TMI Blog2014 (2) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... views of the revenue authorities and sustain an action which is strictly technical. We, therefore, set aside the impugned order of the CIT(A) and direct the AO to cancel the penalty levied u/s 221(1) of the Income Tax Act. - Decided in favour of assessee - IT Appeal No. 1646 (Mum.) of 2011 - - - Dated:- 19-2-2014 - D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND VIVEK VARMA. JUDICIAL MEMBER For the Petitioner : Vijay Mehta For the Respondent : R.K. Sahu ORDER Vivek Varma, Judicial Member The instant appeal is filed by the assessee against the order of CIT(A) 9, Mumbai, dated 21.12.2010, wherein, the following grounds have been raised: 1. The learned Commissioner of Income Tax (Appeals) has erred in law and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return of income. However, the assessee paid and cleared the entire tax liability, including the interest as on 31.12.2009, by paying a sum of ₹ 83,01,194/- by adding the interest for the period 01.10.2009 to 31.12.2009. As per the submissions of the AR as well as from the order of the CIT(A), the AO served on the assessee's show cause notice on 22.02.2010, as to why penalty u/s 221(1) be not levied. 4. The assessee admittedly did not comply with the notice and as a result, thereof, the AO levied the penalty of ₹ 20,20,710/- u/s 221(1). 5. The assessee took the matter before the CIT(A), before whom, the assessee submitted that it had committed a default, but neither that was a continuing default, nor was an intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were submitted before the CIT(A). The AR submitted that prior to this event, the financial position of the assessee was never bad. The fact that the funds (sale proceeds in the instant circumstance) are sometimes advanced to its group associates is a normal business circumstance. But having the same funds getting attached in different persons accounts was unforeseen and leaving the assessee in a precarious circumstance, is an issue to be examined. The AR submitted that even for payment of normal expenses and essential expenses such as water bill, the assessee was forced to take loan from its other associates (as is evident from the copies of bank statements appended). The AR submitted that never ever, the assessee had defaulted in any stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % of the tax due. Hence the orders of the revenue authorities should be sustained. 12. We have heard the arguments of either side and have perused the facts as coming out from the order of the CIT(A) and also as appended in the APB. 13. The basic facts, that the assessee sold its property and advanced the sale proceeds to its group associates and those funds got stuck under attachment by the Income Tax Department, are undisputed. We have to examine the circumstances and weigh the arguments of either side on this undisputed fact and to see whether the assessee actually hood winked the department or the circumstances were created against the assessee, who was forced to default, without any mala fide intention. The DR very rightly said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: Where as a result of any final order the amount of tax, with respect to the default in the payment of which the penalty was levied, has been wholly reduced, the penalty levied shall be cancelled and the amount of penalty paid shall be refunded . 15. When we examine the case from the angle of 2nd Proviso as well, we find that the assessee had elaborately proved its bona fide intention to pay the tax and statutory liabilities. the default, as well as the reasons making the assessee a defaulter, was a good and sufficient reason. Again sub-section (2) provides the cushion, that if the assessee's amount of tax has been reduced, the penalty shall be cancelled. In the instant case, though there is no occasion for inviting s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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