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2015 (11) TMI 738 - AT - Income TaxPenalty under section 221(1)- Held that:- Liability of the assessee has increased and that credit rating of the assessee has reduced but there was a profit in the assessment year under appeal as well as in subsequent assessment year 2011-12. May be the profit has reduced but it is not a case that the assessee has not earned any profit. Therefore, considering the material on record, we do not find it to be a case of good and sufficient reasons for not paying the taxes as per law. Therefore, penalty shall have to be levied in the facts and circumstances. However, considering the financial position of the assessee has worsened and that the credit rating of the assessee has also reduced and ultimately when self- assessment tax was to be paid in subsequent assessment year 2011-12, there was a fall in the profit. Therefore, considering the explanation given by the assessee, we are of the view that the Assessing Officer was not justified in levying the penalty of 20 per cent. of the arrears of tax. Considering the totality of the facts and circumstances as noted above, we hold that 20 per cent. of the penalty of outstanding demand was excessive, unreasonable and therefore, we modify the orders of the authorities below and direct the Assessing Officer to restrict the penalty under section 221(1) of the Act by restricting the penalty at 7.5 per cent. of the outstanding self-assessment tax of ₹ 8.14 crores and the Assessing Officer shall rework the penalty amount accordingly. The orders of the authorities below levying the penalty at 20 per cent. is thus, set aside and modified to the extent of 7.5 per cent. - Decided partly in favour of assessee.
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