TMI Blog2022 (7) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... Provisions of Section 140A (3) can apply only when there is a self-assessment tax payable with respect to the return filed u/s 139 of the act. Further, if there is a failure u/s 140 A (3) then only assessee can be held to be assessee in default . As in the present case there is no return of income filed u/s 139 of the income tax act, therefore any penalty based on that return, does not survive. There is one more aspect to the issue, on one hand Act treats defective return as Failure to furnish the return of income and on the other hand, AO initiates penalty based on that defective return for non payment of taxes. Thus , there is an apparent dichotomy in the action of the AO. Accordingly we find that the penalty levied by the learned assessing officer as per order dated 14/05/2018 u/s 221 (1) of the income tax act is not sustainable. Hence, orders of lower authorities are reversed. Ground no 1 to 4 are allowed. - ITA No. 1095/Mum/2020 - - - Dated:- 7-7-2022 - Shri Prashant Maharishi, AM And Ms. Kavitha Rajagopal, JM For the Assessee : Ms Ritika Agarwal, AR For the Revenue : Shri Hoshang B. Irani, DR ORDER PER PRASHANT MAHARISHI, AM: 01. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed. 07. On 19/01/2018, assessee filed return under Section 139(4) of the Act at the same total income, however, claimed MAT credit of ₹1,18,34,786/- and balance tax liability was worked out at ₹7,39,71,026/-. Thus, the additional tax liability of ₹3,69,29,000/- was paid on 5th July, 2017 of ₹2,70,00,000/- and on 15th December, 2017, ₹99,20,000/-. 08. However, on 23rd March, 2018, the learned Assessing Officer issued notice under Section 221 read with section 140A of the Act, asking the assessee as to why the penalty should not be levied for default of non-payment of taxes on due date. 09. On 24.04.2018, assessee submitted that there is no default as the self-assessment tax as determined in the return of income under Section 139(4) of the Act has been paid. 010. The learned Assessing Officer rejected the contention of the assessee and on 14 May 2018 passed an order under Section 221(1) of the Act. The learned Assessing Officer held that assessee filed its belated return of income only after invalidation of Return of income by the Central Processing Centre, Bangalore. The learned Assessing Officer was of the view that filing of belated r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvalid. The learned Authorized Representative further relied upon the copy of the reply of show cause notice dated 2nd April, 2018 placed at page no. 67 and 69 Paper Book as well as return submission filed before the learned CIT (A) at page no. 59 to 63A of the Paper Book. She also referred to show cause notice dated 23rd March, 2018, placed at page no. 65 to 66 of the Paper Book. The learned Authorised Representative claimed that when the return of income is held to be invalid return, the penalty based on invalid return could not be levied. She further referred to the chronology of the events. The learned Authorized Representative further referred to the provisions of Section 221 and Section 140A of the Act. She submitted that the penalty could be levied only if the return is filed under Section 139 of the Act and assessee has not paid any tax due thereon. It was stated that when the return of income itself has been held as invalid, on such invalid return self assessment tax is not required to be paid and on that return assessee cannot be held to be an assessee in default and therefore, the penalty levied by learned Assessing Officer and confirmed by learned CIT (A) is not corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treat the return is a valid return. In case of the assessee, assessee did not rectify that defect of incorrect claim or filing of proper schedules, therefore, the original return filed by the assessee on 17/10/2016 is deemed never to have been filed. The fact also shows that assessee subsequently filed the return of income u/s 139 (4) of the act which is a valid return. In the acknowledgement of return produced before us placed at page number 54 of the paper book shows that it is an original return. However, it did not have any defect and is accepted by the revenue. However the AO initiated penalty proceedings by issue of show cause notice stating that Return of income filed on 17/10/2016 the tax liability was shown at ₹ 36,247,650/ which was incorrect. Thereupon return was revised on 19/1/2018 without any change in the total income however total tax and interest calculated at ₹ 73,971,026/ . We first find that assertion of the learned assessing officer that the return was revised on 19/1/2018 is a revised return is devoid of any merit. This is so because in the acknowledgement of return filed in 19/1/2018 assessee says it is still an original return. Based on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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