9911796707
TMI Blog1991 (9) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act, 1961 ? (2) Whether there was material for the Tribunal to sustain the levy of penalty of Rs. 2,24,620 in view of the fact that there was paucity of funds for payment of the tax which was a reasonable cause ?" The petitioner filed his returns for the assessment year 1984-85 on January 24, 1985. He paid only part of the tax due along with the returns of income. The Income-tax Officer, therefore, issued a show-cause notice dated July 29, 1985, requiring the petitioner to show cause why penalty under section 140A(3) of the Act should not be imposed. The assessee gave a reply in which it was submitted that, due to increase in the auction amount of kist, it was put in financial difficulties. It was submitted that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned. We heard Sri P. Balachandran for the assessee and Sri P. K. R. Menon for the Revenue. The Appellate Assistant Commissioner found that the assessee had sufficient liquid funds, but it was utilising the same for payment of kist dues and for taking part in the arrack shop auction for carrying on its business and paucity of funds was precipitated. The Tribunal, as a matter of fact, found that the assessee had utilised the funds for advancing funds to its sister concerns instead of remitting the tax. As on April 1, 1983, the amount advanced to Sri. K. Sreedharan and Company, a sister concern, itself was more than Rs. 58 lakhs. Therefore, the difficulty for funds arose, according to the Tribunal, because the assessee had diverted the avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x. In CIT v. Chembara Peak Estates Ltd. [1990] 183 ITR 471, this court examined a like case wherein this court held that imposition of penalty cannot be an automatic consequence of default in payment of tax. Therein, this court examined the decision in Bhauram Jodhraj Properties (P) Ltd. v. CIT [1977] 108 ITR 305 (Gauhati), wherein the plea that there was shortage of liquid cash because the assessee had invested the same in heavy construction work was not accepted as sufficient ground. Similarly, in Juggilal Kamlapat Cotton Spg. and Wvg. Mills Co. Ltd. v. CST [1979] Tax LR 1773, the Allahabad High Court held that diversion of sales tax realised to a sister concern will not constitute a reasonable ground. Ultimately, this court held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
