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2016 (4) TMI 296 - ITAT MUMBAI

2016 (4) TMI 296 - ITAT MUMBAI - TMI - Penalty under section 221 r.w.s. 140A(3) - levy the maximum penalty - Penalty payable when tax in default - Held that:- Examination by the learned CIT(A) of the assessee's bank account, for the period under consideration, evidenced that the assessee did not have sufficient funds therein and that the payment of taxes in six installments from 22.11.2011 to 09.03.2012 were made by margin moneys deposited with various brokers being withdrawn by the assessee. Be .....

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t with various brokers.

Revenue has also not been able to justify before us, as to why, in these factual circumstances, the AO proceeded to levy the maximum penalty, i.e. to the extent of tax arrears. In these above factual circumstances, we concur with the view of the learned CIT(A) that the AO's action in levying the penalty under section 221 r.w.s. 140A(3) of the Act on the maximum amount of tax payable appears to be excessive, especially considering the severe financial constrain .....

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n P Boaz, AM For the Appellant : Shri J Saravanan For the Respondent : Shri Nehul Shah ORDER Per Jason P. Boaz, AM This appeal by Revenue is directed against the order of the CIT(A)-6, Mumbai dated 13.05.2013 for A.Y. 2011-12. The assessee has also preferred cross objections ('CO') against the aforesaid order of the CIT(A)-6, Mumbai. 2. The facts of the case, briefly, are as under:- 2.1 The assessee filed its return of income for A.Y. 2011-12 on 29.09.2011. On examination thereof, the As .....

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due to heavy losses incurred in the capital market did not find favour with the AO. The AO, observing that the entire self assessment tax was paid by the assessee only after the assessee's bank account was attached on 31.01.2013, was of the opinion that the assessee did not make payment of self assessment tax before filing of the return of income, as required by the provisions of section 140A(3), without any reasonable cause or sufficient reasons. In this view of the matter, the AO proceeded .....

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ed in the past. It was, inter alia, submitted that the day the AO attached the assessee's bank account the balance therein was only ₹ 48,487/- which evidenced the fact that the assessee was under financial hardship. The learned CIT(A), on examination of the assessee's bank account for the said period, observed that the assessee did not have sufficient funds and that the assessee withdrew margin money deposited with various brokers over a period of time and made payment of taxes. In .....

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to account the fact that the assessee actually faced severe financial constraints. Observing thus, the learned CIT(A) confirmed the levy of penalty at ₹ 1,00,000/-, thereby allowing the assessee relief of ₹ 11,69,268/-. 3. Revenue, being aggrieved by the order of the CIT(A)-6, Mumbai dated 13.05.2013, has preferred this appeal raising the following grounds: - "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the penalty under s .....

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s in form of Advance Tax which is wholly attributable to the assessee and ventured to utilize the funds which would have gone to Govt. coffers. 3. For these and other ground that may be urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the AO restored." 3.1 We have heard both the learned D.R. for Revenue in support of the grounds raised (supra) and the learned A.R. for the assessee. As per the facts that emanate from the record, it is not disputed that th .....

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nd liquidity it faced. 3.1.1 It is seen from a perusal of the impugned order of the learned CIT(A) that on appeal the assessee once again reiterated its submission that the default in payment of self assessment taxes was due to severe financial hardship and liquidity pressure due to heavy losses incurred in the capital market. We find that the examination by the learned CIT(A) of the assessee's bank account, for the period under consideration, evidenced that the assessee did not have suffici .....

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