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TMI Blog2025 (3) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... o any penalty merely by reason of the fact that before the levy of such penalty he has paid the tax. Therefore, in view of the express provisions of section 221(1) of the Act, we do not find any merits in the submissions of AR that till the levy of penalty u/s 221(1), the assessee has made partial payment of tax on various occasions, which were not considered by the AO. During the hearing, apart from reiterating the submissions made before the lower authorities, AR did not bring any material on record to show that the exercise of discretion by the AO to levy a penalty at 100% of the amount of tax in arrears is not as per the provisions of the Act. Further, in light of the income declared by the assessee in his return of income for subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g financial difficulty during the period when the demand was payable and there was reasonable cause for failure on the part of the assessee and penalty was not leviable. 3. The Ld CIT(A), NFAC, erred in not considering the fact that Ld AO had imposed penalty without considering the payment of Rs. 12, 40, 000/- made before the date of passing of the impugned penalty order. 4. The Ld CIT(A), NFAC, erred in not appreciating that the Ld Assessing Officer was not justified in imposing penalty equivalent to the amount of outstanding demand though he had the discretion to impose penalty at any amount between Rs. 1/- to Rs. 1, 21, 24, 070/-. 5. The Ld CIT(A), NFAC, erred in sustaining the order of penalty in respect of the demand on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng tax demand of INR 1, 21, 24, 070. In response to the show cause notice dated 13/09/2017, the assessee submitted that he had no money to make the payment of the entire amount of tax liability. Disagreeing with the submissions of the assessee, the Assessing Officer ("AO"), vide order dated 13/11/2017 passed under section 221(1) of the Act, noted that the assessee has sufficient income in his income tax returns filed after the assessment year 2008-09 from which the payment of outstanding demand could have been made. The AO further held that however the assessee despite having sufficient income chose not to pay the outstanding tax demand even after the lapse of almost 9 years. Accordingly, the AO levied a penalty of INR 1, 21, 24, 070 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. As per the assessee, he is in financial difficulty and has no money to make the payment of the entire amount of tax liability, therefore, he could not make the payment of the tax due at the time of filing the return of income. 7. During the hearing, the learned Authorised Representative ("learned AR") by referring to the provisions of section 221(1) of the Act submitted that the maximum amount of penalty that can be levied under this section is the amount of tax in arrears. Thus, the AO is expected to examine the facts and circumstances before levying the penalty under section 221(1) of the Act. However, in the present case, the AO did not consider the good and sufficient reasons available with the assessee to make the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsecured loan instead of paying the due tax amount to the Government. Further, we find that as per the Explanation to section 221(1) of the Act, the assessee shall not cease to be liable to any penalty merely by reason of the fact that before the levy of such penalty he has paid the tax. Therefore, in view of the express provisions of section 221(1) of the Act, we do not find any merits in the submissions of the learned AR that till the levy of penalty under section 221(1) of the Act, the assessee has made partial payment of tax on various occasions, which were not considered by the AO. During the hearing, apart from reiterating the submissions made before the lower authorities, the learned AR did not bring any material on record to show th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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