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2015 (8) TMI 1023 - ITAT PUNE

2015 (8) TMI 1023 - ITAT PUNE - TMI - Penalty u/s.140A(3) r.w.s. 221 - assessee failed to pay self-assessment tax - CIT(A) deleted the addition admitting additional evidences - Held that:- In the instant case it is an undisputed fact that the assessee did not appear before the Assessing Officer despite repeated opportunities given by him. This act of assessee by ignoring the Assessing Officer is highly deplorable. However, considering the mishaps in the family caused due to the death of his pare .....

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ld by the assessee in his demat accounts. From the various bank accounts produced by the assessee we also find that there is negligible or insufficient balances. Therefore, we find merit in the submission of the Ld. Counsel

It has been held in various judicial decisions that levy of penalty by the Assessing Officer u/s.221(1) is discretionary and not automatic. Further, for levy of penalty u/s.221 such default must be wilful and not merely accidental. In the instant case, the assessee .....

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Assessing Officer. Since in the instant case the various documents produced before the CIT(A) were already before the Assessing Officer in the quantum proceedings, therefore, these documents in our opinion cannot per se be called as additional evidence. Therefore, the ground raised by the Revenue on this issue is dismissed. Thus the assessee has proved that the default was for good and sufficient reasons. Therefore, in view of the second proviso to section 221(1) this is not a fit case for levy .....

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enalty of ₹ 42,16,773/- levied by the Assessing Officer u/s.140A(3) of the I.T. Act by admitting additional evidences is the only issue raised by the Revenue in the grounds of appeal. 3. Facts of the case, in brief, are that the assessee filed his return of income on 30-03-2008 declaring total income of ₹ 6,27,99,405/-. The source of income is mainly from capital gain out of share transactions. Although the tax payable on the returned income was ₹ 53,17,680/-, however, the asse .....

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lty u/s.221 of the Act should not be levied. Since the assessee did not reply to the show cause notice the Assessing Officer again issued similar notices asking the assessee to explain. In absence of any reply from the assessee despite opportunities given, the Assessing Officer levied penalty of ₹ 42,16,773/- u/s.140A(3) r.w.s. 221 of the I.T. Act. 4. Before CIT(A) the assessee submitted that his father was looking after the taxation matters who was not feeling well from June to September .....

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ion and tried to take possession of the godown of the assessee. He along with around 200 persons forcibly attacked the godown and destroyed the same. Unfortunately this event took a communal colour, i.e. Hindu-Muslim conflict and the matter is now subjudice before the court. 5. The assessee further gave a chronology of events such as the fall in the stock market and attachment of bank account, demat account etc. The relevant portion of the submission by the assessee before the CIT(A) reads as un .....

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r the Assessing officer has taken very harsh action for Recovery of demand i.e., Bank a/c attachment, D-Mat A/c attachment, etc. The Income Tax Officer sold assesses valuable shares at a very low price without any information to assessee. Sir, Assessing Officer has in letter dt. 17/08/20010 to Networth Capital Written that assessee has holding shares of ₹ 29,15,601/- on that day which may sale and deposit that amount in Income Tax Office, Ahmednagar, but as against the same the Assessing O .....

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ervices Pvt. Ltd., balance can be made to the Income Tax Department, Ahmednagar for its outstanding" Sir, for the same I am very regret to say that the assessee was not payable single paisa to said M/s Ravisha Financial Services Pvt. Ltd. and the Assessing Officer has not informed or asked to assessee before granting permission to recover the amount of ₹ 19,17,560/-. Sir, it was his moral/Legal responsibility on account of Income Tax Department as well as Assessee. Sir, Assessing Offi .....

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ssessee was not in position to pay of taxes, There was no alternative for payment of taxes except to borrow money. Sir, ENAR STAR TRADE LTD has given unsecured loan to assessee hence he can paid the balance of Self Asst. Tax. Sir, here we are producing all the documents for your honors kind verification and out of the same some copies of such documents are submitting on record. Sir, in all these matters assessee cannot understand that what he has to do first. Due to some other family problems an .....

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vation of the Hon'ble Finance Minister in the Lok Sabha in his reply to debate on clause by clause consideration of the Finance Bill, 1964. Referring to the provisions of section 140A(3) and the CBDT Circular dated 22-04-1971, the decision of the Hon'ble Calcutta High Court in the case of CIT Vs. Wesman Engineering Company Pvt. Ltd. reported in 104 ITR 650 and the decision of the Hon'ble Karnataka High Court in the case of Ramchandra Pesticides Pvt. Ltd. Vs. CIT reported in 285 ITR 4 .....

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pital Gains of ₹ 1,53,11,448/- along with salary income is not in dispute. The tax payable on the returned income was at ₹ 53,17,680/-. However, the appellant paid ₹ 11,00,887/- only and the balance of ₹ 42,16,773/- remained to be paid. The AO after processing the return raised a demand of ₹ 62,07,590/- alongwith interest. The case was further selected for scrutiny and the assessment was completed u/s 143(3) on 4/12/2008 by treating the share transactions as assessa .....

