TMI Blog2013 (10) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act - income of an assessee belongs to him, but his right is subject to payment of dues to the Sovereign i.e; taxes - State has all the rights to recover taxes and a make reasonable provision to secure payment of tax on due date - the assessee had not offered any good and sufficient reason for not paying taxes on due dates, so FAA was justified in rejecting appeal filed by it - payment of tax, along with interest, after due dates cannot be considered a sufficient cause for adhering to the provisions of section 140A of the Act - the order of the FAA upheld – Decided against Assessee. - ITA No. 761/Mum/2012 - - - Dated:- 4-10-2013 - Sh. I. P. Bansal And Rajendra,JJ. For the Appellant : Shri K. K. Ved For the Respondent : Shri Salman Khan ORDER Per Rajendra, AM Following Grounds of appeal have been filed by the assessee against the order dated 11-11-2011 of the CIT(A)-16, Mumbai: 1:O Re.: Levy of penalty u/s. 221(1) r.w.s. 140A(3): 1:1 The Commissioner of Income-tax (Appeals) has erred in confirming the action of the Assessing Officer of levying a penalty u/s. 221(1) r.w.s. 140A(3) of the Income-tax Act, 1961 on the Appellant. 1:2 The Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default' as per the provisions of section 140A(3) of the Act.He levied penalty of Rs.1, 07, 019/- (10% of the SAT liability)u/s.221 of the Act. 3.Assessee preferred an appeal before the First Appellate Authority(FAA).After considering the order passed by the AO and the submissions of the assessee, FAA held that the only reason given by the assessee-company for not paying SAT was that the staff-members of the account section inadvertently did not make the payment of taxes, that staff was over burdened with the work, that the submission of the assessee could not be accepted as genuine, that when return was filed payment of taxes had to be checked, that the year under consideration was not the first year of the assessee, that payment of taxes was a regular and systematic activity undertaken by the assessee, that it was hard to believe that the members of account section had committed the mistake of not paying taxes.Finally, he held that assessee-company had not advanced a good and sufficient cause for not paying SAT in time for the year under consideration.Accordingly, he confirmed the penalty levied by the AO. 4. Before us, Authorised Representative(AR) submitted that assessee al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t also. Amendment of 2013 talk of sums appearing under five heads that have to be considered for calculating 'payable tax' as per the provisions of section 140A of the Act.Similarly, for calculating interest u/s.234A of the Act, special procedure has been prescribed.Explnation to section 3 defines assessed tax.Though many a amendments have been made to the section since 1971, yet the penal provisions have remained almost same. 5.1. It will be useful to understand the basic principles of section 140A.As per the provisions of section 139 of the Act, every person whose total income, during the previous year, exceeds the maximum amount not chargeable to tax is supposed to furnish a return of income in the prescribed manner within the prescri -bed period. Provisions of the Act also provide for payment of advance tax by scuh assessee.Advance tax is payable in instalments.The liability to pay advance tax is based upon the theory'pay as you earn'. It is said that section 140A is one of the modes/stages of collection of tax devised by Parliament.The principle behind the said section is that if at the end of the year the assessee is liable to pay any tax according to his own estimate of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay the whole or any part of such tax /interest/both in accordance with the provisions of sub-section (1), he shall, be deemed to be an assessee in default in respect of the tax or interest or both remaining unpaid, and all the provisions of this Act shall apply accordingly. Section 221(1)comes in to play once it is found that default has been committed by any assessee in payment of tax.Explanation to the section 221(1)provides that an assessee shall not cease to be liable to any penalty under this sub-section merely by reason of the fact that before the levy of such penalty he has paid the tax.In our opinion, explanation has made it clear that mere payment of taxes will not exonerate the assessee and he cannot claim immunity from the penal provisions as envisaged in the section.As per the provisions of the section penalty is not to be levied if assessee proves, to the satisfaction of the AO, that the default was for good and sufficient reasons.Second condition for levying penalty is that before levying any such penalty the assessee has to be given a reasonable opportunity of being heard.As far as first condition is concerned, onus is on the assessee to prove the existence of go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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