TMI Blog2021 (7) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... espect to the default in payment of which the penalty was levied, has been wholly reduced. In the instant cases, as on today, the assessment orders have been quashed by the Tribunal, vide its order dated 03-02-2021 (referred above) in the hands of both the assessee by holding that reopening of assessment is invalid. Hence, as on today, the demand has become Nil. Accordingly, as per the provisions of sub. Sec. (2) of sec. 221, the penalty levied u/s 221(1) is liable to be cancelled, if the orders passed by the Tribunal becomes final order, i.e., the operation of sub. Sec (2) would depend upon the question as to whether the orders passed by the Tribunal have become final or not? If the revenue has accepted the orders passed by the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the assessment order in their respective hands u/s 144 r.w.s. 147 of the Act by making disallowances u/s 40(a)(ia) of the Act and also disallowing marketing expenditure. Accordingly, the A.O. raised a demand of ₹ 3.39 crores in the hands of M/s. Star Electricals and ₹ 5.09 crores in the hands of M/s. Yeshoda Electricals. Both the assessees did not pay the tax demanded by the AO. They challenged the assessment order by filing appeal before Ld CIT(A) and then before ITAT. Before the Tribunal, both the assessees challenged the validity of reopening of assessment also. 3. In the mean time, the A.O. also passed penalty order in the hands of both the assessees by levying penalty u/s 221(1) of the Act, since they have not paid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty orders. 5. We heard Ld D.R and perused the record. In these two cases, the AO has levied penalty u/s 221(1) of the Act. The provisions of sec.221 read as under:- 221. Penalty payable when tax in default. (1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of section 220, be liable, by way of penalty, to 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 tax in arrears : Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, as on today, the assessment orders have been quashed by the Tribunal, vide its order dated 03-02-2021 (referred above) in the hands of both the assessees by holding that reopening of assessment is invalid. Hence, as on today, the demand has become Nil. Accordingly, as per the provisions of sub. Sec. (2) of sec. 221, the penalty levied u/s 221(1) is liable to be cancelled, if the orders passed by the Tribunal becomes final order, i.e., the operation of sub. Sec (2) would depend upon the question as to whether the orders passed by the Tribunal have become final or not? If the revenue has accepted the orders passed by the Tribunal in the hands of both the assessees, then the same will result in a final order, in which case, the impugned p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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