TMI Blog2014 (12) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... harbours the belief that maximum penalty must be imposed in all cases, which is not the legislative mandate. – decided against revenue. - ITA No. 654/2014 - - - Dated:- 22-12-2014 - Sanjiv Khanna And V. Kameswar Rao,JJ. For the Appellant : Mr. Balbir Singh, Senior Standing Counsel For the Respondent : None ORDER V. Kameswar Rao, J. 1. The challenge in this appeal by the revenue under Section 260A of the Income Tax Act, 1961 ( Act in short) is to the order dated March 31, 2014 passed by the Income Tax Appellate Tribunal, Delhi Bench ( Tribunal , in short), whereby the Tribunal, in cross appeals filed by the appellant-revenue and the respondent-assessee, upheld the order of the Commissioner of Income Tax (Appeals), restricting the penalty imposed under Section 140A (3) to 25%. 2. The relevant facts of the case are, the respondent-assessee filed return of income for the Assessment Year 2009-10 on 03.11.2010 declaring an income of ₹ 6,23,36,790/-, on which tax at ₹ 1,26,46,875/- was due and payable after reducing the advance tax paid of ₹ 14,60,000/-. The respondent-assessee had not paid this admitted tax liability under Section 140A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure strict compliance of the law. This is evident from the word shall used in treating the assessee in default. Any other interpretation will defeat the very purpose of the provision. Where the Assessing Officer initiated proceedings for levy or penalty by treating the assessee as assessee in default and the assessee challenged levy of penalty under section 221 on the ground that no notice of demand under section 156 was served by the Assessing Officer, it was held that liability to pay self assessment tax arises on the basis of the return furnished by the assessee and the failure to pay tax or interest or both on the income admitted in the return, renders the assessee to be in default. Hence, there was no need to issue notice of demand.(Safari Mercantile Pvt. Ltd. Vs. CIT(2008) 21 SOT 531 (Mum). In view of the above I am of the considered opinion that once the default is committed the appellant became the assessee is default and cannot take shelter under any reason or circumstances. It is quite a vague reason that the appellant was facing financial crisis and that too without any proof and evidence. Even though the tax and interest have been paid subsequently that will not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly, appeal of the assessee as well as of the Department are dismissed . 5. Mr.Balbir Singh, Senior Standing Counsel for the appellant-revenue would submit that there has been a clear default on the part of the assessee as he had not paid the amount due within the specified period and the penalty was rightly imposed by the Assessing Officer. He would state that no reasonable cause was shown by the assessee in not depositing the admitted amount due as tax. He would justify the order of the Assessing Officer in imposing penalty @ 100% of the tax due. 6. Having heard the learned Senior Standing Counsel for the revenue, we note, the respondent-assessee had stated, in his reply before the Commissioner of Income Tax (Appeals), that he had paid the admitted tax by 28.04.2011 before the issuance of the show cause notice by the Assessing Officer on 22.11.2011. In addition the assessee was liable to pay interest for the delayed payment. The delay in payment of tax as stated and argued by the assessee was due to the financial hardship or constraint due to huge losses suffered in share investments. In support, the assessee had filed the details of the bank statements and other relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut for exercise of power of judicial review. The Court observed that we are not unmindful of the development of the law that from the doctrine of Wednesbury unreasonableness , the Court is leaning towards the doctrine of proportionality . But in a case of this nature, the doctrine of proportionality must also be applied having regard to the purport and object for which the Act was enacted. 8. In the case in hand, it is to be seen whether penalty of 25% restricted by the CIT (Appeals) and the Tribunal is justified or the penalty must be the one imposed by the Assessing Officer. We note, the CIT (Appeals) while restricting the penalty to 25% was of the view that there was no intention to evade tax. The conclusion of the CIT (Appeals) which is upheld by the Tribunal reducing the quantum of penalty is justified. Such a finding is keeping in view the fact that the assessee paid advance tax of ₹ 14,00,000/-. After the return was processed under Section 143(1) of the Act, the intimation was sent to the assessee on 01.02.2011 calling upon him to make payment by 01.02.2011. The assessee deposited the tax due by April 28, 2011, which is much before the date of issuance of notice u ..... 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