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TMI Blog2014 (1) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the ld. CIT(A) has erred in partially sustaining the penalty of Rs. 3,28,407 against the penalty levied by the A.O. of Rs. 16,42,037 although the assessee had established good and sufficient cause for non- imposition of penalty. 2. On the facts and in the circumstances of the case I the lei. CIT (A) has erred in holding that the A.O. was justified in including interest chargeable u/s 234B and 234C while imposing penalty although tax is defined u/s 2(43) of the Act means income tax chargeable under the provisions of the Act and does not include interest and penalty." 2. The facts, apropos the levy of penalty under section 221 of the Act are that, the assessee is a partnership firm engaged in the business of civil construction and real estate developer. It has filed its return of income from 29th October 2007, declaring total income of Rs. 47,15,420. In the course of the assessment proceedings, the Assessing Officer noted that the assessee has not paid the self assessment tax along with the interest before filing of the return of income in view of the provisions of section 140A. Accordingly, the Assessing Officer issued show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as was raised before the Assessing Officer. It was further submitted that due to business exigencies beyond the control of the assessee and lack of funds, the assessee could not pay the self assessment tax. Even without receiving any intimation or notice from the Department, the assessee paid the self assessment tax on 11th February 2008 i.e., after three months. Regarding the liquidity crunch, the assessee submitted that almost all its funds were parked in the construction work and the project work in progress was at Rs. 7.27 crores. Besides this, the assessee has also made advance for the future development of the property to the extent of Rs. 70.20 lakhs. At the time of filing of the return of income, the assessee did not had sufficient funds to immediately pay the self- assessment tax. Accordingly, there was a reasonable cause and default for non-payment of self-assessment tax was due to bonafide reasons. Therefore, in view of the second proviso to section 221, penalty should not be levied. Alternatively, it was also submitted that the Assessing Officer has levied 100% penalty looking to the fact that in the past, the assessee has never defaulted in complying with the payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner (Appeals) held that the provisions of the Act are very clear and they are consequential. However, the learned Commissioner (Appeals) reduced the quantum of penalty to 20% and restricted the penalty at Rs. 3,28,407 on the ground that the assessee has paid the entire self assessment tax with the marginal delay of three months and that the assessee has never been at default earlier and this was the first time default. 7. Before us, the learned Counsel, Mr. K.K. Lalkaka, on behalf of the assessee, reiterating the explanation and the submissions made before the authorities below, submitted that the assessee actually did not had any sufficient funds to pay the self assessment tax at the time of filing of the return of income. Immediately, when the assessee had the funds, he deposited the same to the Government exchequer in three months. He also reiterated that the assessee has never defaulted for payment of tax either self assessment or assessed tax in the earlier years or in the subsequent years. The assessee has even deposited the penalty amount. The intention of the assessee was never to delay the self assessment tax purposely, but it was due to extreme business exigencies and l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be paid together with the interest payable before furnishing of the return of income. Not only that the assessee has to furnish the proof of payment accompanied with the return of income. Section 221 provides for levy of penalty along with arrears of tax and the amount of interest payable under sub-section (2) of section 220 where the assessee is in default in making payment of tax. The second proviso to section 221, provides discretion to the Assessing Officer that if the assessee proves to the satisfaction of the Assessing Officer that the default was for good and sufficient reasons then, in that case, no penalty shall be levied under section 221. It is undisputed fact that the assessee had not paid the self assessment tax before the filing of the return of income on 29 th October 2007, wherein the admitted tax liability was Rs.15,87,211 along with the interest under section 234B. The assessee's case has been that at the time of filing of return of income, the assessee did not have sufficient fund for paying the self assessment tax. This has been demonstrated through various closing balances of the bank accounts as on 31st October 2007. The learned Commissioner (Appeals) too has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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