TMI Blog2011 (3) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... R R.S. Padvekar: Both these appeals are filed by the assessee challenging the impugned order of the Ld. CIT (A)-8 Mumbai dated 11.6.2009 for the A.Y. 2007-08 and 2008-09. Both these appeals are arising out of the penalty levied by the A.O. u/s.221(1) of the Income-tax Act for the non-payment of the due tax by treating the assessee in default. The assessee has taken the identical grounds in both the appeals and the facts are also identical. Hence, both these appeals are disposed off by this common order for the sake of convenience. 2. The A.O. levied the penalty u/s.221(1) of the I.T. Act of Rs. 2.82 crores for the A.Y. 2007-08 and Rs.1.98 crores for the A.Y. 2008-09. The facts which revealed from the record are as under. The assesseecompany is engaged in the business of reality and civil construction. So far as assessment year 2007-08 is concerned, the due date of filing of the return was 30.11.2007. The assessee did not pay any advance tax for the A.Y. 2007-08. The survey action u/s.133A was conducted in the business premises of the assessee-company. In the course of the survey action, audited accounts of the company for the financial year ending 31.3.2007 were foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee approached to the Ld. CIT (A)-VIII Mumbai for lifting or canceling the order passed u/s.281B but the same was also rejected and the Ld. CIT (A) informed the assessee that if any proposal of the sale of the flats is filed then the said proposal would be cleared immediately. Finally, the A.O. levied the penalty at 5% u/s.221(1) of the Act of the total tax due as per original returns filed. The challenged penalty orders before the Ld. CIT(A). The assessee relied on the decision of Hon'ble Supreme Court in the case of D.M. Malani 174 Taxman 263 and submitted that though the assessee is having the huge assets but the assessee is not in a position to liquidate the same. At the first instance, for the reason that the reality Estate was in crisis and substantial money of the flat booking was refunded to the buyers there was mass cancellations of booking and secondly, as the Department has issued the Prohibitory Order u/s.281B that also created the problem as prospective buyers kept distance from the assessee-company for buying the flats in it's projects. Hence, it would not be possible for the assessee to liquidate the assets and to make the payment. The assessee, therefore, cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. u/s.221(1) for invoking the harsh provision of sec. 221(1) and same is to be invoked in only rare case. It is argued that sufficient safeguards are provided in the Act to compensate the revenue by way of the payment of the interest, in case, the assessee fails to make the payment on the due dates. He further submits that penalty proceedings are qusi-judicial proceedings and A.O. has to establish the deliberate Act on the part of the assessee. He pleaded for canceling the penalty. Per contra, the Ld. D.R. supported the orders of the authorities below. 4. Section 221 reads as under:- (1) "When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of, be liable, by way of penalty, to pay such amount as the Assessing Officer may direct, and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears: Provided that before levying any such penalty, the assessee shall be given a reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner. When the matter reached before the Hon'ble Supreme Court, the assessee took the plea that if the interest is not waived then the assessee would suffer genuine hardship. The Hon'ble Supreme Court explained the term 'genuine' and set aside the matter with certain directions to the CIT (A) for afresh adjudication. In our opinion, facts in the case of B.M. Mulani (supra) are in the different context. 7. The assessee has filed the paper book which is placed on record. The plea of the assessee is that the A.O. has passed the order u/s.281B of the Act making the provisional attachment that affected the liquidity. Copy of the order is placed at page no.49 and 50 of the compilation. It is seen that the order is passed on 17.10.2008 i.e. after the survey action and it was not passed in the finance year 2006-07 or 2007-08. Hence, this defence of the assessee is not helpful to support the contention that due to provisional attachment order, there was liquidity crunch in F. Yrs. 2006-07 and 07-08. The A.O. passed the order u/s.140A(3) treating the assessee in default in respect of the tax and interest remaining unpaid on the income declared in the returns for the A.Ys. 2007-08 and 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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