9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (6) TMI 322 - AT - Income TaxPenalty u/s 140A(3) - non payment of self assessment tax which was shown as payable in the return of income filed - CIT(A) deleted the penalty levy - Held that - No penalty notice was issued to the assessee u/s 221 of the Act and the penalty order was also not passed u/s 221 of the Act and there is no penalty provision u/s 140A of the Act and the AO misunderstood the relevant provision of the Act while issuing notice and imposing penalty against the assessee. Consequently the assessee was also not provided due opportunity of hearing prior to imposing penalty u/s 221 of the Act as required by first proviso to section 221(1) of the Act and at the same time the assessee was also denied opportunity of hearing to discharge its onus and to show good and sufficient cause for non payment of tax at the time of filing of return as required second proviso to section 221(1) of the Act to avoid penalty, which is also a clear violation of the mandatory provisions of the Act by the AO and thus, penalty order cannot be held as in accordance with law and sustainable and the first appellate authority i.e. CIT(A) was quite justified and correct in demolishing the same. In view of the observations of the Hon ble High Court of Delhi in the judgment dated 12.8.2013 in assessee s own case (2015 (6) TMI 308 - DELHI HIGH COURT), we are also in agreement with the conclusion of the CIT(A) that the assessee was facing financial constrain and acute liquidity crunch and there was a good and sufficient cause for the assessee for non payment of tax which was incorrectly rejected by the AO while wrongly imposing penalty u/s 140A(3) of the Act. We are unable to see any infirmity, perversity or any other valid reason to interfere with the impugned order of the CIT(A) which deleted the penalty and thus, we uphold the same. - Decided in favour of assessee.
Issues Involved:
1. Correctness of the CIT(A)'s order in law and facts. 2. Deletion of penalty under Section 140A(3) of the Income Tax Act, 1961. Issue-wise Analysis: 1. Correctness of the CIT(A)'s Order in Law and Facts: The Revenue challenged the CIT(A)'s decision to delete the penalty imposed under Section 140A(3) of the Income Tax Act, 1961. The CIT(A) had set aside the penalty order dated 31.05.2012 for the assessment year 2009-10. The Revenue argued that the CIT(A) erred in deleting the penalty of Rs. 4,12,62,460/- for non-payment of self-assessment tax shown as payable in the return of income. 2. Deletion of Penalty under Section 140A(3) of the Income Tax Act, 1961: The assessee filed a return of income for the assessment year 2009-10 on 03.09.2010, declaring an income of Rs. 9,39,00,720/- without paying the self-assessment tax of Rs. 4,12,62,460/-. The AO issued a show-cause notice under Section 140A(3) on 23.11.2011, asking why the assessee should not be treated as in default and why a penalty should not be imposed. The AO subsequently imposed a penalty of Rs. 4,12,62,460/-. The CIT(A) rejected the legal objection that the penalty was imposed under Section 140A(3) instead of Section 221, citing Section 292B, which covers inadvertent mistakes in quoting the correct section. However, the CIT(A) allowed the appeal on merits, accepting the assessee's explanations regarding liquidity issues and the timing of the tax payments. The Departmental Representative (DR) argued that no supporting documents for liquidity issues were provided to the AO and that the bank accounts were attached in March 2011 due to non-payment of demand. The DR emphasized that the undisclosed income was admitted voluntarily by the assessee and that the payment of tax cannot be delayed. The DR relied on several judgments to support the penalty. The assessee's counsel argued that Section 140A does not provide for penalty imposition and that the AO's penalty order was not sustainable. The counsel highlighted that the assessee faced a liquidity crunch and had paid the entire tax liability before the penalty order was passed. The counsel also cited several judgments supporting their position. The Tribunal noted that the judgments relied upon by the AO were related to assessment years prior to 1989-90, and the provisions of Section 140A had been amended several times since then. The Tribunal observed that the AO had not issued a defect notice under Explanation (aa) of Section 139(9) and that the assessee had paid the entire tax liability before the penalty order. The Tribunal also noted the Hon'ble High Court of Delhi's order dated 12.08.2013, which accepted the assessee's argument of liquidity issues. The Tribunal concluded that the AO misunderstood the relevant provisions of the Act and that the penalty order was not sustainable. The Tribunal upheld the CIT(A)'s order, finding no infirmity or perversity in it. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order to delete the penalty imposed under Section 140A(3) of the Income Tax Act, 1961. The Tribunal agreed with the CIT(A) that the assessee faced a liquidity crunch and had a good and sufficient cause for the delay in tax payment. The Tribunal found that the AO had not followed the correct procedure and that the penalty order was not in accordance with the law.
|
