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TMI Blog2008 (2) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee had paid self-assessment tax of only Rs. 7,50,000. The return was processed under section 143(1) on 22-1-2001 and demand of Rs. 30,52,501 created (tax plus surcharge of Rs. 25,32,153 with interest under section 234B at Rs. 3,79,815 and under section 234 C at Rs. 1,40,533). The assessee was unable to pay the aggregate demand. The sum of Rs. 7,50,000 had been paid by the assessee earlier leaving balance demand of Rs. 23,02,501 as outstanding. A request had been made to the Assessing Officer for granting installments. The assessee had made the payments of Rs. 23,00,000 from 16-11-2000 to 4-3-2002 as per the details contained in para 2 of the Commissioner of Income-tax (Appeals) order. The Assessing Officer initiated penalty proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the speech of the Finance Minister assuring the house that instructions will be issued to officers that wherever it is justifiable, no penalty should be imposed. The Commissioner of Income-tax (Appeals) has, after taking into account financial difficulties of the assessee in making the payment, the time extended by the ITO for making the payments, the circular of the Board and various judicial decisions held that it was not a fit case for imposition of penalty under section 221. The Commissioner of Income-tax (Appeals) has further made reference to various other cases where the Assessing Officer has not imposed penalty under similar circumstances. The Commissioner of Income-tax (Appeals) has also pointed out that this is perhaps a first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of taxes before 30-1-2002 and therefore there was no default in making the payments. It was contended that technically there was delay in making the payments but the delay was covered by reasonable cause and therefore the Commissioner of Income-tax (Appeals) was justified in deleting so. 6. In regard to the payment of interest our attention was invited to section 221 of the Act, which provides for imposition of penalty in the event of default for making the payment of taxes. According to the ld. Counsel for the assessee no penalty has been provided for the delay in making the payment of interest levied under the Act. Reliance was placed on the decision of Delhi Bench of the Tribunal in the case of ITO v. Devsons (P.) Ltd. [2008] 113 TTJ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in default. Technically section 221 is attracted in this case in so far as there is a delay in making the payment of taxes by the assessee. So however it is well-established principle of law that penalty under the provisions of Act is not automatic. The Assessing Officer has got the discretion to impose or not to impose the penalty depending upon the facts and circumstances of each case. The discretion vested with the Assessing Officer has to be exercised judicially and not arbitrarily. The assessee had expressed its difficulties in making the payment of taxes and the Assessing Officer had extended the time to the assessee for making the payment of taxes and interest presumably keeping in view such difficulties. The Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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