Madras High Court
Commissioner Of Income Tax vs H.T.Ha. Bit Pvt. Ltd. on 5 May, 1995
Equivalent citations: [1996]217ITR173(MAD)
Author: T. Jayarama Chouta
Bench: T. Jayarama Chouta
JUDGMENT Thanikkachalam, J.
1. In this tax case petition, the Department requested this Court to direct the Tribunal to refer the following question of law said to arise out of the order of the Tribunal for our opinion under s. 256(2) of the IT Act, 1961 :
"Whether, on the facts and in the circumstances of the case, and having regard to the fact that the assessee has not satisfied the conditions stipulated in s. 249(4) of the IT Act, 1961, the Tribunal was justified in confirming the cancellation of the penalty under s. 140A(3) of the IT Act, 1961 ?"
2. The assessee is a private limited company and it filed a return of income for the asst. yr. 1977-78 admitting an income of Rs. 54,635. The assessee did not pay the advance tax. The assessee was liable to pay what is known as "self assessment" tax under s. 140A of the IT Act within one month from the date of filing of the return. Even that tax, the assessee had failed to deposit. The assessee was asked to show cause why such tax was not deposited and why penalty should not be imposed for the failure to deposit the tax. The assessee explained that it was due to paucity of funds and, hence, the tax could not be paid with the return of income or within the time stipulated for such deposit. The ITO refused to accept the explanation offered by the assessee and levied a penalty of Rs. 15,750. However, on appeal, the CIT(A) came to the conclusion that there was paucity of funds and, therefore, the assessee could not pay the tax in time and accordingly accepted the explanation offered by the assessee and cancelled the penalty. On further appeal, the Tribunal confirmed the order passed by the CIT(A). Imposition of penalty under s. 140A(3) is said to be discretionary as per the decision of this Court rendered in the case of CIT vs. Mysore Fertiliser Co. (1984) 145 ITR 91 (Mad). In that judgment, this Court has held that the non-payment of self assessment tax was due to financial difficulties, is an acceptable ground for not levying penalty under s. 140A(3) of the Act. The Tribunal which is the highest fact finding authority, found that, at the relevant point of time, the assessee was having a cash balance of Rs. 3,000 in its bank account even though the assessee had to realise the debts from various debtors. Thus, the Tribunal found on facts that there was a paucity of funds and, therefore, the penalty could not be levied under s. 140A(3) of the Act. Since this finding was arrived at by the Tribunal on the basis of facts, we consider that no referable question of law arises out of the order of the Tribunal as framed and suggested by the Department.
3. In so far as the second part of the question which relates to conditions prescribed under s. 249(4) of the Act is concerned, this aspect was neither argued before the Tribunal nor any finding was given on this aspect. Therefore, this part of the question would not arise out of the order of the Tribunal and, hence, this petition is dismissed. No costs.