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TMI Blog2020 (3) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... consonance with the amendments carried out in Sec. 140A(3) of the Act w.e.f. 01.04.1989, the Assessing Officer erred in levying the impugned penalty. Thus, on this aspect, we hereby set-aside the order of CIT(A) and direct the Assessing Officer to delete the penalty imposed u/s 140A(3) r.w.s. 221(1) of the Act. - Decided in favour of assessee - ITA No.696/Asr/2017 - - - Dated:- 17-3-2020 - Sh. N.K. Choudhry, Judicial Member And Sh. Anadee Nath Misshra, Accountant Member For the Appellant : Sh. S.K. Vatta, (Ld. CA) For the Respondent : Sh. Charan Dass (Ld. Sr. DR) ORDER PER ANADEE NATH MISSHRA, AM: The instant appeal has been preferred by the Assessees against the order dated 04.09.2017 passed by the learned. CIT(Appeals), Jalandhar u/s 250(6) of the Income Tax Act, 1961 (hereinafter called as the Act ). The assessee has raised the following grounds of appeal. 1. Whether on the facts of the case and in law, in absence of any demand notice issued u/s 156 of the Act and also in view of the fact on record that the Return of Income for the cited Asstt. year 2014-15 was itself declared defective and non est u/s 139(9) of the Income Tax Act by CPC C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, The return of income for A.Y.2014-15 was filed by the appellant on 31.03.2015, which was return u/s 139(4) of the Act, declaring total income of ₹ 85,11,630/- with the following particulars of tax liability. Total Income: ₹ 85,11,630/- Net Tax payable: ₹ 26,30,094/- Less TDS: ₹ 8,40,000/- Balance payable: ₹ 17,90,094/- Interest payable: ₹ 4,24,230/- Total tax interest payable: ₹ 22,14,320/- The sum of ₹ 22,14,320/- was required to be paid u/s 140A before the filing of the return. However, the assessee failed to deposit the tax on the returned income as per 140A of the Act, It has, therefore, been rightly deemed to be an assessee in default u/s 140A(3) of the Act. In response to the show cause notice issued by Ld.AO as to why a penalty u/s 221(1) be not imposed for the above default, the explanation of the assessee in its reply dated 22.07.2016 was that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a sister concern, Kapson Industries Ltd, in A.Y. 2013-14, which refund was more then the tax due u/s 140A and for which a no- objection was also filed from the sister concern. The plea does not held the appellant. All refunds issued by the department are A/c payee and go directly to the bank a/c furnished by an assessee in its return of income and there is no provision to adjust refund of one PAN against the demand in the case of any other PAN. Refund adjustment is possible only against the demand outstanding in the case of the assessee itself. The only course open for the appellant was to withdraw the refund money from the bank a/c of the sister concern and deposit it against the liability payable in its own case. During the year, the appellant has received rental income ₹ 84,00,000/- on which TDS was made @ 10% and also had other income. The argument of paucity of funds thus does not hold good. The assessee has not been able to prove that the default was for good and sufficient reason so as to fall within the proviso to section 221(1) of the Act. Hence, the penalty levied under section 221(1) is upheld. During appeal, Ld. AR could not inform as to how the sums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in view of the legal citations placed on record, which also have summarily been ignored. 4. That the assessee craves to add, modify, alter, delete any grounds of appeal during the course of penalty proceedings. I, N. K. SEHGAL, the appellant do hereby declare that what is stated above is true to the best of my information and belief. 4.1 Further, in the course of appellate proceedings in ITAT, the following papers/documents were filed from the assessee s side. Written submission vide letter dated 10.07.2019 Copy of the order u/s 139(9) of the Income Tax Act by CPC Cell Copy of the reply submissions for notice u/s 221(1) of the Act dated 18th July, 2016. Copy of the no objection to adjust the due refund of the Associate entity dated 18th July, 2016. Written submissions vide letter dated 10.07.2019. 5. At the time of hearing before us, the learned Authorized Representative of the assessee placed reliance on the aforesaid written submissions vide letters dated 22.11.2018 and 10.07.2019. For the sake of reference the relevant portions of the aforesaid written submissions are reproduced as under: Letter dated 22.11.2018. 1) Scope and Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest .Ostensibly, the legislature did not envisage that consequent to the amendment, the default in payment of self -assessment tax would hitherto to be covered by the scope of section 221(1). The emphasis of the revenue is to point out that the nonpayment of self-assessment tax renders the assessee in default in the amended provision which further prescribes that all the provisions of this Act shall apply accordingly and therefore ,the default is hitherto(from 1st April ,1989) covered by section 221(1). the consequence of the aforesaid two expressions contained in section 140A(3) are also not of the type sought to be understood by the revenue, and rather the assessee is to be treated as an assessee in default for the limited purpose of enabling the AO to make recovery of the amount of tax and interest due and not for levy of penalty, an aspect which has been specifically done away in the new provision . Therefore considered in the aforesaid light, the fact that the amended section 140A(3) w.e.f 1st April,1989 does not envisage any penalty for non-payment of self-assessment tax, the AO was not justified in levying the impugned penalty by making recourse to section. 