M/s. DD Resorts Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1246/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7062 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Recovery proceedings; Opportunity of being heard; Initiation of penalty proceedings; Reasonable cause

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SH I.C.SUDHIR , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 1246/DEL/2014 (ASSESSMENT YEAR: 2008 - 09 ) . DD RESORTS PVT LTD., 12, RING ROAD, LAJPAT NAGAR, IV, NEW DELHI PAN:AAACD4557E VS. ACIT, CC - 12, NEW DELHI (APPELLANT) (RESPONDENT) I TA NO .1454/DEL/2014 (ASSESSMENT YEAR: 2008 - 09 ) ACIT, CC - 12, NEW DELHI VS. DD RESORTS PVT LTD., 12, RING ROAD, LAJPAT NAGAR, IV, NEW DELHI PAN:AAACD4557E (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SUDESH GARG, ADV REVENUE BY: SH. ANIL KUMAR SHARMA, DR DATE OF HEARING 17/10/ 2016 DATE OF PRONOUNCEMENT 05/ 01/2017 O R D E R PER PRASHANT MAHARISHI , A . M . 1. TH ESE ARE THE APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF THE LD CIT ( A) - XXXI, NEW DELHI DATED 31.12.2013 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A) ERRED IN LAW AND FACTS UPHOLDING PENALTY U/S 140 A (3) OF IT ACT 1961. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN RESTRICTING THE PENALTY FROM RS.1,13,41,820/ - TO RS.1800000/ - U/S 140A(3) OF THE ACT. PAGE 2 OF 8 4. THE ONLY GROUND OF APPEAL OF THE ASSESSEE IS THAT THE LD CIT(A) HAS CONFIRMED THE PENALTY U/S 140A(3) OF THE INCOME TAX ACT, 1961 OF RS. 18 LAKHS FOR NONPAYMENT OF SELF - ASSESSMENT TAX. 5. THE BRIEF FACTS OF THE CASE IS THAT THE APPELLANT HAS FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09 ON 30.08.2010 WHERE SELF ASSESSMENT TAX OF RS. 11341820/ - WAS PAYABLE. THIS TAX WAS PAID ALONG WITH INTEREST. FURTHER AS THE SAME WAS NOT PAID AT T HE TIME OF FILING OF RETURN OF INCOME THEN THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE FOR LEVY OF THE PENALTY. BEFORE THE LD AO, IT WAS SUBMITTED THAT THE ASSESSEE HAS ALREADY PAID THE TAX ON 11.11.2011 ALONG WITH INTEREST. REASONABLE CAUSE WAS EXPLAIN ED THAT THE ASSESSEE IS SUFFERING FROM LIQUIDITY CRUNCH AND ALL THE BANKING ACCOUNT OF THE ASSESSEE WERE SEIZED BY THE INCOME TAX DEPARTMENT AND DUE TO WHICH THE ASSESSEE WAS LEFT WITH NO MEANS TO PAY THE TAX. IT WAS FURTHER SUBMITTED THAT ADMISSION FOR TA X HAS ARISEN DUE TO SURRENDER MADE AT THE TIME OF SEARCH . THEREFORE, THERE IS SOME DELAY IN PAYMENT OF THE TAX. THE LD AO REJECTED THE EXPLANATION OF THE ASSESSEE AND LEVIED A PENALTY OF RS. 11341820/ - VIDE ORDER DATED 31.05.2012. 6. AGGRIEVED BY THE ORDER O F THE LD AO THE ASSESSEE HAS CHALLENGED THE SAME BEFORE THE LD CIT(A) WHO CONFIRMED THE PENALTY TO THE EXTENT OF 100% OF TAX LIABILITY AND RESTRICTED THE ORIGINAL PENALTY LEVIED OF RS. 11341820/ - TO RS. 18 LAKHS ONLY. AGGRIEVED BY THE ORDER OF THE LD CIT(A ) THE ASSESSEE IN APPEAL BEFORE US. FURTHER, THE REVENUE AGGRIEVED BY THE ORDER OF THE LD CIT(A) IN RESTRICTING THE PENALTY FROM RS. 11341820/ - TO RS. 18 LAKHS IS ALSO IN APPEAL BEFORE US. THEREFORE, THERE ARE CROSS APPEAL. 