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TMI Blog2007 (7) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... during the financial years 1982-83 and 1983-84 ?" 2 The reference relates to the financial years 1982-83 and 1983-84 in proceedings relating to imposition of penalty under section 201(1)/221 of the Act. 3 The respondent-assesses is a development authority. During the aforesaid years, the development authority failed to comply provisions regarding tax deducted at source from the amount various contractors. It had also not filed the appropriate form income-tax Department nor the amount of tax deducted at from time to time was deposited by it. The Income-tax Officer initiated penalty proceedings under section 221 of the Act and after considering the reply and the material on record, levied a total sum of Rs.2,67,5 10 as penalty. The aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority had not been fairly exercised. The Tribunal had further held that the Income-tax Officer had initiated action not because the tax was not paid but because Form No. 26C was not submitted and, in its view, no penalty could be levied for default in furnishing Form No. 26C in which details of tax deducted had to be furnished and the submission of such form was not a pre-condition for payment of tax deducted and the violation of rule 37(2C) of the Rules, which required the person making the deduction of tax in accordance with section 194C, to send to the Income- tax Officer in a statement in Form No. 26C, could not be punished. The operative part of the Tribunal's order is as follows : "For the above reasons, we are of the opinion that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd contrary to law. He further that the Income-tax Officer had rightly exercised his discretion and levied penalty looking into the number of recurring defaults, which could not be said to be arbitrary. In support of his aforesaid pleas, he has relied upon the following decisions: (i) Laxmi and Co. v. CIT [1981] 128 ITR 259 (All) ; (ii) Jubilee Investments and Industries Ltd. v. Asst. CIT [1999] 238 ITR 648 (Cal) ; and (iii) Amin Chand Payarelal v. IAC [2006] 285 ITR 546 (SC). 8 We have given our anxious consideration to the various pleas raised by learned counsel for the parties. 9 We find from the order of the Income-tax Officer that before initiating penalty proceeding under section 201(1) of the Act by issuance of a sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficers were not aware about the statutory provisions regarding the deposit of tax and they were under the impression that it was to be deposited by the end of the financial year and from Oct 1982, to June, 1983, there was no accounts officer posted in the development authority and no person knowing the statutory provision was available with them. The default was neither deliberate nor there was any mens rea. It was a semi-Government local authority and was not earning any benefit from the deduction of tax at source and as the alleged default was less than a period of one month, no penalty was imposable. 10 The plea taken by the development authority had not been accepted. From the order of the Tribunal, we find that it is not in dispute t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustries Ltd. [1999] 238 ITR 648, the Calcutta High Court has held that whether the assesses had paid the interest or not is immaterial. When it is found in default in depositing the amount of the tax deducted at source within the time prescribed, it is liable to pay penalty and interest. 14 In the case of Amin Chand Payarelal [2006] 285 ITR 546, the apex court has held that merely because sub-section (4) of section 139 enables the assesses to file the return in time before the assessment is made, it does not mean that the liability to pay penalty under section 271(l)(a) is erased. 15 We are in respectful agreement with the aforementioned views, It is immaterial as to whether tax deducted at source and interest, if any, accrued there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated in June, 1984, when no tax was in arrears The Income-tax Officer has levied a penalty of 30 per cent. for the taxes deducted in September-October, 1982, and paid on January 21, 1983, is after a little more than 4 months. He has levied penalty at 70 per cent. For the tax that was deducted in February, 1984, could be paid by March 7, 1984, arid Was actually pa on March 31, 1984. He has thus adopted an ascending scale of penalty although the period of default was descending and was very nominal in respect of the last two items for which the maximum rate of penalty has been levied. This shows that the income-tax Officer's discretion to levy penalty on the assesses has not been fairly exercised." 18 From a perusal of the aforesaid, we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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