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2022 (4) TMI 623 - MADRAS HIGH COURTPenalty proceedings initiated u/s 221(1) - reopening of assessment u/s 147 - petitioner also filed application under Section 220(6) of the Act to seek for a stay - HELD THAT:- Mere filing of an appeal before the Appellate Authority against the order passed under Section 147 of the Act would not preclude the Assessing Authority to make a demand and also to initiate penalty proceedings. In this case, during the pendency of the appeal, the petitioner also has filed an application for stay u/s 220(6) and the said application having been considered was, in fact, rejected for grant of blanket stay only. AO has stated that, as a condition precedent if the petitioner comes forward to pay 20% of the demand, stay would be granted. The Assessing Officer would further be stated that, if at all the petitioner in order to get further ease in making payment of 20% of the demand by way of installment, that also would be considered, provided, if the assessee comes forward to make application to that effect. On seeing the said order dated 08.12.2021 passed under Section 220(6) of the Act, wherein the provision wrongly quoted as “226” of the Act, it is a reasoned order, where, the Assessing Officer, considering the facts and circumstances of the case, has used his discretion, of course, with condition which is a mandatory one that to be imposed by the Assessing Officer while exercising his discretion under Section 220(6) of the Act. On the factual matrix of the case as well as the reasonable disposal of the stay application by the Assessing Officer, this Court feels that, the judgment cited by the learned counsel appearing for the petitioner may not apply to the facts of the present case. Petitioner seems to have filed further application before the Principal Commissioner to seek for a stay and according to the learned counsel for the petitioner, it is still pending, therefore, he can very well pursue the said application. Insofar as initiating proceedings for penalty under Section 221(1) of the Act, it has made clear that, if there is any due of tax who is in default or deemed to be in default in arrears, the Assessing Officer may direct in case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct by way of penalty, but only condition is that, the penalty does not exceed the amount of tax in arrears. The proviso to Section 221 (1) says that, before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard. Only in order to comply with the said proviso under Section 221(1) of the Act, now the present notice, which is impugned herein, has been issued by the respondents. Therefore, the said notice in the legal scrutiny cannot be construed as a notice issued without jurisdiction or in violation of the principles of natural justice, hence, this Court has no hesitation to hold that, the impugned notice does not require any interference from this Court at this stage.
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