TMI Blog1981 (11) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... facts relevant for the determination of the question are as follows : As already stated the reference arises out of the assessment of M/s. Raunaq Co, for the assessment year 1965-66. It appears that the assessee-company bad made a voluntary disclosure under s. 24 of the Finance Act of 1965 and its total income for the assessment year 1965-66 was determined on the basis of such disclosure. The assessment culminated in a demand of Rs. 1,32,021 by way of tax and a notice of demand in respect of this amount was served on July 6, 1966, and was payable within few days thereof as provided in the statute. The assessee did not Pay the tax as demanded and so the ITO imposed a penalty under s. 221 by his order dated August 9, 1968, the amount of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authority was taking proper steps for the realisation of the demand then the Income-tax Officer should not have, in the circumstances of the case, levied penalty though he had authority to levy penalty. The mere fact that the Income-tax Officer has authority would not entitle him to levy penalty when he found that the assessee had no means to pay the tax and when the assessee had been making arrangement for payment of tax with the Tax Recovery Officer. We have to look into totality of the circumstances of the case. " The Commissioner moved the Tribunal for a reference of certain questions of law to this court but was not successful. Thereafter he made an application under s. 256(2) of the Act and it is as a result of the order of this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalties leviable under the other provisions of the Act, is one of the modes of recovery of tax. We are of opinion that the question for decision in this, case was ultimately a question of fact. It is no doubt true that s. 221 enables the ITO to impose a penalty where an assessee is in default in making a payment of tax. But it appears to us that the imposition of a penalty cannot be an automatic consequence of a default by way of non-payment of tax. In our opinion, the decision of the Supreme Court in the case of Hindustan Steel Ltd. [1973] 83 ITR 26, has direct relevance to this issue and it, has in fact been held in a large number of decisions even under the I.T. Act that the principles of this decision would apply to the imposition of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the matter. We have also dealt with a similar issue in our judgment in Addl. CIT v. Free Wheels India Ltd. [1982] 137 ITR 378 (Delhi), where we have given reasons for coming to a like conclusion in the context of s. 140A(3) of the Act. We are of opinion that once the question before us boils down to this that in a proper case it is open to the ITO not to levy a penalty even though there may be a default in the payment of tax as per the notice of demand then it will only be a question of fact to be decided on the facts and circumstances of such case as to whether good and sufficient reasons existed in a particular case for the non-levy of penalty. In the present case both the: AAC and the Appellate Tribunal which endorsed his view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of events, the Appellate Tribunal and the AAC were satisfied that this was not a case where the assessee was deliberately failing to make the payment of tax but that this was a case where it could not pay the huge sum demanded from it in one lump sum and was paying it in monthly instalments as directed by the concerned officer. In our opinion, the conclusions of the Tribunal and the AAC in this regard were conclusions arrived at on the facts and circumstances and do not give rise to any question of law. This court in the order dated 6th May, 1974, has indicated that one of the reasons given by the Tribunal for cancelling the levy of penalty was that when steps were being taken for the recovery of tax through the TRO, no penalty under s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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