7. THE LD AR SUBMITTED THAT THE SE APPEALS ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009 - 10, WHERE IDENTICAL ISSUE HAS BEEN ADJUDICATED U/S 140A(3) WAS DELETED. HE SUBMITTED THAT IN THAT ORDER OF THE TRIBUNAL IN CASE OF THE ASSESSEE FOR ASSESS MENT YEAR 2009 - 10 IN ITA NO 965/DEL/2014 & 1103 & 1104/DEL/2014 FOR AY 2009 - 10 DATED 11 - 4 - 2016 THE PENALTY WAS DELETED BY RELYING ON THE ORDER OF THE COORDINATE BENCH IN CASE OF RAKESH KR GARG. HIS MAIN CONTENTION WAS THAT THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE. PAGE 3 OF 8 8. THE LD DR RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES FOR THE PURPOSE OF LEVY OF THE PENALTY AND ON THE QUANTUM, HE SUBMITTED THE LD CIT(A) HAS ERRED IN REDUCING IT TO RS. 18 LAKHS ONLY. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE RELEVANT ORDER OF THE COORDINATE BENCH OF ITAT IN ITA NO 965/DEL/2014 & 1103 & 1104/DEL/2014 DTAED11 - 4 - 2016 IN THE CASE OF THE ASSESSEE WHEREIN THE COORDINATE BENCH HAS DELETED TH E PENALTY HOLDING AS UNDER: - 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF RAKESH KUMAR GARG AND FIND THAT THE TRIBUNAL HAS ELABORATELY DIS CUSSED THE PROVISIONS OF CONCERNED SECTIONS AND ISSUE IN DETAIL. FOR THE SAKE OF CLARITY, THE RELEVANT PORTION OF THE AFORESAID ORDER IS REPRODUCED BELOW : - 18. AT THE VERY OUTSET, WE FIND IT APPROPRIATE TO DEAL WITH THE LEGAL ISSUE EMERGE FROM PARAGRAPH NO. 3.6 OF THE IMPUGNED ORDER, WHEREIN THE CIT(A) HAS OBSERVED THAT IT IS POSSIBLE THAT PROVISION OF SECTION 292B OF THE ACT WOULD COVER SUCH INADVERTENT MISTAKES IN QUOTING THE CORRECT SECTION OF THE ACT AS THE APPELLANT HAD PARTICIPATED IN THE PROCEEDIN GS WITHOUT RAISING ANY OBJECTION. ON THIS ISSUE FROM THE PENALTY NOTICE VIDE DATED 23.11.2011 (AS REPRODUCED HEREINABOVE IN PARA 14 OF THIS ORDER) AND PENALTY ORDER DATED 31.05.2012 (AS REPRODUCED HEREINABOVE IN PARA 16 OF THIS ORDER), IT IS APPARENT THAT THE AO SHOW CAUSED THE ASSESSEE AS TO WHY A PENALTY U/S 140A(3) SHOULD NOT BE IMPOSED UPON HIM FOR NOT COMPLYING WITH THE PROVISIONS OF SECTION 140A(1) OF THE ACT. FROM OPERATIVE PART OF THE PENALTY ORDER PARA 6, IT IS ALSO CLEAR THAT THE AO IMPOSED PENA LTY WITH A BOTTOM LINE THAT THE ASSESSEE IS HELD IN DEFAULT FOR NOT MAKING PAYMENT OF ADMITTED TAX LIABILITY WITHIN THE TIME LIMIT AS PRESCRIBED BY THE PROVISIONS OF THE ACT. THE AO IN THE LAST LINE OF THE OPERATIVE PART OF THE ORDER HAS MENTIONED THAT A PENALTY OF AN AMOUNT EQUAL TO ADMITTED TAX LIABILITY IS IMPOSED U/S 140A(3) OF THE ACT. 19. IN VIEW OF ABOVE NOTED FACTS, WE OBSERVE THAT THE SECTION 140A OF THE ACT IS PLACED IN CHAPTER XIV TITLED AS PROCEDURE FOR ASSESSMENT, WHEREAS SECTION 221 OF THE ACT HAS BEEN PLACED IN CHAPTER XVII COLLECTION AND RECOVERY OF TAX