221 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o such order was passed u/s 143(1) or sub section (1) of section 200A of the Act and admittedly no such demand notice u/s 156 of the Act was issued/served on the assessee of any tax, penalty, fine or any other sum payable for the cited Asstt. Year 2014-15. ii) The aforesaid arguments plea of the assessee that there was no order u/s 143(1) not valid demand notice u/s 156 of the Act was not found sustainable in terms of opening para at page 7 of 9, of the orders of the worthy CIT (Appeals). iii) As regards provisions of section 156 of the Act vis a vis absence of valid demand, reliance is placed on the decision of the Hon'able Supreme Court in the case of Sri Mohan Wahi vs Commissioner of Income Tax as reported in (2000) 248 ITR 922 (SC) at Page 7 of 8 of the judgement, wherein the Hon'able Supreme Court have held ; In the present case, the plea as to non-service of demand notice having been raised the High Court, in our opinion the High Court should not have adopted too technical a approach by refusing to deal with the plea because it was not raised in the manner in which the High Court thought it should have been raised. The plea went to the root of the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same with Sec. 221(1) of the Act, the action of the Assessing Officer in imposing penalty is quite justified. In sum and substance, it is sought to be emphasised on the strength of Sec. 221(1) of the Act that the penalty is leviable so long as the default is in the nature which renders the assessee as an assessee in default for payment of tax. Sec. 221(1) of the Act prescribes for penalty when assessee is in default in making the payment of tax. On the face of it, the argument of the Revenue appears to be justified, so however, the same does not merit acceptance if one examines the issue in slight detail. Notably, the penalty envisaged Sec. 140A (3) in the unamended provision was on the statute alongwith the penalty envisaged u/s 221 of the Act. Once Sec. 140A(3) of the Act has been amended w.e.f. 01.04.1989, as we have seen earlier, there is no amendment of Sec. 221 of the Act and it continues to remain the same. What we are trying to emphasise is if the piea of the Revenue is to be accepted, based on the amendment to Sec. 140A(3) of the Act, it would mean that prior to 01.04.1989 the same default invited penai provisions under two sections, namely, Sec. 140A(3) as well as Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w.s. 221(1) of the Act. Now, therefore, in view of the aforesaid facts, and in law as per relevant provisions and legal citations as relied upon, the assessee respectfully request and pray for due grant of relief as prayed. 6. At the time of hearing before us, the learned Authorized Representative of the assessee drew our particular attention to order of Co-ordinate Bench of ITAT, Mumbai in the case of Heddle Knowledge Pvt. Ltd. vs. Income Tax Officer [2018] 169 DTR 396 (Mum) and contended that the issue in dispute is squarely covered in favor of the assessee by this decision. 7. On the other side, the learned Departmental Representative relied upon the orders of the learned CIT(A) and the Assessing Officer dated 04.09.2017 28.07.2016. However, he did not dispute the contention of learned Authorized Representative of the assessee, that issue in dispute is squarely covered in favour of assessee by aforesaid order in the case of Heddle Knowledge Pvt. Ltd. vs.ITO (supra). 8. We have heard both sides and perused the material available on record. We find that the issue in dispute in the present appeal before us is squarely covered by the aforesaid order of Co-ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec. 221(1) of the * Act. Before parting, we may again emphasise that Sec. 221 of the Act remains unchanged, both during the pre and post amended Sec. 140A(3) of the Act and even in the pre-amended situation, penalty u/s 221 of the Act was not attracted for default in payment of self-assessment tax , which was expressly covered in pre 01.04.1989 prevailing Sec. 140A(3). Thus, without there being any requisite corresponding amendment to Sec. 221 of the Act in consonance with the amendments carried out in Sec. 140A(3) of the Act w.e.f. 01.04.1989, the Assessing Officer erred in levying the impugned penalty. Thus, on this aspect, we hereby set- aside the order of CIT(A) and direct the Assessing Officer to delete the penalty imposed u/s 140A(3) r.w.s. 221(1) of the Act. 9. At the time of hearing before us, neither side has brought any distinguishing facts or circumstances or legal provisions to our notice to persuade as to take a view different from the view taken by Co-ordinate Bench of ITAT Mumbai in the aforesaid case of Heddle Knowledge Pvt. Ltd. vs. ITO (supra). There is no dispute between the two sides that the issue as raised in the present appeal is squarely covered in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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