1976 (4) TMI 125 - AT - Income Tax

Summary

Issues:
- Validity of penalty imposed under section 140A(3) for non-payment of self-assessment amount
- Existence of a valid order for levying the penalty
- Requirement of a show cause notice before imposing the penalty
- Interpretation of an entry in the order sheet as an order under section 140A(3)
- Compliance with the provisions of section 156 regarding notice of demand

Analysis:

The appeal before the Appellate Tribunal ITAT PATNA-B concerns the cancellation of a penalty of Rs. 1,000 imposed by the Income Tax Officer (ITO) under section 140A(3) for non-payment of the self-assessment amount. The Assistant Commissioner of Income Tax (AAC) canceled the penalty, citing reasons related to the validity of the order and the absence of a show cause notice issued by the successor ITO. The Department appealed against the AAC's decision (Para. 1).

The Departmental Representative argued that a show cause notice was indeed issued and served on the assessee, contradicting the assessee's claim. Additionally, it was contended that an entry in the order sheet could be considered a valid order for levying the penalty, contrary to the AAC's decision. The counsel for the assessee maintained that there was no valid order for the penalty (Para. 2).

Upon hearing the arguments, the Tribunal deliberated on whether an entry in the order sheet could constitute a valid order under section 140A(3) and trigger the issuance of a notice of demand. The Tribunal emphasized that an entry in the order sheet does not suffice as a formal order under the Income Tax Act. Section 156 mandates that a notice of demand can only be served based on a valid order specifying the payable amount. In this case, the entry in the order sheet, which lacked essential details and was unsigned, did not meet the legal requirements for a valid order. Moreover, the absence of a show cause notice further invalidated the penalty imposition. As a result, the Tribunal upheld the AAC's decision to cancel the penalty (Para. 3).

Conclusively, the Department's appeal was dismissed by the Tribunal, affirming the cancellation of the penalty imposed under section 140A(3) (Para. 4).