PART D - COLLECTION AND RECOVERY. FROM VIGILANT READING OF PROVISION OF SECTION 140A & 221 OF THE ACT, WE NOTE THAT SECTION 140A(3) STIPULATES THAT IF ANY ASSESSEE FAILS TO PAY THE WHOL E OR ANY PART OF SUCH TAX OR INTEREST OR BOTH IN ACCORDANCE WITH PROVISIONS OF SUB SECTION (1), HE SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCE WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF THE TAX OR INTEREST OR BOTH REMAIN ED UNPAID, AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY. MEANING THEREBY THE PROVISIONS OF SECTION 140A(3) OF THE ACT PROVIDES A SITUATION WHERE IF ANY ASSESSEE FAILS TO PAY WHOLE OR ANY PART OF SUCH TAX OR INTEREST OR BOTH AS PER PROVISIONS OF SECTION 140A(1) PAGE 4 OF 8 OF THE ACT THEN HE SHALL BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF UNPAID TAX OR INTEREST OR BOTH. WHILE FROM THE LANGUAGE USED BY THE LEGISLATION IN SECTION 221 OF THE ACT WE CLEARLY OBSERVE THAT THIS PROVISION PROVIDES PEN ALTY LEVIABLE AND PAYABLE WHEN THE ASSESSEE IS IN DEFAULT IN MAKING A PAYMENT OF TAX THEN THE AO MAY IMPOSE PENALTY DOES NOT EXCEEDS THE AMOUNT IN ARREARS. FOR THE SAKE OF CLARITY IN OUR OBSERVATIONS AND CONCLUSION, WE FIND IT APPROPRIATE TO REPRODUCE SEC TION 221 OF THE ACT AS UNDER: 221. (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 AO MAY DIRECT AND IN THE CASE OF A CONTINUING DEFAULT, SUCH FURTHER AMOUNT OR AMOUNTS AS THE AO MAY, FROM TIME TO TIME, DIRECT, SO, HOWEVER, THAT THE TOTAL AMOUNT OF PENALTY DOES NOT EXCEED THE AMOUNT O F TAX IN ARREARS: PROVIDED THAT BEFORE LEVYING ANY SUCH PENALTY, THE ASSESSEE SHALL BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD: PROVIDED FURTHER THAT WHERE THE ASSESSEE PROVES TO THE SATISFACTION OF THE AO THAT THE DEFAULT WAS FOR GOOD AND SUFFICIE NT REASONS, NO PENALTY SHALL BE LEVIED UNDER THIS SECTION. EXPLANATION FOR THE REMOVAL OF DOUBT, IT IS HEREBY DECLARED THAT AN ASSESSEE SHALL NOT CEASE TO BE LIABLE TO ANY PENALTY UNDER THIS SUB - SECTION MERELY BY REASON OF THE FACT THAT BEFORE THE LEVY OF SUCH PENALTY HE HAS PAID THE TAX. (2) WHERE AS A RESULT OF ANY FINAL ORDER THE AMOUNT OF TAX, WITH RESPECT TO THE DEFAULT IN THE PAYMENT OF WHICH THE PENALTY WAS LEVIED, HAS BEEN WHOLLY REDUCED, THE PENALTY LEVIED SHALL BE CANCELLED AND THE AMOUNT OF PENALTY PAID SHALL BE REFUNDED. 20. AS WE HAVE ALREADY NOTED THAT THERE IS NO PROVISION OR PROCEDURE IN SECTION 140A OF THE ACT FOR IMPOSING PENALTY FOR DEFAULT IN PAYMENT OF DUE TAX AND FROM THE LANGUAGE OF PROVISION OF SECTION 221 OF THE ACT, IT IS EX FACIE THAT SUB SECTION (1) PROVIDES THAT WHEN THE ASSESSEE IS IN DEFAULT OR IS DEEMED TO BE IN DEFAULT IN MAKING A PAYMENT OF TAX THEN HE SHALL BE LIABLE TO PAY SUCH AMOUNT AS THE AO MAY DIRECT BY WAY OF PENALTY AND THE TOTAL AMOUNT OF PENALTY DOES NOT EXC EED THE AMOUNT OF TAX IN ARREARS. FIRST PROVISO TO SECTION 221(1) OF THE ACT PROVIDES THAT BEFORE LEVYING ANY SUCH PENALTY THE ASSESSEE