9911796707
TMI Blog1983 (11) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... er contested question dealing with 80J, the matter was sent back to the ITO. A recovery certificate being issued to the assessee, the entire amount was collected by the ITO by 18th June, 1981. The ITO thereafter issued a show-cause notice for levy of penalty under s. 221 on 30th June, 1981 and rejecting the points raised by the assessee in his letter dt. 9th July, 1981 levied a penalty under s. 22 of Rs. 1,00,000 for non-payment of the amount outstanding of Rs. 10,02,321. On appeal, the CIT(A) reduced the penalty to Rs. 10,000. Hence the appeal before the Tribunal. In making the above reductions, the CIT (A)had regard to the fact that when the assessee was prepared to pay the undisputed tax that extent, he could not be regarded as a default ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctionist stand on the part of the assessee. The legal point made out also in the light of the explanation to s. 221 not acceptable. 4.On a consideration of the facts, we see no justification to levy the penalty. The Commissioner dismissed the legal objection raised by the assessee by referring to the explanation to s. 221 which provided that "an assessee shall not cease to be liable to any penalty under this sub-section merely by reason for the fact that before the levy of such penalty he has paid the tax. "It would appear that the explanation justified a penalty even after the demand of the tax. In our view, this interpretation is brought out with unlimited difficulties. If the explanation means that wherever an assessee has delayed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of s. 221 is to coerce a recalcitrant obstructionist assessee to pay the normal tax. We have our own doubts whether in any serious cases of doubts regarding the quantity of tax to be collected, s. 221 can be applied even where the assessee is financially sound. In the present case the assessee offered to pay the undisputed tax but ITO refused to collect it by not giving a challan for the same. It is not merely the demands of tax but interest and other items which have swelled up the demand. The penalty levied covers these other demands and even though the Commissioner has deleted some portion for this reason, that the ITO made no difference between the various types of demands is clear. The assessee was asking for stay of collection allegi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a further power to levy the penalty even after the tax is paid. This has two aspects: firstly, penalty generally is leviable for a default. Having paid the amount (even collection by coercion would be covered by this) in law it would be incorrect to say that the assessee was in default. The assessee might have been in default earlier but at the time when the penalty was levied certainly, he was not in default of non-payment of any tax. Secondly, what was the purpose of levying the penalty). A punishment is made for deterrent effect on the person who commits a crime or default or on other but in a case like the present one where the person has already paid the tax due, what deterrent effect can it have either on him or on others. We have t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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