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TMI Blog2014 (2) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... [1974 (1) TMI 8 - CALCUTTA High Court] - interest cannot be held to be 'additional tax'. Unless the assessee is or is deemed to be in default in making a payment of "tax", as defined in section 2(43) of the Act, which means that he is in default or in deemed default in payment of income-tax chargeable under the provisions of the Act or super-tax chargeable under the provisions of the Act, depending upon the assessment year in question, there could be no levy of penalty under section 221(1) - Advance tax would fall within the ambit of tax - The position here is different as it relates to interest and not advance tax and, therefore, no benefit can be derived by the revenue – Decided against Revenue. - ITA No.283 of 2009 (O&M) - - - Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and on fact in deleting the penalty amount of Rs. 11,50,000/- without considering the Explanation 1 to section 140A(3) of the IT Act, 1961 which clearly stipulates that where the amount paid by the assessee falls short of tax and interest, the amount of tax so paid shall be adjusted towards interest payable and the balance towards the tax payable?" 2. Briefly, the facts necessary for adjudication of the controversy involved, as narrated in the appeal, may be noticed. The assessee firm filed its return of income for the assessment year 2004-05 on 31.10.2004 showing total income of Rs. 3,33,29,720/-. There was a note given in the return that interest under sections 234B and 234C of the Act was liable to be waived. It was also stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-05 and therefore, the Assessing Officer and the CIT(A) had rightly imposed the penalty on the assessee. Support was drawn from judgment of the Kerala High Court in E.K. Varghese v. ITO [1974] 96 ITR 577. 4. Controverting the submissions made by learned counsel for the revenue, learned counsel for the assessee relied upon judgments in Shreeniwas Sons v. I.T.O., (1974) 96 ITR 562 (Calcutta) and CIT v. P.B.Hathiramani, (1994) 207 ITR 483 (Bombay) to submit that no penalty under Section 221(1) of the Act could be levied where there was default in making the payment of interest. According to the aforesaid provision, where there was default in deposit of tax, only then penalty was leviable. Reference was also made to CBDT circular/not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of this Act, and in relation to any other assessment year income tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date." The tax, penalty and interest are different concepts under the Act. The definition of 'tax' under Section 2(43) of the Act does not include penalty or interest. Similar view was taken by the Calcutta High Court in Shreeniwas Sons case (supra) wherein it was noticed that interest cannot be held to be 'additional tax'. 9. The Bombay High Court in P.B. Hathiramani's case (supra), applying the principles as laid down in Shreeniwas Sons case (supra) interpreted the provisions of section 221(1) with section 2(43) of the Act as under: 4. A bare reading of this provision s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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