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TMI Blog2014 (11) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with the provisions of s. 140A(1) is "deemed to be an assessee in default in respect of the tax or interest or both remaining unpaid" as per the statutory provision of s. 140A(3). The provision of s. 140A(3) further provides that in case the assessee is deemed to be in default, all the provisions of this Act shall apply to the case of the assessee. The provisions of s. 221 providing for penalty payable when tax is in default applies to both the situations, i.e., when assessee is in default in respect of the assessed tax or is deemed to be in default in making the payment of tax under "self-assessment tax" as per the return of income filed by the assessee - "Self-assessment tax" has to be calculated on the basis of the return filed by the assessee for the relevant assessment year and paid to the credit of the Government suo moto before furnishing the return of income and the return of income shall be accompanied by proof of payment of such tax and interest as per the statutory provisions of s. 140A(1) and there is no requirement of issue of notice of demand u/s. 156 by the Assessing officer for making such payment of tax and interest of the "self-assessment tax" before fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of filing their return. The assessee was therefore directed to pay the taxes overdue within 3 days from the date of receipt of letter dated 1/11/2012 which was received by the assessee on 2/11/2012 . However, the said letter was not complied with and therefore, the assessee is deemed to be an assessee in default as per the provisions of section 140A(3) of the I.T. Act in respect of the outstanding amount of self assessment tax of ₹ 92,01,650/- for the assessment year 2012-13. The Assessing officer issued notice under section 221(1) r.w.s. 140A(3) of the Act, which was served upon the assessee intimating that the assessee is deemed to be an assessee in default and to show cause as to why penalty u/s. 221(1) of the Act should not be levied for failure to pay self assessment tax for A.Y. 2012-13. The date of compliance was fixed on 3.12.2012. On the date of hearing before the Assessing officer, a representative from the company attended, and stated that the assessee has been facing certain financial difficulties and that the payment would be paid in a week's time. No written submissions were made nor any evidence in support of their contention was submitted for considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent) Act, 1987 with effect from 1-4-1989. Attention is invited to the provision of section 140A(3) as at stood immediately before the said amendment effective from 1-4-1989 which is as follows: If any assessee fails to pay the tax or any part thereof in accordance with the provisions of sub-section (1), two percent of such tax or part thereof, as the case may be shall be recovered from by way of penalty for every month during which the default continues . 7. The provision of section 140A(3) after the amendment is also given below. If any assessee fails to pay the whole or any part of such tax or interest or both in accordance with the provisions of sub-section (1), he shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of the tax or interest or both remaining unpaid, and all the provisions of this Act shall apply accordingly. 8. He submitted that from the above amendment it can be concluded that the parliament intend to withdraw the penalty specifically provided u/s. 140A(3) in view of the simultaneous insertion of Section 234A, 234B, 234C in the Income Tax Act, providing for payment of penal inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to pay before furnishing the return, tax together with interest payable under any provisions of the Act for delay in furnishing the return or any default or delay in payment of advance tax. Proof of payment of such tax and interest is to be attached with the return. Further, an Explanation has been inserted in the said sub-section (1) to clarify that where the assessee pays only part of, the amount due at the time of filing the return, such payment shall first be adjusted towards interest payable, and balance, if any, shall be adjusted towards the tax payable. 4.17. The old provisions of sub-section (3) of the section provided for levy of penalty for non-payment of self-assessment tax. Since the rate of mandatory interest for failure to pay the tax has not been increased, it is not necessary to retain this provision any more. The Amending Act, 1987, has accordingly, omitted the said sub-section (3). ' 12. According to the Ld. AR, from the above it is clear that the view of the department is not to impose penalty since the penalty is taken care under sections 234A, 234B, 2324C. It is to be noted that this circular being beneficial is binding on the department and henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 which was as per the return of income filed by the assessee showing the tax liability of ₹ 92,01,650. Although the return has been filed in time, the amount of tax, as worked out by the assessee themselves, could not be remitted in time. Here, the immediate issue is not relating to any dispute regarding the demand of ₹ 92,01,650/-. It is only relating to the payment of such demand where the assessee as submitted that because of financial difficulties and other problems they could not remit the same. Further, section 140A(3) deals with any failure on the part of the assessee to pay the whole or any part of such tax or interest or both in accordance with the provisions of sub-section 1 shall be deemed to be an assessee in default, in respect of the tax or interest or both remaining unpaid and all the provisions of this Act shall apply accordingly. It is amply clear that any failure in payment of either a part or the whole of the amount of tax payable on the basis of return filed u/s. 139 of the Act, shall attract the provisions where the assessee shall be deemed to be an assessee in default. The Ld. DR submitted that: 1. The assessee has filed the return of income u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or any part of such tax or interest or both in accordance with the provisions of sub-section (1) of sec. 140A of the Act, he shall be deemed to be an assessee in default, in respect of tax or interest or both remaining unpaid and all the provisions of this Act shall apply accordingly. The assessee in this case has admittedly failed to pay the admitted tax amount of ₹ 92,01,650/- which is admitted tax and interest. The provisions of sec. 221 will come into force if the assessee fails to explain the reasonable cause as provided u/s. 273B of the I.T. Act for not depositing the tax in time with the Government by the assessee and therefore, the penalty u/s. 221 of the Act ought to be imposed by the Assessing officer. The assessee is not able to point out any reasonable cause for not depositing the admitted tax with the Government. The assessee made a plea before us that there is no demand notice u/s. 156 of the I.T. Act served upon the assessee so as to make payment by the assessee. Section 156 of the Act reads as under: when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing officer shall serve up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The liability to pay self-assessment tax arises on the assessee on the basis of the return of income furnished by it and the failure to pay the whole or any part of such interest or tax payable in accordance with provisions of s. 140A(1), renders the assessee to be in default in respect of tax or interest or both remaining unpaid as per the statutory provision of s. 140A(3). The tax, interest, or any other sum found payable in accordance with the assessment or any other order passed by the Assessing officer under the provisions of the Act, are treated differently and in such case a separate notice of demand on the prescribed form has to be served by the Assessing officer upon the assessee specifying the sum so payable in accordance with the provision of s. 156. In this case, the amount found payable by the assessee is in accordance with the return of income furnished by the assessee for the relevant assessment year and so payable as self-assessment tax under the statutory provision of s. 140A(1) and the IT Act, 1961 nowhere provides for issue of any notice of demand u/s. 156, in case the amount of tax or interest is found payable on the basis of return furnished by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be accompanied by proof of payment of such tax and interest as per the statutory provisions of s. 140A(1) and there is no requirement of issue of notice of demand u/s. 156 by the Assessing officer for making such payment of tax and interest of the self-assessment tax before furnishing the return of income by the assessee. In this view of the matter, the penalty u/s. 221 was rightly levied on the assessee. 21. The assessee has further made a claim that there is provisions of sections 234A, 234B and 234C to take care of the loss to the Revenue on non payment of tax in time and being so, there is no necessity to levy penalty u/s. 221 of the I.T. Act and he also tried to compare the pre-amended provisions of sec. 140A(3) with the amended provisions of sec. 140A(3) so as to state that as per the new amended section 140A(3), the assessee cannot be considered as deemed to be in default and being so, the assessee cannot be fastened with the liability of penalty. The argument of the Ld. Counsel for the assessee is devoid of merits as sec. 140A(3) is to be read with sec. 221 of the I.T. Act and which empowers the Assessing officer to levy penalty when there is a failure on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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