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nalty u/s 221 though the same were not availed. Since the appellant has been able to explain with evidences the reasons for not being able to pay the taxes fully on the returned income as well as for not being able to appear before the AO, the penalty levied can be deleted for the successful demonstration of good and sufficient reasons for the aforesaid defaults. In view of the discussions made above, ground No.1 is allowed." 8. Aggrieved with such order of the CIT(A) the Revenue is in appe .....

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the assessee should not be given any premium for non-attendance before the Assessing Officer. 10. The Ld. Counsel for the assessee on the other hand heavily relied on the order of the CIT(A). He submitted that although the assessee has not appeared before the Assessing Officer during penalty proceedings, however, the assessee has appeared before the Assessing Officer during scrutiny assessment proceedings for the A.Y. 2006-07 wherein all details were filed. Referring to paper book page 43 he sub .....

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ar Urban Cooperative Bank, copies of which are placed at paper book pages 76 to 80 he submitted that the balance as on 31-03-2006 was ₹ 49.75, balance as on 31-03-2007 was ₹ 6,093.30 and balance as on 31-03- 2008 was ₹ 10,564.80 only. Referring to the bank account maintained with HDFC Bank he submitted that the balance as on 31-03-2008 was ₹ 9,074.01 (placed at paper book page 80A). Referring to bank account maintained with Ahmednagar Merchants Cooperative Bank Ltd. (a co .....

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-03-2006 was ₹ 1,880/-, as on 31-03- 2007- ₹ 1,998/- and as on 31-03-2008-Rs.2,069/-. 11. Referring to the Demat account, a copy of which is placed at page 81 and 82 of the paper book he submitted that the Demat account shows that the assessee has shares in several companies and the price of all the shares had slashed down. The assessee was holding 1,87,730 shares of J.K. Agro Genetics Ltd. as on 31-03-2008. Although the prices of these shares were hovering around ₹ 280 to S .....

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essee had 1,49,336 in Rama Pulp Ltd., as on 31-03-2008. The prices of those shares which were quoted between ₹ 40 to ₹ 50 came down to ₹ 20/- in March 2008 and subsequently to ₹ 3 to ₹ 4. Similar is the case with various other shares which were held by the assessee. All these facts show that the assessee's default cannot be said to be wilful. Referring to various decisions he submitted that if the default is not wilful and there is sufficient reason to prove tha .....

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eal before the CIT(A) which was dismissed by him u/s.249(4) for non payment of self assessment tax. Thereafter, the assessee could arrange the loan and made the payment after about 1 ½ years and filed the appeal before the Tribunal. Referring to the copy of the order of the Tribunal vide ITA No.1721/PN/2012 order dated 28-10-2013 he submitted that the Tribunal allowed the appeal filed by the assessee by directing the CIT(A) to admit the appeal and decide the issue on merit. He accordingly .....

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ding the deletion of penalty levied u/s.140A(3) r.w.s. 221 of the Act by the Ld.CIT(A) by admitting additional evidences. There is no dispute to the fact that the assessee while filing the return of income has not paid the self assessment tax. He has paid only ₹ 11,00,887/- as against the total tax liability of ₹ 53,17,680/- leaving the short payment of ₹ 42,16,773/-. Despite opportunities given by the Assessing Officer, the assessee did not appear before him during the penalty .....

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usiness premises. The assessee also brought to the notice of the Ld.CIT(A) the action of the Assessing Officer by attaching the bank account, demat account etc., The action of the Assessing Officer in selling some shares held by the assessee at a very less price was also brought to the notice of Ld.CIT(A). It is also a fact that against the quantum addition made by the Assessing Officer the assessee filed an appeal before the CIT(A) which was dismissed by him as non maintainable in view of secti .....

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e on merit. All these facts show that there was some bonafide reason on the part of the assessee for non payment of self-assessment tax. 13.1 Under the provisions of section 140A(3) if any assessee fails to pay the whole or any part of such tax or interest or both in accordance with the provisions of sub section (1), he shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of the tax or interest or both remaining unpaid, and all .....

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sputed fact that the assessee did not appear before the Assessing Officer despite repeated opportunities given by him. This act of assessee by ignoring the Assessing Officer is highly deplorable. However, considering the mishaps in the family caused due to the death of his parents within a very short span and the subsequent illness of his wife as stated before the CIT(A) and not controverted by the Revenue we are taking a liberal view of this action on the part of the assessee in not appearing b .....

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l for the assessee that there was a bonafide reason on his part in not paying the self-assessment tax. 13.3 It has been held in various judicial decisions that levy of penalty by the Assessing Officer u/s.221(1) is discretionary and not automatic. Further, for levy of penalty u/s.221 such default must be wilful and not merely accidental. In the instant case, the assessee has proved beyond doubt that the default by him in not paying the self-assessment tax is not wilful and it was beyond his cont .....

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