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Issues:
1. Levy of penalty under section 140-A (3) of the IT Act, 1961. 2. Interpretation of the provisions of section 140-A (3) regarding the imposition of penalty. 3. Consideration of reasonable cause for failure to pay tax under section 140-A. 4. Applicability of penalty under section 140-A (3) and the discretion of the authorities. 5. Scope of appeal against the order under section 140-A (3). 6. Application of the principle from Hindustan Steel Ltd. vs. State of Orissa in penalty cases. Analysis: 1. The appeal concerns the objection to the penalty imposed by the Income Tax Officer (ITO) under section 140-A (3) of the IT Act, 1961, which was partially sustained by the Appellate Assistant Commissioner (AAC). The appellant argued that due to financial constraints, an extension was granted by the ITO for tax payment, which was made within the extended period. The Department contended that penalty under section 140-A (3) is mandatory for failure to pay tax within the specified time. 2. The Tribunal noted discrepancies in the facts presented by the appellant and the Department's inability to confirm them. The Department argued that even if the facts were true, they would only affect the quantum of penalty, not its imposition. The Tribunal disagreed with the Department's interpretation, emphasizing that the appellant's genuine reasons for delay and diligent actions should be considered in penalty assessment. 3. The Tribunal rejected the Department's stance that penalty under section 140-A (3) is automatic, highlighting the importance of affording the assessee a reasonable opportunity to be heard before levying any penalty. The Tribunal also referenced the provision for appeal against orders under section 140-A (3), allowing challenges to both the quantum and propriety of the penalty. 4. Citing the Hindustan Steel Ltd. case, the Tribunal emphasized that penalties for failing to meet statutory obligations should not be imposed unless there is deliberate defiance of the law or contumacious conduct. The Tribunal concluded that the penalty in this case was not justified, considering the appellant's bona fide belief, timely payment within a short period, and the discretion available to the authorities in penalty imposition. 5. The Tribunal highlighted the appellant's belief in receiving an extension for tax payment and the credit given by the ITO for the self-assessment tax paid within a reasonable time. The Tribunal aligned with the principles laid down by the Supreme Court, stating that the breach in this case stemmed from a genuine belief and should be considered a technical or venial breach, warranting the cancellation of the penalty. 6. Ultimately, the Tribunal allowed the appeal, canceling the penalty imposed under section 140-A (3) and directing any collected penalty to be refunded to the assessee. The decision was made based on the principles of fairness, genuine belief, and the discretionary powers available to the authorities in penalty matters.
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