SHALL BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD AND SECOND PROVISO PROVIDES THAT WHERE THE ASSESSEE PROVES TO TH E SATISFACTION OF THE AO THAT THE DEFAULT WAS DUE TO GOOD FOR SUFFICIENT REASONS NO PENALTY SHALL BE LEVIED UNDER THIS SECTION. THE LEGISLATION HAS ALSO PROVIDES AN EXPLANATION REMOVING DOUBT THAT AN ASSESSEE WAS NOT CEASED TO BE LIABLE TO ANY PENALTY UN DER THIS SUB SECTION MERELY BY REASON OF THE FACT THAT BEFORE THE LEVY OF SUCH PENALTY HE HAS PAID THE TAX. SUB SECTION (2) OF SEC. 221 OF THE ACT FURTHER PROVIDES THAT PAGE 5 OF 8 WHERE AS A RESULT OF ANY FINAL ORDER THE AMOUNT OF TAX, WITH RESPECT TO THE DEFAULT IN THE PAYMENT OF WHICH THE PENALTY WAS LEVIED, HAS BEEN WHOLLY REDUCED, THE PENALTY LEVIED SHALL BE CANCELLED AND THE AMOUNT OF PENALTY PAID SHALL BE REFUNDED. 21. TURNING TO THE LEGAL ISSUE BEFORE US AS WE HAVE ALREADY NOTED THAT THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE U/S 140A(3) OF THE ACT AND THE PENALTY ORDER WAS ALSO PASSED BY IMPOSING PENALTY U/S 140A(3) OF THE ACT AND THERE IS NO MENTION OF SECTION 221 OF THE ACT EITHER IN THE NOTICE DATED 23.11.2011 NOR IN THE PENALTY ORDER DATED 31.05.2011 AS REPRODUCED HEREINABOVE. THE CIT(A) IN PARA 3.6 OF THE IMPUGNED ORDER HAS HELD THAT THE PROVISIONS OF SECTION 292B OF THE ACT WOULD COVER SUCH INADVERTENT MISTAKES IN QUOTING THE CORRECT SECTION OF THE ACT. AS WE HAVE ALREADY NOTED THAT AS PER FIRST PR OVISO TO SECTION 221(1) OF THE ACT IT IS MANDATORY THAT BEFORE LEVYING SUCH PENALTY THE ASSESSEE SHALL BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD AND SECOND PROVISO TO THE SAID SUB SECTION FURTHER PROVIDES THAT WHERE THE ASSESSEE PROVES TO THE SATISF ACTION OF THE AO THAT THE DEFAULT WAS FOR GOOD AND SUFFICIENT REASON THEN NO PENALTY SHALL BE LEVIED UNDER THIS PROVISO. 22. IN VIEW OF LANGUAGE USED BY THE LEGISLATURE IN FIRST AND SECOND PROVISO TO SUB SECTION (1) OF SECTION 221 OF THE ACT, IT IS AM PLE CLEAR THAT NO PENALTY CAN BE LEVIED WITHOUT AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND IF ASSESSEE SUCCEEDS TO PROVE TO THE SATISFACTION OF THE AO THAT THE DEFAULT WAS FOR GOOD AND SUFFICIENT REASON THEN NO PENALTY SHALL BE LEVIED ON THE ASSESSEE U/S 221 OF THE ACT. IN THE LIGHT OF LEGAL PROVISION IF ASSESSEE HAS NOT BEEN SHOW CAUSED U/S 221 OF THE ACT THEN IT IS A CLEAR VIOLATION OF MANDATORY PROVISION OF FIRST PROVISO TO SECTION 221(1) OF THE ACT AND WHEN ASSESSEE HAS NOT BEEN SHOW CAUSED U/S 221 OF THE ACT THEN IT CANNOT BE PRESUMED THAT THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO DISCHARGE THE REQUIRED ONUS INCUMBENT UPON HIM TO PROVE TO THE SATISFACTION OF THE AO THAT THE DEFAULT WAS FOR GOOD AND SUFFICIENT REASON AS REQ UIRED PER SECOND PROVISO OF THE ACT. THUS, IN OUR HUMBLE OPINION IF THE NOTICE FOR INITIATION OF PENALTY PROCEEDINGS TO THE ASSESSEE HAS NOT BEEN ISSUED U/S 221 OF THE ACT AND THAT TOO THE PENALTY ORDER HAS ALSO