2018 (6) TMI 835 - AT - Income Tax

Right to file an appeal before CIT(A) where the application for revision u/s 264 rejected by the CIT - Revisional jurisdiction of Commissioner - Whether the assessee can file an appeal before the appellate authority - Held that - Following the judgment of Madras High Court in COMMISSIONER OF INCOME TAX VERSUS D. LAKSHMINARAYANAPATHI 1998 (12) TMI 12 - MADRAS HIGH COURT it is held that even though for invoking revisional jurisdiction, it is a pre-condition that the appellate jurisdiction should not have been invoked. There is no bar for filing appeal when the assessee has invoked revisional jurisdiction. Notwithstanding unsuccessful effort of the assessee in the revisional proceeding, still the assessee can file an appeal - thus assessee invoked revisional jurisdiction u/s 264 of the Act, it cannot constitute a bar for invoking the appellate jurisdiction Penalty levied u/s 221 for default in payment of self assessment tax - good and sufficient reason for default - Held that - Assessee admittedly paid the tax belatedly along with interest under Section 234A, 234B and 234C of the Act - When the assessee has availed overdraft facility from the bank and exceeded the limit sanctioned by the bank and the assessee has no liquid cash to make the self assessment tax, this Tribunal is of the considered opinion that there is a good and sufficient reason for not making payment of self assessment tax. Therefore, in view of the second proviso to Section 221, there cannot be any levy of penalty - Decided in favor of assessee.

Summary

Issues:
- Appeal against penalty under Section 221 of the Income-tax Act, 1961 for non-payment of self-assessment tax.
- Maintainability of appeal before CIT(Appeals) due to invoking revisional jurisdiction under Section 264 of the Act.

Analysis:

1. Issue 1: Appeal against penalty under Section 221 of the Income-tax Act
The appellant contested the penalty levied under Section 221 for non-payment of self-assessment tax, citing financial hardship and subsequent payment of the due amount. The appellant explained that due to exceeding the overdraft facility, there was a lack of liquid cash at the time of filing the return, leading to delayed payment. The appellant argued that all taxes due were eventually paid with interest under Section 234A, 234B, and 234C of the Act. The Counsel for the appellant relied on the second proviso to Section 221, claiming a reasonable cause for the delayed payment.

2. Issue 2: Maintainability of appeal before CIT(Appeals)
The CIT(Appeals) dismissed the appeal on the grounds of non-maintainability, as the appellant had filed a petition under Section 264 of the Act before the Principal Commissioner. The appellant had also approached the High Court challenging the Principal Commissioner's order, which was set aside, leading to the revision petition under Section 264. The Counsel for the appellant referenced a judgment of the Madras High Court to argue that the appeal should be considered maintainable despite invoking revisional jurisdiction.

3. Judgment Analysis
The Tribunal reviewed the Madras High Court judgment regarding the interplay between revisional and appellate jurisdictions. The High Court's ruling clarified that invoking revisional jurisdiction does not bar the filing of an appeal. Therefore, the Tribunal concluded that the appeal before the CIT(Appeals) was maintainable. On the merits of the case, the Tribunal found that the appellant had a valid reason for the delayed payment of self-assessment tax due to financial constraints and exceeded overdraft limits. As per the second proviso to Section 221, the Tribunal held that there was a reasonable cause for non-payment, leading to the deletion of the penalty levied by the Assessing Officer.

4. Conclusion
The Tribunal allowed the appeal filed by the appellant, setting aside the orders of the lower authorities and deleting the penalty under Section 221 of the Income-tax Act. The judgment emphasized the importance of valid reasons for delayed tax payments and clarified the maintainability of appeals despite invoking revisional jurisdiction.

This comprehensive analysis highlights the legal arguments, relevant case law, and the Tribunal's decision on both issues raised in the appeal.