TMI Blog2017 (2) TMI 1429X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) and thereafter sustained by the CIT(A). - Decided in favour of assessee. - I.T.A. No. 6632/Mum/2012 - - - Dated:- 17-2-2017 - SHRI R.C. SHARMA, AM AND SHRI RAVISH SOOD, JM For the Appellant : Shri Shriram Bajaj For the Respondent : Shri Suresh Kumar, Sr. A.R. ORDER PER RAVISH SOOD, JM: The present appeal arises from the order of the CIT(A)-17, dated. 28.08.2012, which in itself arises from the order passed by the A.O u/s 221(1) r.w Sec. 140A(3) of the Income-tax act, 1961 (for short Act ), dated. 13.07.2011. The assessee assailing the order of the CIT(A) had carried the matter in appeal before us, therein raising the following grounds of appeal:- Being aggrieved by the order dated 28.08.2012 passed by the learned Commissioner of Income Tax (Appeals)-17, Mumbai. [ CIT (A) ] u/s. 250 of the Income-Tax Act, 1961( Act ), your appellant prefers this appeal, among others, on the following grounds of appeal, each of which is without prejudice to, and independent of, the other; 1. On the facts and in the circumstances of the case and also in law, the learned CIT(A) erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee as being in default therein imposed a penalty of ₹ 5,96,547/- u/s 221(1). The assessee assailed the order of the A.O imposing penalty u/s 221(1) r.w.s 140A(3) before the CIT(A) who upheld the order of the A.O by observing as under:- 3.3 Now one of the objection of the assessee is that levy of penalty is not justified as it had paid its taxes on issue of demand by the AO. Sub section (3), of section 140A clearly states that the assessee shall be deemed to be in default if it fails to pay taxes or interest as per the provision of sub-section (1). Sub section (1), of 140A clearly stipulates that the assessee shall be liable to pay balance taxes, as per its return before furnishing the return. Further, the explanation to section 221 stipulates that the assessee would not cease to be liable to any penalty merely because it has paid the taxes before the levy of the penalty. A harmonious reading of all these provisions, cited supra, would mean that the liability for penalty u/s. 221 arises the movement the assessee fails to pay taxes u/s. 140A before the furnishing of the return. Subsequent payment of taxes, by itself, would not exonerate its liability u/s. 221. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er alternative had filed the return of income therein duly admitting its outstanding tax liability, which remained payable as such. The Ld. A.R in order to fortify his contention that his aforesaid claim was substantiated from the facts available on record and was not an eye wash to wriggle out of the penal provisions, therein took us through his OD A/c No. 003431909 with Bank of India, Yari Road branch, Mumbai (Page 62 of APB ) which revealed the outstanding bank liability of ₹ 25,73,33,811.66. That a perusal of the bank account of the assessee, company reveals that on the relevant date on which the assessee had filed its return of income, viz. 14.10.2010, it had already overdrawn its said bank facility. The Ld. A.R in order to drive home his aforesaid contention that the assessee company was facing a financial crunch on the relevant date, viz. 14.10.2010, therein referred to the Cash flow statement prepared for the period 01.04.2010 to 31.12.2010 (Page 14 of APB ). Thus in the backdrop of the aforesaid facts it was submitted by the Ld. A.R that though the assessee was in no financial means to deposit the self-assessment tax at the time of filing of its return of income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay such amount as the Assessing Officer may direct, and in the case of a continuing default such further amount or amounts as the [Assessing] Officer may, from time to time, direct, so however, that the total amount of penalty does not exceed the amount of fax in arrears. Provided that before levying any such reasonable opportunity of being heard: Provided further that where the assessee proves to the satisfaction of the [assessing] Officer that the default was for good and sufficient reasons no penalty shall be levied under this section] [Explanation- For the removal of doubt. It is hereby declared that an assessee shall not cease to be liable to any penalty under this sub section merely by reason for the fact that before the levy of such penalty he has paid the tax]. (2) 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 shaIl be refunded . Thus a conjoint perusal of the aforesaid statutory provisions therein reveals that though the assessee o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... health of the assessee company. We find great force in the claim of the assessee that though being in serious financial trouble it was in no position to deposit the outstanding tax liability, but in due compliance of its statutory obligation to file the return of income within the stipulated time period, it did not defer the filing of the same, though the same was witnessed by non deposit of the self assessment tax of ₹ 1,19,30,943/-. We find ourselves to be in agreement with the assessee that though the year under consideration, i.e financial year ending 31.03.2010 was a good year for its marketing efforts, but in the ensuing months its inflows were adversely hit, and the same resulted in serious cash crunch, which in itself stands established from the fact that as averred by the assessee before the A.O, the payment of the salaries and operating expenses got delayed, budgeted capital expenditure got deferred etc. We further find that the assessee thereafter, despite being in financial doldrums and drained of funds, however made good its commitment with the A.O of depositing the outstanding dues alongwith interest within a period of 15 days, and after arranging borrowed funds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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