NOT BEEN PASSED U/S 221 OF THE ACT THEN THI S MISTAKE IS NOT COVERED UNDER THE UMBRELLA OF PROVISIONS OF SECTION 292B OF THE ACT. 23. COMING TO THE MERITS OF THE CASE FROM THE PENALTY ORDER, WE NOTE THAT THE AO HAS REJECTED THE CAUSE OF SHORTAGE OF FUNDS, LIQUIDITY CRUNCH AND SHORTAGE OF CASH AVAI LABLE AT THE TIME OF FILING RETURN BY OBSERVING THAT NO SUPPORTING DOCUMENTS IN THIS REGARD HAVE BEEN FILED. THE AO HAS ALSO REJECTED THE PLEA OF THE ASSESSEE THAT THE ASSESSEES BANK ACCOUNTS WERE ATTACHED BY THE DEPARTMENT FOR RECOVERY OF OUTSTANDING DE MAND BY OBSERVING THAT THE BANK ACCOUNTS OF THE ASSESSEE WERE ATTACHED IN THE MONTH OF MARCH, 2011 AS THE ASSESSEE WAS NOT MAKING PAYMENT OF DEMAND RAISED AFTER COMPLETION OF ASSESSMENT PROCEEDINGS. THE AO HAS ALSO TURNED DOWN THE ANOTHER PLEA OF THE ASSE SSEE THAT THE HUGE UNDISCLOSED INCOME WAS ADMITTED BY THE ASSESSEE AND HE VOLUNTARILY ADMITTED AND SURRENDERED BIG AMOUNTS TO COVER UP THE PAGE 6 OF 8 INCRIMINATING DOCUMENTS FOUND DURING THE SEARCH OPERATION WHICH FURTHER RESULTED INTO HUGE TAX DEMAND WHICH WAS OBVIO USLY AN ABNORMAL DEMAND AND THE SAME WAS NOT RELATED WITH THE NORMAL BUSINESS OF THE ASSESSEE. THE AO HAS REJECTED THIS CONTENTION OF THE ASSESSEE BY OBSERVING THAT IN THE RETURN OF INCOME SAID INCOME WAS VOLUNTARILY SURRENDERED AND OFFERED FOR TAX AND T HE ASSESSEE WAS UNDER OBLIGATION TO PAY TAX ON THE ADMITTED AND SURRENDERED INCOME BEFORE FILING THE RETURN AND, THEREFORE, ASSESSEE IS LIABLE TO PAY PENALTY U/S 140A(3) OF THE ACT. 24. FROM VIGILANT PERUSAL FROM THE OPERATIVE PART OF THE IMPUGNED ORDER OF THE CIT(A), WE NOTE THAT UNDISPUTEDLY ALL DUE TAXES WERE PAID BY THE ASSESSEE BEFORE PASSING AND LEVYING PENALTY ORDER AND THERE WAS NO ARREAR OF TAX AGAINST THE ASSESSEE AS ON 31.05.2012 WHEN THE PENALTY ORDER WAS PASSED. THE LD. DR HAS NOT CONTROVER TED THIS FACT THAT THE ASSESSEE PAID ENTIRE AMOUNT OF TAX UPTO 16.02.2012 IN 24 INSTALMENTS, WHEREIN ON 02.12.2011 THERE WAS A PAYMENT OF RS. 5,000/ - WHICH SHOWS THAT THE APPELLANT WAS REALLY FACING LIQUIDITY CRUNCH. FROM THE COPIES OF THE BANK STATEMENTS OF THE RELEVANT PERIOD APRIL, 2010 TO MARCH, 2011, PLACED BEFORE AUTHORITIES BELOW, WE NOTE THAT THE ASSESSEE WAS OPERATING 5 BANK ACCOUNTS WITH RBS BANK, DENA BANK, FEDERAL BANK, INDIAN OVERSEAS BANK & UNION BANK, WHEREIN THE TOTAL BALANCE AS ON THE DAT E OF FILING OF RETURN SHOWN WAS LESS THAN RS. 2.5 LACS AND THIS FACT HAS NOT BEEN CONSIDERED AND CONTROVERTED BY THE AO. THIS FACT ALSO SUPPORTS GOOD AND REASONABLE CAUSE OF THE ASSESSEE FOR NON PAYMENT OF TAX AT THE TIME OF FILING OF RETURN. 