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TMI Blog2017 (8) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... MAHARISHI, A . M . 1. These are the appeals filed by the assessee and revenue against the order of the ld CIT (A)-XXXI, New Delhi dated 31.12.2013 for the Assessment Year 2008-09. 2. The assessee has raised the following grounds of appeal:- 1 . The learned CIT ( A ) erred in law and facts upholding penalty u / s 140A ( 3 ) of IT Act 1961 . 3. The revenue has raised the following grounds of appeal:- 1 . On the facts and the circumstances of the case the ld CIT ( A ) has erred in restricting the penalty from Rs . 1,13,41,820 /- to Rs . 1800000 /- u / s 140A ( 3 ) of the Act . 4. The only ground of appeal of the assessee is that the ld CIT(A) has confirmed the penalty u/s 140A(3) of the Income Tax Act, 1961 of ₹ 18 lakhs for nonpayment of self-assessment tax. 5. The brief facts of the case is that the appellant has filed its return of income for Assessment Year 2008-09 on 30.08.2010 where self assessment tax of ₹ 11341820/- was payable. This tax was paid along with interest. Further as the same was not paid at the time of filing of return of income then the Assessing Officer issued show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in the case of Rakesh Kumar Garg and find that the Tribunal has elaborately discussed the provisions of concerned sections and issue in detail . For the sake of clarity, the relevant portion of the aforesaid order is reproduced below :- 18 . At the very outset, we find it appropriate to deal with the legal issue emerge from paragraph no . 3 . 6 of the impugned order, wherein the CIT ( A ) has observed that it is possible that provision of section 292B of the Act would cover such inadvertent mistakes in quoting the correct section of the Act as the appellant had participated in the proceedings without raising any objection . On this issue from the penalty notice vide dated 23 . 11 . 2011 ( as reproduced hereinabove in para 14 of this order ) and penalty order dated 31 . 05 . 2012 ( as reproduced hereinabove in para 16 of this order ) , it is apparent that the AO show caused the assessee as to why a penalty u / s 140A ( 3 ) should not be imposed upon him for not complying with the provisions of section 140A ( 1 ) of the Act . From operative part of the penalty order para 6, it is also clear that the AO imposed penalty with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed the amount of tax in arrears : Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard : Provided further that where the assessee proves to the satisfaction of the AO that the default was for good and sufficient reasons, no penalty shall be levied under this section . Explanation For the removal of doubt, it is hereby declared that an assessee shall not cease to be liable to any penalty under this sub - section merely by reason of the fact that before the levy of such penalty he has paid the tax . ( 2 ) Where as a result of any final order the amount of tax, with respect to the default in the payment of which the penalty was levied, has been wholly reduced, the penalty levied shall be cancelled and the amount of penalty paid shall be refunded . 20 . As we have already noted that there is no provision or procedure in section 140A of the Act for imposing penalty for default in payment of due tax and from the language of provision of section 221 of the Act, it is exfacie that sub section ( 1 ) provides that when the assessee is in default or is deemed to be in def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding a reasonable opportunity of being heard to the assessee and if assessee succeeds to prove to the satisfaction of the AO that the default was for good and sufficient reason then no penalty shall be levied on the assessee u / s 221 of the Act . In the light of legal provision if assessee has not been show caused u / s 221 of the Act then it is a clear violation of mandatory provision of first proviso to section 221 ( 1 ) of the Act and when assessee has not been show caused u / s 221 of the Act then it cannot be presumed that the assessee was given an opportunity to discharge the required onus incumbent upon him to prove to the satisfaction of the AO that the default was for good and sufficient reason as required per second proviso of the Act . Thus, in our humble opinion if the notice for initiation of penalty proceedings to the assessee has not been issued u / s 221 of the Act and that too the penalty order has also not been passed u / s 221 of the Act then this mistake is not covered under the umbrella of provisions of section 292B of the Act . 23 . Coming to the merits of the case from the penalty order, we note that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee for non payment of tax at the time of filing of return . 25 . At this juncture, we respectfully take cognizance of the order of the Hon ble High Court of Delhi dated 12 . 08 . 2013 in assessee s own case i . e . ITA No . 384 / Del / 2013 ( supra ) , wherein the Hon ble High Court upheld the conclusion of the Tribunal which directed the CIT ( A ) to hear the first appeal of the assessee on merits . The relevant operative part of the order of Hon ble High Court reads as under : Tribunal in the impugned order has found and held that there was a financial constraint faced by respondent assessee . Therefore, he took time to arrange for money but the said amount was duly paid before the appeal was dismissed by the first appellate authority . It has been held that the appeal should have been treated as validly filed on the date when the tax amount was paid . Tribunal also examined the question whether delay in filing of the first appeal should be condoned in view of the factual position . After examining the factual matrix, Tribunal condoned the delay and directed CIT ( Appeals ) to hear the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that he had paid entire amount of tax arrears before levy of penalty meaning thereby there was no amount of tax remained unpaid against the assessee when the penalty order was passed by the AO . 28 . To sum up, we are inclined to hold that the no penalty notice was issued to the assessee u / s 221 of the Act and the penalty order was also not passed u / s 221 of the Act and there is no penalty provision u / s 140A of the Act and the AO misunderstood the relevant provision of the Act while issuing notice and imposing penalty against the assessee . Consequently the assessee was also not provided due opportunity of hearing prior to imposing penalty u / s 221 of the Act as required by first proviso to section 221 ( 1 ) of the Act and at the same time the assessee was also denied opportunity of hearing to discharge its onus and to show good and sufficient cause for non payment of tax at the time of filing of return as required second proviso to section 221 ( 1 ) of the Act to avoid penalty, which is also a clear violation of the mandatory provisions of the Act by the AO and thus, penalty order cannot be held as in accordance with law and sus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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