9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (10) TMI 1103 - AT - Income TaxPenalty levied u/s 221 r.w.s. 140A(3) - Claim of the assessee that post amendment of Sec. 140A(3) w.e.f 01.04.1989 without there being any amendment in Sec. 221(1) of the Act no penalty could be levied for non-payment of self-assessment tax - Whether no penalty under sub-section (3) to Sec. 140A could have validly been imposed on the assessee for its failure to discharge its admitted self-assessment tax liability? - HELD THAT - Admittedly, it is a matter of fact borne from the record that the assessee company except for the aforesaid interest income on the ICD s with NBFC s had no other source of income. Insofar the availability of the aforesaid funds invested with the NBFC s are concerned, we find that as the same were sourced from the parent company, viz. Mercantile Ports and Logistics Ltd. formerly known as SKIL Ports Logistics ltd) Guernesey (SPLL-G) for a specific purpose i.e for Karanja port development project, and were invested by it with the NBFC s, therefore, the same were not freely available to the assessee for discharging its admitted tax liability. We are in agreement with the view taken by the CIT(A) that as the assessee was in no financial position to pay the self-assessment tax at the time of filing of return of income, therefore, no penalty u/s 221(1) r.w.s 140A(3) could have been imposed on it. We, thus, in terms of our aforesaid observations concur with the view taken by the CIT(A) that considering the serious financial constraints of the assessee due to which it had failed to discharge its admitted self-assessment tax liability at the time of filing its return of income, and for a period thereafter, no penalty under Sec. 221(1) r.w.s 140A(3) could have even otherwise be imposed on it. Finding no infirmity in the view taken by the CIT(A) we uphold his order. Accordingly, the appeal filed by the revenue being devoid and bereft of any merit is dismissed.
Issues Involved:
1. Deletion of penalty levied under Section 221(1) read with Section 140A(3) of the Income Tax Act, 1961 for non-payment of self-assessment tax by the assessee. Issue-wise Detailed Analysis: 1. Deletion of Penalty Levied under Section 221(1) read with Section 140A(3) of the Income Tax Act, 1961 Background: The revenue filed appeals against the orders of the CIT(A) which deleted the penalty of ?3,92,70,237/- levied on the assessee under Section 221(1) read with Section 140A(3) of the Income Tax Act, 1961 for A.Y. 2011-12 and A.Y. 2012-13. The assessee had filed its return of income for A.Y. 2011-12 declaring an income of ?6,86,61,138/-, later revised to ?9,64,16,230/-. The return was processed under Section 143(1) and later scrutinized under Section 143(2). The AO observed that the assessee failed to pay its self-assessment tax liability of ?3,92,70,237/- and imposed a penalty under Section 221(1) read with Section 140A(3). Contentions: - Assessee's Argument: The failure to pay the self-assessment tax was due to financial constraints caused by delays in the Karanja Port development project. The assessee argued that the post-amendment Section 140A(3) does not allow for penalty imposition for non-payment of self-assessment tax, supported by ITAT Mumbai decisions in Heddle Knowledge (P) Ltd. and Balraj Prakashchand Bansal. - Revenue's Argument: The revenue contended that the AO rightly imposed the penalty as the assessee was deemed to be in default under Section 140A(3) and thus subject to penalty under Section 221(1). Tribunal's Analysis: - Statutory Provisions: The Tribunal noted the amendment to Section 140A(3) effective from 01.04.1989, which changed the provision from allowing penalty imposition to deeming the assessee in default for non-payment of self-assessment tax. The legislative intent, as clarified by CBDT Circular No. 549, was to replace penalty with mandatory interest for such defaults. - Judicial Precedents: The Tribunal relied on decisions in Heddle Knowledge (P) Ltd. and Balraj Prakashchand Bansal, which held that post-amendment Section 140A(3) does not envisage penalty for non-payment of self-assessment tax. - Financial Constraints: The Tribunal agreed with the CIT(A) that the assessee faced serious financial constraints, as evidenced by the lack of liquidity and the fact that the interest income was not actually received but accrued on investments made for a specific project. Conclusion: The Tribunal upheld the CIT(A)'s decision to delete the penalty, concluding that: 1. Post-amendment Section 140A(3) does not permit penalty imposition for non-payment of self-assessment tax. 2. The assessee's financial constraints constituted a reasonable cause for non-payment, justifying the deletion of the penalty. Order: The Tribunal dismissed the revenue's appeals for both A.Y. 2011-12 and A.Y. 2012-13, affirming the CIT(A)'s orders. Pronouncement: The order was pronounced in the open court on 21.10.2021.
|