2 5. AT THIS JUNCTURE, WE RESPECTFULLY TAKE COGNIZANCE OF THE ORDER OF THE HONBLE HIGH COURT OF DELHI DATED 12.08.2013 IN ASSESSEES OWN CASE I.E. ITA NO. 384/DEL/2013 (SUPRA) , WHEREIN THE HONBLE HIGH COURT UPHELD THE CONCLUSION OF THE TRIBUNAL WHICH DIREC TED THE CIT(A) TO HEAR THE FIRST APPEAL OF THE ASSESSEE ON MERITS. THE RELEVANT OPERATIVE PART OF THE ORDER OF HONBLE HIGH COURT READS AS UNDER: TRIBUNAL IN THE IMPUGNED ORDER HAS FOUND AND HELD THAT THERE WAS A FINANCIAL CONSTRAINT FACED BY RESPONDENT ASSESSEE. THEREFORE, HE TOOK TIME TO ARRANGE FOR MONEY BUT THE SAID AMOUNT WAS DULY PAID BEFORE THE APPEAL WAS DISMISSED BY THE FIRST APPELLATE AUTHORITY. IT HAS BEEN HELD THAT THE APPEAL SHOULD HAVE BEEN TREATED AS VALIDLY FILED ON THE DATE WHEN THE TA X AMOUNT WAS PAID. TRIBUNAL ALSO EXAMINED THE QUESTION WHETHER DELAY IN FILING OF THE FIRST APPEAL SHOULD BE CONDONED IN VIEW OF THE FACTUAL POSITION. AFTER EXAMINING THE FACTUAL MATRIX, TRIBUNAL CONDONED THE DELAY AND DIRECTED CIT(APPEALS) TO HEAR THE A PPEAL ON MERITS AS IT WAS ADMITTED THAT THE TAX AMOUNT HAS BEEN PAID. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT THERE WAS A FINANCIAL CONSTRAINT AND LIQUIDITY CRUNCH RAISED BY THE ASSESSEE AT THE TIME OF FILING OF RETURN WHICH IS A GOOD AND SUFFICIENT REASON TO PROVE AND EXPLAIN THE DEFAULT OF THE ASSESSEE IN MAKING PAYMENT OF TAX AT THE TIME OF FILING RETURN WHICH WAS WRONGLY REJECTED BY THE AO. PAGE 7 OF 8 26. ON A SPECIFIC QUERY FROM THE BENCH THE LD. DR COULD NOT ASSIST US WHETHER ANY DEFECT NOTICE AS PER EXPLANATION (AA) OF SECTION 139(9) OF THE ACT WAS ISSUED TO THE ASSESSEE POINTING OUT DEFECTS IN THE RETURN BY THE DEPARTMENT. IN ABSENCE OF ANY DETAIL, WE MAY OBSERVE THAT THE DEPARTMENT HAS NOT ISSUED ANY NOTICE UNDER SAID PROVISION OF THE ACT POINTING OUT DEFECT IN THE RETURN FILED BY THE ASSESSEE. AT THE COST OF REPETITION, WE MAY AGAIN POINT OUT THAT THE AO NEITHER ISSUED ANY NOTICE U/S 221 OF THE ACT N OR LEVIED PENALTY U/S 221 OF THE ACT WHICH RESULTED A GREAT PREJUDICE AGAINST THE ASSESSEE BECAUSE THE ASSESSEE WAS NOT PROVIDED DUE OPPORTUNITY OF HEARING AS TO WHY PENALTY U/S 221 OF THE ACT SHOULD NOT BE IMPOSED UPON HIM AND AT THE SAME TIME ASSESSEE WA S ALSO PREVENTED TO ESTABLISH, PROVE AND TO DISCHARGE ITS ONUS TO SHOW THAT THERE WAS A GOOD AND SUFFICIENT REASON FOR NON PAYMENT OF TAX AS REQUIRED AS PER SECOND PROVISO TO SEC. 221(1) OF THE ACT. 27. IN VIEW OF ABOVE, WE RESPECTFULLY FOLLOW THE RATIO OF THE DECISION OF ITAT MUMBAI A BENCH IN THE CASE OF AGO PHARMACEUTICALS LTD. VS. ACIT (SUPRA), WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 28.09.2009 AND PAID SELF ASSESSMENT TAX U/S 140A OF THE ACT ON 19.01.2010 THEN SINCE ASSESSEE HAD PAID SELF ASSESSMENT TAX IMMEDIATELY WHEN FACT REGARDING NON PAYMENT OF TAX CAME TO ITS NOTICE THEN THE ASSESSEE WAS NOT LIABLE FOR PENALTY U/S 221 OF THE ACT. IN THE PRESENT CASE UNDISPUTEDLY THE ASSESSEE HAD PAID ENTIRE DEMAND OF TAX BY WAY OF LAST INSTALMENT PAID ON 16.02.2012 AND THIS FACT WAS ALSO NOTICED BY THE AO WHILE PASSING THE IMPUGNED PENALTY ORDER. HOWEVER, WE ALSO HOLD IN VIEW OF EXPLANATION TO SUB SECTION (1) OF SECTION 221 OF THE ACT THE ASSESSEE DOES NOT SECURE ANY IMMU NITY FROM LEVY OF PENALTY ONLY