Income Tax Appellate Tribunal - Amritsar
Income-Tax Officer vs Guru Nanak Rice & General Mills. on 8 February, 1990
Equivalent citations: [1990]33ITD140(ASR)
ORDER
1. In this revenues appeal, the agitation is that the Deputy Commissioner of Income-tax (Appeals) Amritsar Range, Amritsar, hereinafter referred as the Dy. CIT (A), whose order dated 31-10-1988 in respect of assessment year 1978-79 is brought in appeal, erred in cancelling penalty of Rs. 10,140, which was imposed by the ITO, B-Ward, Batala under section 140A (3) of the Income-tax Act, 1961, hereinafter referred as the Act. The contention projected is that the Dy. CIT (A) failed to appreciate that payment under section 140A (3) of the Act was due in relation to return of income of Rs. 75,420 submitted on 31-7-1978 whereas payment was made only on 28-3-1985 in relation to revised return submitted on 4-3-1985 offering taxable income of Rs. 73,387.
2. In this case admittedly the assessee filed a return as stated above on 31-7-1978 and no tax under section 140A (3) of the Act was paid as statutorily provided on 24-2-1983, an ex parte assessment under section 144 of the Act was framed determining taxable income of Rs. 3,16,350 which apparently came to be cancelled because as per some settlement with the Department the assessee furnished taxable return of Rs. 73,387 on 4-3-1985 and on 6-3-1985 the income offered in the return of 4-3-1985 came to be accepted.
3. Before the ITO in the only reply filed it was claimed by the assessee that it had deposited a sum of Rs. 2,875 as advance tax and that since in the ex parte assessment under section 144 of the Act framed on 24-2-1983 no notice under section 140A (3) of the Act was directed to be issued no penalty, no penalty was leviable. Alternatively, it was also claimed that the default had been committed on account of non-availability of funds and non-recovery from the third parties.
4. The ITO repelling the assessees contention stated as a fact in his order dated 12-12-1986, which was not even sought to be controverted either before the Dy. CIT (A) or before me, that no payment of Rs. 2,875 as claimed had been made and further, there was only vague averment made without any supporting evidence that the assessee lacked availability of funds for such a long period. The result was imposition of penalty of Rs. 10,140 for 78 months default on the due tax of Rs. 7,260 in relation to the returned income of Rs. 75,420 in the status of registered firm.
5. The Dy. CIT (A) after stating the facts recorded the assessees contentions, which I am noticing below as also the assessees averment that it had voluntarily gone before the Commissioner of Income-tax, Amritsar under section 264 of the Act for settlement and the later vide order dated 28-3-1985 had waived interest under section 215/217 of the Act after being satisfied that it had taken 6 1/2 years to finalise the assessment and further that interest under section 139(8) of the Act was directed to be waived for all the years to the extend of 90% except for the assessment year 1978-79 for which year interest under the said sections came to be totally waived, cancelled the penalty vide para 4. The relevant portions of para 2 and para 4 are reproduced as follows :
"2. ........................................................... ........
That the assessee firm got no notice under section 140A (3) when ex parte assessment was framed.
That the revised return was filed on 4-3-1985 and the assessment framed on 6-3-1985 there is no fault as the assessment has been framed within one month from the date of filing of revised return.
That no cognizance of the tax paid to the tune of Rs. 2,875 towards advance tax has been taken in spite of the fact that the reply was filed indicating the said payment.
That due to death of one of the partner and financial crises the firm has not been able to make the balance payment which is genuine and reasonable cause.
That the assessee submits herewith Income-tax Appellate Tribunal Order No. ITA-830(ASR) /79 for the assessment year 1975-76 dated August 1980 passed in the case of Sh. Ved Prakash, c/o Kumar Engg. Company vs. ITO, A-Ward, Batala.
That the case law relied upon K. M. Sali Maricar v. ITO [1973] 90 ITR 160 (Mad.). That, the Ld. ITO has not given the working of levying of penalty and as such it is not a speaking order and penalty imposed is illegal.
4. I have carefully considered the submissions made before me and have also verified the facts the tax liability has been paid much before the actual settlement between the appellant firm and the Commissioner of Income-tax is correct, as verified from the record. Further, it is submitted that no additional tax liability was payable as per the returns filed by the appellant from time to time. Having regard to the above facts on record and also the decision of the ITAT, Amritsar Bench including the Madras High Court in the case of K. M. Sali Maricar reported at 90 ITR 160 (as cited by the ITAT in ITA No. 830 (ASR) /1979 dated August, 1980), I am inclined to accept that no penalty under section 140A (3) is called for having regard to the facts of the case. The Name is, therefore, accordingly cancelled and the appeal is allowed."
6. Before me, for the Revenue, Shri R. P. Kapur, D. R. made a short effective submission that on the facts as record the learned Dy. CIT (A) was in error in cancelling the penalty even after noticing and recording in para 3, the assessees averments that certain interests under section 215/217 of the Act came to be waived by the Commissioner of Income-tax on the ground that it had taken 6 1/2 years to finalise the assessment. This factor in itself, he submitted, indicated that the Commissioner of Income-tax agreed for a settled assessment keeping in view the assessees return of 31-3-1978 and also the fact that an ex parte assessment under section 144 of the Act had been framed on 24-3-1983 in which income of Rs. 3,16,350 was determined. For the respondent, Shri S. K. Jain, Advocates submissions were the same as made before the Dy. CIT (A) and which have been reproduced above.
7. Keeping in view the facts of the case, I fail to see any case for the assessee, which could have promoted the Dy. CIT (A) to have cancelled the penalty imposed under section 140A (3) of the Act when admittedly self-assessment tax under section 140A (3) was not paid for about 6 years. The contention for the assessee, which was very vehemently reiterated before me, that since there was no default under section 140A (3) of the Act in relation to revised return penalty was not leviable, simply can be said to be frivolous argument not worthy of any serious discussion. Similarly, the fact that Commissioner of Income-tax thought it fit to waive certain interests on the ground that it had taken 6 1/2 years to finalise the assessment for the assessment year 1978-79 itself shows that the assessee was not given any immunity or promised any leniency as far as default under section 140A (3) of the Act was concerned. Further, Dy. CIT (A)s reference to the judgment of the Honourable Madras High Court in the case of A. M. Sali Maricar v. ITO [1973] 90 ITR 116 could pay no role because what was held by the Honourable Madras High Court was that the provisions of section 140A (1) and (3) were ultra vires to the Constitution of India and such pronouncement could be said to be valid only for the State of Madras and Courts and Tribunal beyond the Madras High Courts jurisdiction were incompetent to hold the provision of section 140A (3) as ultra vires. The Dy. CIT (A) has wrongly given the citation as A. M. Sali Maricars case (supra).
8. The last contention of the assessees counsel that the ITOs order was non-speaking one is totally devoid of any merits because full facts were narrated by the ITO and in fact he in terms stated that the assessees claim of advance tax was wrong and that on the facts of the case the penalty for non-payment of self-assessment tax was leviable. May be that the ITO mentioned that even after filing of the revised return on 4-3-1985 the assessee paid no self-assessment tax but that observation could not have the effect of changing or altering the basis of his case that the assessee had defaulted in respect of his liability u/s. 140A (3) in relation to its return of income of Rs. 75,420 submitted on 31-7-1978.
9. On the facts of the case, therefore, reversing the Dy. CIT (A)s order, I restore the penalty of Rs. 10,140 levied under section 140A (3) of the Act.
10. In the result, the Revenues appeal is allowed.