2016 (2) TMI 302 - HC - Income Tax

Penalty imposed u/s 221 (1) - self assessment tax under Section 140A remained payable - denial of natural justice - Held that - Considering the assessee s submission that the 1st respondent is erred in sustaining the levy of penalty under Section 221(1) without considering sufficient cause shown for the belated payment of self assessment tax under Section 140A for the assessment year in question and without assigning proper reasons and that the 1st respondent has failed to appreciate the unreasonable approach of the 3rd respondent in passing the exparte penalty order even though it was brought to his notice and thus there is gross violation of principles of natural justice the impugned order dated 13.10.2015 is set aside and the matter is remitted back to the 1st respondent for passing orders afresh - Decided in favour of assessee by way of remand

Summary

Issues: Challenge to order rejecting cancellation of penalty under Section 221(1) of the Income Tax Act 1961 for Assessment Year 2014-15.

Analysis:
1. The petitioner, a liquor manufacturing company, filed a writ petition under Article 226 challenging the rejection of the plea for cancellation of penalty imposed under Section 221(1) of the Income Tax Act 1961 for the Assessment Year 2014-15.
2. The petitioner disclosed a taxable total income of Rs. 1,92,45,470 for the year ended 31.03.2014, with self-assessment tax of Rs. 65,43,850 remaining payable, leading to penalty proceedings under Section 221(1) triggered by a show cause notice.
3. Despite seeking adjournment, the penalty was levied ex parte by the 3rd respondent on the grounds of non-filing of details and non-payment of self-assessment tax. The petitioner later remitted the due tax amounts.
4. The petitioner argued that the 1st respondent erred in sustaining the penalty without considering sufficient cause for the delayed tax payment, failing to apply the second proviso to Section 221(1) and violating principles of natural justice.
5. The petitioner also contended that the 1st respondent's findings lacked proper reasoning and justification, citing judgments from various High Courts to support their case.
6. The Court, after hearing both sides, found merit in the petitioner's submissions and set aside the impugned order dated 13.10.2015, remitting the matter back to the 1st respondent for fresh orders.
7. The petitioner was granted four weeks to file objections, with directions for the 1st respondent to consider the same and pass orders on merits and in accordance with the law, ensuring due opportunity to the petitioner.
8. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed.