notwithstanding. In result, the Revenue s appeal is dismissed.

Summary

Issues:
Levy of penalty under section 221(1) of the Income-tax Act, 1961.

Detailed Analysis:
1. The appeal by the Revenue was against the Commissioner of Appeals' order dated 14-12-1998, focusing on the levy of penalty under section 221(1) of the Act.
2. The assessee did not appear, and the appeal was heard ex parte.
3. The primary issue was the penalty of Rs. 10,00,000 imposed under section 221(1) of the Act, concerning non-payment of self-assessment tax.
4. The facts revealed that the return was filed under section 158BC of the Act, declaring undisclosed income. The Assessing Officer issued a notice under section 221(1) for non-payment of self-assessment tax, leading to the penalty imposition. The CIT(A) deleted the penalty based on certain grounds.
5. The Revenue contended that no fresh notice was required after the revised return and argued for restoration of the penalty order.
6. The ITAT found that the assessee's financial constraints justified the delayed payment, and there was no evidence of deliberate non-compliance. The ITAT upheld the CIT(A)'s decision based on the quasi-criminal nature of penal provisions and the bona fide conduct of the assessee.
7. Consequently, the Revenue's appeal was dismissed based on the principles laid down by the Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, emphasizing genuine hardship and cooperation as grounds for waiver of penalty.

This detailed analysis provides a comprehensive overview of the judgment, focusing on the issues involved and the reasoning behind the decision to dismiss the Revenue's appeal regarding the penalty under section 221(1) of the Income-tax Act, 1961.