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TMI Blog2010 (1) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee that in all such cases where the assessee proves to the satisfaction of Assessing Officer that the default, if any, was for good and sufficient reason, no penalty is leviable under the section - The Jt. CIT, Kurukshetra had granted the instalments to the assessee to pay the demand on 16-3-2009 and 25-3-2009. The assessee thus could not be held to be in default on 16-3-2009 i.e., the date on which the instalments were granted by the Jt. CIT - Thereafter, the assessee had filed an application for further stay of the demand as it was under the bona fide belief that it is entitled to substantial relief before the CIT (Appeals) where the appeal of the assessee was being adjudicated Find no justification in the order of the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(3) of the IT Act creating a demand of Rs. 1,60,84,670, out of which Rs. 67,59,460 was adjusted against the refunds due to the assessee. The assessment was completed vide order dated 24-12-2008. The Assessing Officer issued notice under section 221(1) dated 4-2-2009 for the recovery of the balance demand of Rs. 1,09,88,280 and the matter was fixed for hearing on 16-2-2009. In response, the assessee filed an application for stay of demand before the Assessing Officer, which was rejected on 18-2-2009. On 26-2-2009, a sum of Rs. 16,63,070 was further adjusted against the balance demand due on 16-2-2009 and the balance payable by the assessee was Rs. 93,25,210. The assessee meanwhile moved an application before the Jt. CIT for stay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative before the CIT(A) that section 220(5) of the Act analyses the default of the assessee, but does not empower the Assessing Officer to impose penalty without giving notice in this regard. It was also pointed out by the learned Authorised Representative for the assessee that the quantum appeal was heard on 17-3-2009 and the remand report was awaited from the Assessing Officer and after the appeal effect, the demand would be substantially reduced. The CIT(A) held that in the case of the assessee more than 42 per cent of the demand was paid and the application for stay of demand was summarily rejected by the Assessing Officer holding it to be filed beyond the time allowed under section 221(1) of the Act. The CIT(A) also considered the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was required to be levied in the case. The assessee (sic Revenue) is in appeal against the said deletion of penalty levied under section 221(1) of the IT Act. 5. Mr. R.K. Meena appeared for the Revenue and Shri S.K. Mukhi along with Ms. Jyoti appeared for the assessee. 6. We have heared the rival contentions and perused the records. Under the provisions of section 221(1) of the IT Act, where an assessee is held to be in default or is deemed to be in default in making the payment of taxes, he shall be liable to pay penalty of such amount as the Assessing Officer may direct and in case of continuing defaults, such further amounts as the Assessing Officer may, from time to time, direct. However, the total amount of penalty would not excee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see thereafter moved an application before the Jt. CIT, Kurukshetra on 24-2-2009 and instalments of Rs. 10 lakhs each payable on 16-3-2009 and 25-3-2009 were granted. Meanwhile, the appeal against the quantum addition were finally heard on 13-3-2009 by the CIT(A) and a remand report was called for. The assessee moved another application dated 16-3-2009 before the Jt. CIT requesting for stay of demand as the appeal had been heard and various additions were likely to be struck down. The Jt. CIT endorsed the said application to the Assessing Officer on 17-3-2009 with the direction to take necessary action as per law. The Assessing Officer passed an order dated 18-3-2009 holding the assessee to be in default in respect of the whole of the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2009 and 25-3-2009. The assessee thus could not be held to be in default on 16-3-2009 i.e., the date on which the instalments were granted by the Jt. CIT. Thereafter, the assessee had filed an application for further stay of the demand as it was under the bona fide belief that it is entitled to substantial relief before the CIT (Appeals) where the appeal of the assessee was being adjudicated. Under the circumstances we find no justification in the order of the Assessing Officer holding the assessee to be in default under section 221(1) of the Act vide order dated 18-3-2009. We are in conformity with the order of CIT (Appeals) in deleting the penalty levied under section 221(1) of the Act. The ground of appeal raised by the Revenue to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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