1979 (9) TMI 97 - AT - Income Tax

Summary

Issues:
1. Imposition of penalty under s. 140-A(3) of the IT Act, 1961.
2. Non-compliance with self-assessment tax payment requirements.
3. Justification for penalty imposition due to paucity of funds.
4. Interpretation of legal provisions for penalty imposition.
5. Comparison with a similar case judgment.

Detailed Analysis:
1. The appeal before the Appellate Tribunal ITAT DELHI-E concerned the imposition of a penalty under s. 140-A(3) of the IT Act, 1961, for the assessment year 1974-75. The penalty of Rs. 1,500 was initially imposed by the Income Tax Officer (ITO) and upheld by the Assistant Commissioner of Income Tax (AAC), leading to the appeal by the assessee.

2. The issue arose from the assessee's failure to comply with the self-assessment tax payment requirements as per s. 140-A(1) of the Act. The assessee had filed the return of income for the relevant year but did not make the necessary payment on a self-assessment basis, resulting in the imposition of the penalty.

3. The assessee contended that the non-payment was due to paucity of funds, which was initially rejected by the ITO. However, the Appellate Tribunal considered the fact that the assessee had been granted instalments for paying the tax demanded for the assessment year, which supported the claim of financial constraints leading to non-payment.

4. The Tribunal analyzed the legal provisions and observed that the levy of penalty under s. 140-A(3) was not automatic but had to be based on the facts and circumstances of the case. Citing a judgment of the Punjab & Haryana High Court in a similar case, the Tribunal concluded that in the present case, the justification provided by the assessee for non-payment due to paucity of funds was valid, leading to the cancellation of the penalty.

5. The Tribunal compared the present case with the judgment of the Punjab & Haryana High Court in the case of CIT vs. R.B.L. Banarsi Dass & Co. (P) Ltd., where the penalty was deleted based on similar grounds of full tax payment and no loss to the government. The Tribunal's decision to cancel the penalty was influenced by this precedent, emphasizing the importance of considering the specific circumstances of each case before imposing penalties under tax laws.