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Issues:
1. Reduction of penalty amount without basis by the CIT(A). 2. Failure of the assessee to pay tax on self-assessment within the stipulated time. 3. Discrepancy in the refund amount claimed by the assessee. 4. Justification of penalty imposition by the ITO. 5. Reduction of penalty by the CIT(A) based on financial stringency and factual position. 6. Cross-appeals filed by the Revenue and the assessee. 7. Tribunal's order in the assessee's appeal and its impact on the present appeal. Analysis: 1. The Revenue appealed against the CIT(A)'s decision to reduce the penalty amount without any basis. The assessee, a limited company for the assessment year 1974-75, failed to pay the self-assessment tax within the specified period, leading to penalty proceedings under section 140A(3) of the IT Act, 1961. 2. The ITO imposed a penalty of Rs. 2,50,000 on the assessee, citing intentional delay in fulfilling the statutory tax liability. The CIT(A) upheld the penalty but reduced it to Rs. 1,85,000 after considering the factual position and the assessee's financial liquidity. The reduction was based on the lack of reasonable cause for non-payment of the tax due on self-assessment. 3. The assessee contested the penalty order, claiming a significant refund amount due from the Department. However, the CIT(A) found the claim misleading and incorrect, leading to the imposition of a reduced penalty. The Tribunal concurred with the CIT(A)'s decision, emphasizing the lack of justification for the penalty in light of the refundable amounts. 4. During the appeal hearing, the Revenue argued against the CIT(A)'s interference in the penalty matter. The assessee's counsel highlighted the pending cross-appeals and referred to a previous Tribunal order canceling the penalty, asserting that no penalty was warranted due to misunderstandings and the substantial refund owed to the assessee. 5. The Tribunal acknowledged the refund due to the assessee and concluded that the non-payment of self-assessment tax could not be deemed a default considering the refundable amount. Following the previous Tribunal's decision, the penalty was deemed unjustified, leading to the dismissal of the Revenue's appeal. 6. The Tribunal's decision in the assessee's appeal, canceling the penalty based on the refundable amounts, influenced the outcome of the present appeal. The cross-appeals were not initially recognized, leading to the dismissal of the Revenue's appeal due to lack of merit. 7. Ultimately, the Tribunal upheld the cancellation of the penalty, emphasizing the substantial refund owed to the assessee as a crucial factor in determining the lack of default in tax payment. The decision highlighted the importance of considering all relevant factors before imposing penalties in tax matters.
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