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TMI Blog2014 (2) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law and in facts in not holding that the penalty proceedings and the order passed u/s 221 (1) of the Act as bad in law. 3. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in holding that the provisions of section 221(1) of the Act are not applicable in the present case. 4. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in confirming levy of penalty by the Assessing Officer of Rs. 20,20,710/-under section 221(1) of the Act in respect of delay in payment of tax by the appellant". 2. The solitary issue pertains to levy and sustaining of penalty of Rs. 20,20,710/- levied u/s 221(1) of the Income Tax Act, 1961. 3. The facts as noted in the SOF are that the assessee is a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continuing hardship and the statutory liability staring its face, the assessee borrowed funds to clear the government dues. 6. Before the CIT(A), the assessee submitted the truth that the assessee had sold a property for Rs. 2,94,39,030/- during the month of July, 2008, which the assessee, advanced the same to its group associates, for a short term adjustment to M/s Manav Builders (P.) Ltd. Rs. 3,10,00,000/- and to Mr. Harsh Mehta a sum of Rs. 25,04,708/-, as they were in immediate need of funds. The assessee had advanced the funds to the group associates, with an understanding that the funds would be returned and the assessee shall clear its liabilities. But the bank accounts of these two persons were attached by the Income Tax Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ched its associates and took loan to clear its tax dues, being the actual liability as per return, and added thereto the interest for the three months for the period from October 2009 to December 2009 and clear the dues. The AR, submitted that taking into account the entire circumstances, when the dues were cleared much before the department getting active on this issue, is a reasonable ground for deletion of penalty. 11. The DR on the other hand supported the orders of the revenue authorities and submitted that prior to anything else, the government should get its dues. The submission and explanation of the assessee that it advanced funds to its group associates, which got attached and the assessee was left with a tight financial position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has to arrange funds, even for basic survival, such as to pay for water bills, which is an essential element for survival. In such a circumstance, will the assessee face the consequences on life or statutory consequences. It is a fact that the assessee did not pay advance tax, but the basic fact remains that the assessee has to pay tax on its income as on 31.03. No doubt the payment of advance tax is essential, but the non payment of advance tax gets compensated by the charge of statutory interest, but we are examining, what is the ultimate, and the answer is, the tax due. The fact that it was the assessee's money which had got stuck in an attachment of a third party, cannot and could not have been conceived by the assessee. The fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood and sufficient reason has been given or in post assessment stage when the final tax is finally determined at a lesser figure, the penalty shall be cancelled. 17. We have to mention that explanation creates the liability even if the tax is paid. But the fact is that the 2nd Proviso was brought in as a saving provision, much after the insertion of the Explanation goes to show the legislative intent is to become reasonable to the assessee. 18. On examination of the entire gamut of circumstances, the fact that the assessee cleared its tax, interest and balance interest dues, leaving not even a rupee outstanding in dues, much before the AO triggered the penal provisions only goes to prove the assessee's fair intention. 19. The fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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