ON THE GROUND THAT HE HAD PAID ENTIRE AMOUNT OF TAX ARREARS BEFORE LEVY OF PENALTY MEANING THEREBY THERE WAS NO AMOUNT OF TAX REMAINED UNPAID AGAINST THE ASSESSEE WHEN THE PENALTY ORDER WAS PASSED BY THE AO. 28. TO SUM UP, WE ARE INCLINED TO HOLD THAT THE NO PENALTY NOTICE WAS ISSUED TO THE ASSESSEE U/S 221 OF THE ACT AND THE PENALTY ORDER WAS ALSO NOT PASSED U/S 221 OF THE ACT AND THERE IS NO PENALTY PROVISION U/S 140A OF THE ACT AND THE AO MISUNDERSTOOD THE RELEVANT PROVIS ION OF THE ACT WHILE ISSUING NOTICE AND IMPOSING PENALTY AGAINST THE ASSESSEE. CONSEQUENTLY THE ASSESSEE WAS ALSO NOT PROVIDED DUE OPPORTUNITY OF HEARING PRIOR TO IMPOSING PENALTY U/S 221 OF THE ACT AS REQUIRED BY FIRST PROVISO TO SECTION 221(1) OF THE AC T AND AT THE SAME TIME THE ASSESSEE WAS ALSO DENIED OPPORTUNITY OF HEARING TO DISCHARGE ITS ONUS AND TO SHOW GOOD AND SUFFICIENT CAUSE FOR NON PAYMENT OF TAX AT THE TIME OF FILING OF RETURN AS REQUIRED SECOND PROVISO TO SECTION 221(1) OF THE ACT TO AVOID PENALTY, WHICH IS ALSO A CLEAR VIOLATION OF THE MANDATORY PROVISIONS OF THE ACT BY THE AO AND THUS, PENALTY ORDER CANNOT BE HELD AS IN ACCORDANCE WITH LAW AND SUSTAINABLE AND THE FIRST APPELLATE AUTHORITY I.E. CIT(A) WAS QUITE JUSTIFIED AND CORRECT IN DEM OLISHING THE SAME. PAGE 8 OF 8 29. IN VIEW OF THE OBSERVATIONS OF THE HONBLE HIGH COURT OF DELHI IN THE JUDGMENT DATED 12.8.2013 IN ASSESSEES OWN CASE (SUPRA), WE ARE ALSO IN AGREEMENT WITH THE CONCLUSION OF THE CIT(A) THAT THE ASSESSEE WAS FACING FINANCIAL CONSTRA IN AND ACUTE LIQUIDITY CRUNCH AND THERE WAS A GOOD AND SUFFICIENT CAUSE FOR THE ASSESSEE FOR NON PAYMENT OF TAX WHICH WAS INCORRECTLY REJECTED BY THE AO WHILE WRONGLY IMPOSING PENALTY U/S 140A(3) OF THE ACT. WE ARE UNABLE TO SEE ANY INFIRMITY, PERVERSIT Y OR ANY OTHER VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE CIT(A) WHICH DELETED THE PENALTY AND THUS, WE UPHOLD THE SAME. ACCORDINGLY, GROUND NOS. 1 & 2 OF THE REVENUE BEING DEVOID OF MERITS IS BEING DISMISSED. 30. IN THE RESULT, THE APPEAL OF THE REVENUE BEING DISMISSED. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE COORDINATE BENCH, WE ARE INCLINED TO DELETE THE PENALTY SUSTAINED BY THE CIT (A) AND ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. 10. LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE FOR THAT YEAR WITH THE YEAR IN APPEAL BEFORE US. THEREFORE RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE COORDINATE BENCH IN THE CASE OF THE ASSESSEE FOR WE DELETE THE PENALTY LEVIED BY THE LD CIT(A) AND ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED. CONSEQUENTLY, THE APPEAL OF THE REVENUE IS AGAINST THE ORDER OF THE LD CIT(A) IN RESTRICTING THE PENALTY TO RS. 18 LAKHS IS ALSO DISMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/01 /201 7 . - SD/ - - SD/ - ( I.C.SUDHIR ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 05 / 01/2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI