M/s.Hope Micro Credit Finance Pvt Ltd, Palakkad V. ACIT, Palakkad

ITA 789/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77460 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 19-06-2014
• Assessment Year: 2012-2013
• Appeal Filed On: 13-12-2013
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Keywords: Reasonable cause
• Section: 273B; 234B; 56; 12; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO.789/COCH/2013 ASSESSMENT YEAR : 2012-13 M/S. HOPE MICRO CREDIT FINANCE (P) LTD., 14/748, SREE SAKTHI COMPLEX, COIMBATORE ROAD, KALAMANDAPAM, PALAKKAD-678 001. [PAN:AAACF 3540P] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, PALAKKAD. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI SIVADAS CHETTOOR, CA REVENUE BY SMT. LATHA V. KUMAR, JR. DR DATE OF HEARING 19/06/2014 DATE OF PRONOUNCEMENT 27/06/2014 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-V, KOCHI DATED 09-10-2013 FOR THE ASSESSMENT YEAR 2012-13. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO LEVY OF PENALTY U/S. 221 R.W.S. 140A(3)OF THE I.T. ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FAILED TO MAKE PAYMENT OF ADVANCE TAX OF RS. 92,01,650/- AS REQUIRED UNDER THE INCOME TAX ACT, 1961 BY 15-03-2012. THIS PAYMENT OF INCOME TAX DUE AND PAYABLE BY THE ASSESSEE WAS ALSO NOT PAID AS SELF ASSESSMENT TAX AT THE TIM E OF FILING THEIR INCOME TAX RETURN. UNDER THE ACT EVERY ASSESSEE IS REQUIRED T O PAY THE ENTIRE INCOME TAX I.T.A. NO.789/COCH/2013 2 WITH IN THE PRESCRIBED LIMIT THE BY OF ADVANCE TAX. IF THE ASSESSEE IS UNABLE TO PAY THE ADVANCE TAX, THE ACT PROVIDES THAT THEY SHO ULD PAY SELF ASSESSMENT TAX BEFORE FILING RETURN OF INCOME U/S. 140A OF THE I.T . ACT. IF THE ASSESSEE FAILS TO PAY, THEN THE ASSESSEE IS DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF TAX AND INTEREST REMAINING UNPAID, AS PER SECTION 140A( 3) OF THE I.T. ACT. THUS PAYMENT OF SELF ASSESSMENT TAX IS AN ADDITIONAL FAC ILITY PROVIDED TO THE ASSESSEE TO MAKE PAYMENT OF TAX PAYABLE THAT MAY ARISE OUT O F SOME UPWARD REVISION/CORRECTION IN THEIR INCOME AT THE TIME OF FILING THEIR RETURN. THE ASSESSEE WAS THEREFORE DIRECTED TO PAY THE TAXES OVERDUE WIT HIN 3 DAYS FROM THE DATE OF RECEIPT OF LETTER DATED 1/11/2012 WHICH WAS RECEIVE D BY THE ASSESSEE ON 2/11/2012 . HOWEVER, THE SAID LETTER WAS NOT COMPLI ED WITH AND THEREFORE, THE ASSESSEE IS DEEMED TO BE AN ASSESSEE IN DEFAULT AS PER THE PROVISIONS OF SECTION 140A(3) OF THE I.T. ACT IN RESPECT OF THE OUTSTANDI NG AMOUNT OF SELF ASSESSMENT TAX OF RS. 92,01,650/- FOR THE ASSESSMENT YEAR 2012 -13. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 221(1) R.W.S. 140A(3) O F THE ACT, WHICH WAS SERVED UPON THE ASSESSEE INTIMATING THAT THE ASSESSEE IS D EEMED TO BE AN ASSESSEE IN DEFAULT AND TO SHOW CAUSE AS TO WHY PENALTY U/S. 22 1(1) OF THE ACT SHOULD NOT BE LEVIED FOR FAILURE TO PAY SELF ASSESSMENT TAX FOR A .Y. 2012-13. THE DATE OF COMPLIANCE WAS FIXED ON 3.12.2012. ON THE DATE OF HEARING BEFORE THE ASSESSING OFFICER, A REPRESENTATIVE FROM THE COMPANY ATTENDED , AND STATED THAT THE ASSESSEE HAS BEEN FACING CERTAIN FINANCIAL DIFFICUL TIES AND THAT THE PAYMENT WOULD BE PAID IN A WEEKS TIME. NO WRITTEN SUBMISSIONS W ERE MADE NOR ANY EVIDENCE IN SUPPORT OF THEIR CONTENTION WAS SUBMITTED FOR CO NSIDERATION BEFORE THE ASSESSING OFFICER. ON 13/12/2012, A COPY OF CHALLA N EVIDENCING THE PAYMENT OF RS. 20,00,000/- WAS FILED IN THE TAPAL OF ASSESSING OFFICER. THE ASSESSEE HAVE NOT ADDUCED ANY EVIDENCE TO SATISFACTORILY EXPLAIN AS TO WHY THE PAYMENT OF ADVANCE TAX OR FOR THAT MATTER SELF ASSESSMENT TAX WAS NOT PAID WITHIN THE STIPULATED TIME AS PROVIDED IN THE INCOME TAX ACT. THEREFORE, THE ASSESSING OFFICER HAD NO OPTION BUT HE TOOK A STAND THAT THE ASSESSEE DOES NOT HAVE ANY SATISFACTORY OR REASONABLE EXPLANATION TO OFFER FOR FAILURE TO COMPLY WITH THE I.T.A. NO.789/COCH/2013 3 PROVISIONS OF THE INCOME TAX ACT. THE EXPLANATION TO SECTION 221(1) SPECIFICALLY PROVIDES THAT AN ASSESSEE BE LIABLE TO PAY PENALTY U/S. 221 OF THE I.T. ACT. THE ASSESSING OFFICER RECORDED THE FINDINGS THAT THE AS SESSEE IS MICRO FINANCE COMPANY PROVIDING FINANCE TO THIRD PARTIES. THEREFO RE PAYMENT OF UNDISPUTED SELF ASSESSMENT TAXES SHOULD NOT POSE A PROBLEM UNLESS T HE ASSESSEE UTILIZES THE FUNDS TO BE PAID AS TAXES FOR PROVIDING LOANS AT AN INTEREST TO PARTIES WITH A MALAFIDE INTENTION TO DEFER THE PAYMENT OF TAXES. IT IS QUITE POSSIBLE IN THE ABSENCE OF ANY DETAILS, TO INFER THAT THE ASSESSEE FINDS UTILIZING THE FUNDS FOR PROVIDING LOANS, A MORE PROFITABLE VENTURE, THAN PA YMENT OF TAX AS THE INTEREST ELEMENT OUTSIDE EXCEEDS THE INTEREST PAYMENTS TO BE MADE TO THE GOVERNMENT. THE ASSESSEE BY INDULGING IN SUCH PRACTICES HAS ACT ED PURELY FOR ITS OWN PERSONAL PECUNIARY INTEREST. ACCORDING TO THE ASSESSING OFF ICER SUCH A PRACTICE OF THE ASSESSEE IF ALLOWED WOULDL DEFEAT THE OBJECTIVES OF TAX COLLECTION BY THE GOVERNMENT AND THEREFORE, NEED TO BE NIPPED IN THE BUD OR CURBED AS ALLOWING SUCH PRACTICE WOULD ALSO BE AN INJUSTICE TO THE LA W ABIDING TAXPAYING ASSESSEES. THEREFORE THE ASSESSING OFFICER CONCLUDED THAT THIS IS A FIT CASE FOR LEVY OF PENALTY U/S. 221 R.W.S. 140A(3) OF THE I.T. ACT AND PROCEED ED TO LEVY PENALTY ON THE ASSESSEE FOR DEFAULT IN PAYMENT OF SELF ASSESSMENT TAX AMOUNTING TO RS. 92,01,650/-. 4. THE ASSESSING OFFICER THEREFORE IMPOSED A PENALT Y OF RS.18,40,330/- BEING 20% OF RS.92,01,650/-. 5. ON APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGAINST THIS, THE ASSESSEE HAS PREFERRED THIS APPEA L BEFORE US. 6. THE LD. AR SUBMITTED THAT THE SAID PENALTY IS IL LEGAL AND UNSUSTAINABLE IN VIEW OF THE SUBSTITUTION OF SUB SECTION (3) OF 140A BY DIRECT TAX LAWS (AMENDMENT) ACT, 1987 WITH EFFECT FROM 1-4-1989. A TTENTION IS INVITED TO THE I.T.A. NO.789/COCH/2013 4 PROVISION OF SECTION 140A(3) AS AT STOOD IMMEDIATEL Y BEFORE THE SAID AMENDMENT EFFECTIVE FROM 1-4-1989 WHICH IS AS FOLLOWS IF ANY ASSESSEE FAILS TO PAY THE TAX OR ANY PART THEREOF IN ACCORDANCE WITH THE PROVISIONS OF SUB- SECTION (1), TWO PERCENT OF SUCH TAX OR PART THEREOF, AS THE CASE MAY BE SHALL BE RECOVERED FROM BY WAY OF PENALTY FOR EVERY MONTH DURING WHICH THE DEFAULT CONTINUES. 7. THE PROVISION OF SECTION 140A(3) AFTER THE AMEND MENT IS ALSO GIVEN BELOW. IF ANY ASSESSEE FAILS TO PAY THE WHOLE OR ANY PAR T OF SUCH TAX OR INTEREST OR BOTH IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1), HE SHALL, WITHOU T PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF THE TAX OR INTEREST OR BOTH REMAINING UNPAID, AND ALL THE PROVISIONS OF THIS AC T SHALL APPLY ACCORDINGLY. 8. HE SUBMITTED THAT FROM THE ABOVE AMENDMENT IT CA N BE CONCLUDED THAT THE PARLIAMENT INTEND TO WITHDRAW THE PENALTY SPECI FICALLY PROVIDED U/S. 140A(3) IN VIEW OF THE SIMULTANEOUS INSERTION OF SECTION 23 4A, 234B, 234C IN THE INCOME TAX ACT, PROVIDING FOR PAYMENT OF PENAL INTEREST WH EN IT DEFAULTS ENVISAGED U/S. 140A(3) OCCURS. 9. THE LD. AR DREW OUT ATTENTION TO THE PROVISIONS OF SEC. 234A, 234B, 234C OF THE ACT AS INSERTED BY DIRECT TAX LAWS (AMENDMEN T) ACT, 1987 WITH EFFECT FROM 01-04-1989. HE SUBMITTED THAT A COMBINED READ ING OF SUBSTITUTED SECTION 140A(3) WITH NEWLY INSERTED SECTION 234A, 234B & 23 4C WOULD MAKE THE PROVISION VERY CLEAR THAT AN EXPRESSED PROVISIONS P ROVIDING FOR PENALTY HAS BEEN DONE AWAY WITH. IT IS ALSO SUBMITTED THAT IF DEMAN D IS RAISED BOTH UNDER 140A(3) TOWARDS PENALTY AND SECTION 234A, 234B, 234 C TOWARDS PENAL INTEREST I.T.A. NO.789/COCH/2013 5 THEN THE WHOLE DEMAND BECOMES CONFISICATORY, ARBITO RY AND WOULD BE HIT BY ARTICLE 14 OF THE CONSTITUTION. THEREFORE HARMONIO US CONSTRUCTION OF LEGAL PROVISION IS REQUIRED AND THE PENALTY IMPOSED MAY K INDLY BE REMOVED. 10. THE LD. AR ALSO DREW OUR ATTENTION TO THE NOTES ON CLAUSES APPENDED TO THE DIRECT TAX LAW (AMENDMENT) BILL 1987 (BILL NO. 131 OF 1987) AS INTRODUCED IN THE LOK SABHA ON 11/12/1987 WHICH READS AS FOLLOWS: - THE EXISTING SUB SECTION 3 OF THE SECTION WHICH P ROVIDES FOR THE LEVY OF THE PENALTY OF NON PAYMENT OF SELF ASSESSMENT TAX IS BEING OMITTED. 11. HE ALSO INVITED OUR ATTENTION TO CIRCULAR NO. 549 DATED 31/10/1989 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES EXPLAINING THE SCOPE OF SECTION 140A(3) AND THE IMPACT OF INSERTION OF THE NEW SECTIONS 234A, 2 34B, 234C VIDE INCOME TAX AMENDMENT ACT, 1987 WHICH IS AS FOLLOWS:- 4.16 FOR DELAY IN FILING THE RETURN OF INCOME AND FOR DELAY OR DEFAULT IN PAYMENT OF ADVANCE TAX, MANDATORY INTERE ST IS NOW PAYABLE UNDER THE PROVISIONS OF NEW SECTIONS 234A T O 234C INSERTED BY THE AMENDING ACT, 1987. FURTHER, UNDER THE NEW SCHEME OF ASSESSMENT ALSO BEING INTRODUCED BY THE A MENDING ACT, 1987 (REFER PARA 5.2 OF THESE EXPLANATORY NOTES ), IF THE TAX AND INTEREST DUE ON THE BASIS OF RETURNED INCOME HA VE BEEN CORRECTLY PAID, THE RETURN WILL BE ACCEPTED AS SUCH AND NO FURTHER ACTION ON IT WILL BE NECESSARY. FOR SUCCES SFUL IMPLEMENTATION OF THE NEW SCHEME OF ASSESSMENT, IT IS NECESSARY THAT THE ASSESSEES SHOULD ALSO PAY INTERE ST DUE IT IS NECESSARY THAT THE ASSESSEES SHOULD ALSO PAY INTERE ST DUE UNDER THE PROVISIONS OF THE NEW SECTIONS 234A TO 234C ALO NG WITH THE SELF-ASSESSMENT TAX BEFORE FILING THE RETURN OF INC OME. THE AMENDING ACT, 1987, HAS, THEREFORE, AMENDED SUB-SEC TION (1) OF SECTION 140A TO MAKE IT MANDATORY FOR A PERSON T O PAY BEFORE FURNISHING THE RETURN, TAX TOGETHER WITH INT EREST PAYABLE UNDER ANY PROVISIONS OF THE ACT FOR DELAY IN FURNIS HING THE RETURN OR ANY DEFAULT OR DELAY IN PAYMENT OF ADVANCE TAX. PROOF OF I.T.A. NO.789/COCH/2013 6 PAYMENT OF SUCH TAX AND INTEREST IS TO BE ATTACHED WITH THE RETURN. FURTHER, AN EXPLANATION HAS BEEN INSERTED IN THE SAID SUB-SECTION (1) TO CLARIFY THAT WHERE THE ASSESSEE PAYS ONLY PART OF, THE AMOUNT DUE AT THE TIME OF FILING THE RETURN , SUCH PAYMENT SHALL FIRST BE ADJUSTED TOWARDS INTEREST PA YABLE, AND BALANCE, IF ANY, SHALL BE ADJUSTED TOWARDS THE TAX PAYABLE. 4.17. THE OLD PROVISIONS OF SUB-SECTION(3) OF THE SECTION PROVIDED FOR LEVY OF PENALTY FOR NON-PAYMENT OF SEL F-ASSESSMENT TAX. SINCE THE RATE OF MANDATORY INTEREST FOR FAIL URE TO PAY THE TAX HAS NOT BEEN INCREASED, IT IS NOT NECESSARY TO RETAIN THIS PROVISION ANY MORE. THE AMENDING ACT, 1987, HAS AC CORDINGLY, OMITTED THE SAID SUB-SECTION(3). 12 ACCORDING TO THE LD. AR, FROM THE ABOVE IT IS CL EAR THAT THE VIEW OF THE DEPARTMENT IS NOT TO IMPOSE PENALTY SINCE THE PENAL TY IS TAKEN CARE UNDER SECTIONS 234A, 234B, 2324C. IT IS TO BE NOTED THAT THIS CIRCULAR BEING BENEFICIAL IS BINDING ON THE DEPARTMENT AND HENCE IT IS REQUESTED THAT THE SAID CIRCULAR BE APPLIED IN THE CASE OF APPELLANT. 13. IN ANY VIEW OF THE MATTER IT IS SUBMITTED BY L D. AR THAT THE PENALTY BE CANCELLED OR REASONABLE ORDERS MAY BE PASSED GIVING DUE RELIEF SINCE THERE IS NO MENS REA. FURTHER, THE LD. AR SUBMITTED THAT THE A PPELLANT WAS IN GREAT FINANCIAL DIFFICULTIES. THE APPELLANT WAS GIVEN ONLY 3 DAYS T IME. THE AMOUNT WAS DEMANDED VIDE LETTER NO. ACIT/CIRCLE-1 PKD/2012/13 DATED 1/11/2012 WHICH WAS SERVED ON THE APPELLANT ON 2/11/12. GIVING 3 D AYS TIME TO REMIT RS. 92 LAKHS IS MOST UNFAIR AND UNREASONABLE IF NOT TOTALL Y ARBITRARY. EVEN THEN THE APPELLANT REMITTED ON 13-12-2012 RS. 20 LAKHS SOON ON RECEIPT OF THE NOTICE. THE MANAGING DIRECTOR OF THE COMPANY DIED A FEW MON THS BACK ALSO. THERE IS NO DEMAND NOTICE EVEN. THE PROVISIONS OF SECTION 14 0A(3) CLEARLY PROVIDES THAT PROVISIONS RELATING TO SECTION 221 AS WELL AS OTHER PROVISIONS OF THE ACT SHALL APPLY. THUS BEFORE TREATING THE ASSESSEE AS AN ASS ESSEE DEEMED TO BE IN DEFAULT THE ASSESSING OFFICER OUGHT TO HAVE ISSUED A DEMAND NOTICE. IT IS I.T.A. NO.789/COCH/2013 7 PERTINENT TO NOTE THAT SECTION 140A(3) REQUIRES TO DECLARE A PERSON AS AN ASSESSEE DEEMED TO BE IN DEFAULT AN NOT AN ASSESS EE IN DEFAULT. SO ACTUALLY HE IS NOT REGARDED AS A DEFAULTER BUT BY A LEGAL FI CTION HE HAS TO BE TREATED AS AN ASSESSEE DEEMED AS A DEFAULTER AND HENCE ALL THE US UAL PROVISIONS RELATING TO DEMAND OF TAX AS ENVISAGED U/S. 156 SHOULD BE FOLLO WED. 14. THE LD. AR SUBMITTED THAT THE APPELLANT WAS DEA LING MICRO FINANCE AND IT IS A MATTER OF COMMON KNOWLEDGE THAT THE WHOLE MICR O FINANCE INDUSTRY IN INDIA WAS IN DOLDRUMS LEADING TO THE APPOINTMENT OF MALEG AM COMMITTEE BY THE RESERVE BANK OF INDIA. THERE WERE CONSIDERABLE DIF FICULTIES IN GETTING LOANS FROM BANKS AND THERE WERE DIFFICULTIES IN THE RECOVERY O F LOAN GIVEN BY THE APPELLANT ALSO. HE DREW OUR ATTENTION TO THE PROVISO TO SECT ION 221(1) WHICH PROVIDES AS FOLLOWS: PROVIDED FURTHER THAT WHERE THE ASSESSEE PROVES TO THE SATISFACTION OF THE ASSESSING OFFICER THAT THE DEFA ULT WAS FOR GOOD AND SUFFICIENT REASONS, NO PENALTY SHALL BE LE VIED UNDER THIS SECTION. THUS IT IS CLEARLY DIRECTORY. HE PRAYED TO DELETE THE PENALTY AND DO JUSTICE. 15. THE LD. DR SUBMITTED THAT IN THIS CASE, IT IS A PPARENT FROM THE RECORDS THAT THE ASSESSEE HAS FAILED TO DEPOSIT THE AMOUNT OF SELF ASSESSMENT TAX FOR THE ASSESSMENT YEAR 2012-13 WHICH WAS AS PER THE RETUR N OF INCOME FILED BY THE ASSESSEE SHOWING THE TAX LIABILITY OF RS. 92,01,650 . ALTHOUGH THE RETURN HAS BEEN FILED IN TIME, THE AMOUNT OF TAX, AS WORKED OU T BY THE ASSESSEE THEMSELVES, COULD NOT BE REMITTED IN TIME. HERE, THE IMMEDIATE ISSUE IS NOT RELATING TO ANY DISPUTE REGARDING THE DEMAND OF RS. 92,01,650/-. I T IS ONLY RELATING TO THE PAYMENT OF SUCH DEMAND WHERE THE ASSESSEE AS SUBMIT TED THAT BECAUSE OF FINANCIAL DIFFICULTIES AND OTHER PROBLEMS THEY COUL D NOT REMIT THE SAME. FURTHER, SECTION 140A(3) DEALS WITH ANY FAILURE ON THE PART OF THE ASSESSEE TO PAY THE I.T.A. NO.789/COCH/2013 8 WHOLE OR ANY PART OF SUCH TAX OR INTEREST OR BOTH IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION 1 SHALL BE DEEMED TO BE A N ASSESSEE IN DEFAULT, IN RESPECT OF THE TAX OR INTEREST OR BOTH REMAINING UN PAID AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY. IT IS AMPLY CLEA R THAT ANY FAILURE IN PAYMENT OF EITHER A PART OR THE WHOLE OF THE AMOUNT OF TAX PAY ABLE ON THE BASIS OF RETURN FILED U/S. 139 OF THE ACT, SHALL ATTRACT THE PROVIS IONS WHERE THE ASSESSEE SHALL BE DEEMED TO BE AN ASSESSEE IN DEFAULT. THE LD. DR SU BMITTED THAT: 1. THE ASSESSEE HAS FILED THE RETURN OF INCOME U/S . 139 OF THE ACT. 2. AN AMOUNT OF RS. 92,01,650/- IS THE AMOUNT OF TAX PAYABLE ON THE BASIS OF RETURN FILED U/S. 139 OF T HE ACT. 3. THE ASSESSEE SHALL BE LIABLE TO PAY SUCH TAX. 4. ANY FAILURE ON PART OF THE ASSESSEE IN THE PAY MENT OF SUCH TAX SHALL MAKE HIM DEEMED TO BE IN DEFAULT. 5. AN ASSESSEE DEEMED TO BE IN DEFAULT IN MAKING PAYMENT OF TAX SHALL BE LIABLE TO PAY THE PENALTY U/S. 221(1) OF THE ACT. 16. THE LD. DR SUBMITTED THAT THE PROVISIONS THAT T HE PROVISIONS WHICH MAKES THE ASSESSEE DEEMED TO BE IN DEFAULT IS MANDATORY A S THE WORD USED IN THE ACT IS SHALL. THE PROVISIONS MAKE IT OBLIGATORY UPON TH E PART OF THE ASSESSEE TO MAKE SUCH PAYMENT WITHOUT FAIL, AT THE SAME TIME, IT MAK ES OBLIGATORY UPON THE ASSESSING AUTHORITY TO TREAT THE ASSESSEE IN DEFAUL T. AND ONCE, THE ASSESSEE IS TREATED AS AN ASSESSEE IN DEFAULT, THE PENALTY U/S. 221 IS MANDATORILY LEVIABLE. IN VIEW OF THIS, THERE IS NO INFIRMITY IN THE ORDER OF THE ASSESSING OFFICER/CIT(A) I.T.A. NO.789/COCH/2013 9 IN MAKING THE ORDER U/S. 221(1) OF THE ACT. ACCORD INGLY, THE ORDER MADE BY THE CIT(A) IS TO BE UPHELD AND THE APPEAL IS TO BE DISM ISSED. 17. WE HAVE HEARD THE PARTIES AND PERUSED THE RECOR D. IN THIS CASE, THE MATERIAL FACTS OF THE CASE ARE NOT IN DISPUTE. THE ASSESSEE IS LIABLE TO PAY THE ADMITTED TAX OF RS. 92,01,650/- FOR ASSESSMENT YEAR 2012-13 AS PER THE RETURN FILED BY THE ASSESSEE. THE ASSESSEE FAILED TO PAY THIS AMOUNT EVEN AFTER GIVING NOTICE TO THE ASSESSEE VIDE NOTICE DATED 01-11-2012 SERVED UPON THE ASSESSEE ON 02-11-2012 WHEREIN THE ASSESSING OFFICER ASKED T HE ASSESSEE TO PAY THE ADMITTED TAX WITH THREE DAYS FROM THE RECEIPT OF TH E NOTICE. ON THE DATE OF HEARING, THE ASSESSEES AUTHORIZED REPRESENTATIVE A PPEARED BEFORE THE ASSESSING OFFICER AND PRAYED FOR ONE WEEKS TIME FOR MAKING T HE PAYMENT AS THE ASSESSEE IS SUFFERING FROM FINANCIAL DIFFICULTIES. LATER, T HE ASSESSEE PAID RS. 20.00 LAKHS AND FILED A COPY OF CHALLAN EVIDENCING THE ABOVE PA YMENT ON 13/12/2012. THE BALANCE WAS NOT PAID BY THE ASSESSEE AND HAS NOT EX PLAINED THE REASONS FOR NON PAYMENT. THAT BEING SO, THE ASSESSING OFFICER CONC LUDED THAT THE ASSESSEE IS IN DEFAULT IN TERMS OF SEC. 221 R.W.S. 140A(3) OF THE I.T. ACT AND LEVIED PENALTY AT 20% OF THE TAX OUTSTANDING AN IMPOSED A PENALTY OF RS. 18,40,330/-. 18. SECTION 140A(3) OF THE I.T. ACT PROVIDES THAT I F THE ASSESSEE FAILS TO PAY THE WHOLE OR ANY PART OF SUCH TAX OR INTEREST OR BO TH IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1) OF SEC. 140A OF THE A CT, HE SHALL BE DEEMED TO BE AN ASSESSEE IN DEFAULT, IN RESPECT OF TAX OR INTERE ST OR BOTH REMAINING UNPAID AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDIN GLY. THE ASSESSEE IN THIS CASE HAS ADMITTEDLY FAILED TO PAY THE ADMITTED TAX AMOUN T OF RS.92,01,650/- WHICH IS ADMITTED TAX AND INTEREST. THE PROVISIONS OF SEC. 221 WILL COME INTO FORCE IF THE ASSESSEE FAILS TO EXPLAIN THE REASONABLE CAUSE AS P ROVIDED U/S. 273B OF THE I.T. ACT FOR NOT DEPOSITING THE TAX IN TIME WITH THE GOV ERNMENT BY THE ASSESSEE AND THEREFORE, THE PENALTY U/S. 221 OF THE ACT OUGHT TO BE IMPOSED BY THE ASSESSING OFFICER. THE ASSESSEE IS NOT ABLE TO POINT OUT ANY REASONABLE CAUSE FOR NOT I.T.A. NO.789/COCH/2013 10 DEPOSITING THE ADMITTED TAX WITH THE GOVERNMENT. T HE ASSESSEE MADE A PLEA BEFORE US THAT THERE IS NO DEMAND NOTICE U/S. 156 O F THE I.T. ACT SERVED UPON THE ASSESSEE SO AS TO MAKE PAYMENT BY THE ASSESSEE. SECTION 156 OF THE ACT READS AS UNDER: WHEN ANY TAX, INTEREST, PENALTY, FINE OR ANY OTHE R SUM IS PAYABLE IN CONSEQUENCE OF ANY ORDER PASSED UNDER THIS ACT, THE ASSESSING OFFICER SHALL SERVE UPON THE ASSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORM SPECIFYING THE SUM SO PAYABLE: PROVIDED THAT WHERE ANY SUM IS DETERMINED TO BE PAYABLE BY THE ASSESSEE UNDER SUB-SECTION (1) OF SECTION 143, THE INTIMATION UNDER THAT SUB-SECTION SHALL BE DEEMED TO BE A NOT ICE OF DEMAND FOR THE PURPOSE OF THIS SECTION. 19. THE ABOVE STATUTORY PROVISIONS OF SEC. 156 PROV IDES THAT WHEN ANY TAX, INTEREST, PENALTY, FINE OR ANY OTHER SUM IS PAYABLE IN CONSONANCE WITH ANOTHER ORDER PASSED UNDER THIS ACT, THE ASSESSING OFFICER SHALL SERVE UPON THE ASSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORMAT SPECIFY ING THE SAME SO PAYABLE. IN THE CASE OF THE ASSESSEE, THE TAX AND INTEREST IS P AYABLE NOT IN CONSONANCE WITH ANY ORDER OR ASSESSMENT ORDER OR ANY OTHER ORDER UN DER THIS ACT BY THE ASSESSING OFFICER. THE FACT IS THAT IN THIS CASE, THE AMOUNT OF TAX AND INTEREST IS PAYABLE ON THE BASIS OF THE RETURN FILED BY THE ASS ESSEE ITSELF UNDER THE PROVISIONS OF THE ACT WHICH IS PAYABLE BY VIRTUE OF PRECEDENCE OF SELF ASSESSMENT U/S. 140A(3) OF THE I.T. ACT. 20. THE STATUTORY PROVISION OF S. 156 PROVIDES THAT WHEN ANY TAX, INTEREST, PENALTY, FINE OR ANY OTHER SUM IS PAYABLE IN CONSEQ UENCE OF ANY ORDER PASSED UNDER THIS ACT, THE ASSESSING OFFICER SHALL SERVE U PON THE ASSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORM SPECIFYING THE SUM SO PAYABLE. IN THE CASE OF THE ASSESSEE, THE TAX AND INTEREST IS PAYABLE NOT IN CO NSEQUENCE OF ANY ORDER OF ASSESSMENT OR ANY OTHER ORDER PASSED UNDER THIS ACT BY THE ASSESSING OFFICER. I.T.A. NO.789/COCH/2013 11 THE FACT IS THAT IN THIS CASE THE AMOUNT OF TAX AND INTEREST IS PAYABLE ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE ITSELF UN DER THE PROVISIONS OF THE ACT AND IS PAYABLE BY VIRTUE OF THE PROVISION OF SELF-ASSE SSMENT U/S. 140A(1). UNDER THE SCHEME OF THE I.T. ACT, THIS AMOUNT OF TAX OR I NTEREST FOUND PAYABLE BY AN ASSESSEE ON THE BASIS OF THE RETURN FURNISHED UNDER THE PROVISIONS OF THE ACT BY THE ASSESSEE IS CALLED SELF ASSESSMENT TAX AS PER THE STATUTORY PROVISION OF SEC. 140A(1) AND THE ASSESSEE IS OBLIGED TO PAY THE SUM TO THE CREDIT OF THE GOVERNMENT BEFORE FURNISHING THE RETURN AND THE RET URN OF INCOME SHALL BE ACCOMPANIED BY PROOF OF PAYMENT O SUCH TAX AND INTE REST AS PROVIDED U/S. 140A(1) OF THE ACT AND THERE IS NO REQUIREMENT UND ER THE ACT FOR PASSING AN ORDER BY THE ASSESSING OFFICER FOR PAYMENT OF SELF- ASSESSMENT TAX BY THE ASSESSEE SEPARATELY. THE LIABILITY TO PAY SELF-ASS ESSMENT TAX ARISES ON THE ASSESSEE ON THE BASIS OF THE RETURN OF INCOME FURNI SHED BY IT AND THE FAILURE TO PAY THE WHOLE OR ANY PART OF SUCH INTEREST OR TAX P AYABLE IN ACCORDANCE WITH PROVISIONS OF S. 140A(1), RENDERS THE ASSESSEE TO B E IN DEFAULT IN RESPECT OF TAX OR INTEREST OR BOTH REMAINING UNPAID AS PER THE STA TUTORY PROVISION OF S. 140A(3). THE TAX, INTEREST, OR ANY OTHER SUM FOUND PAYABLE I N ACCORDANCE WITH THE ASSESSMENT OR ANY OTHER ORDER PASSED BY THE ASSESSI NG OFFICER UNDER THE PROVISIONS OF THE ACT, ARE TREATED DIFFERENTLY AND IN SUCH CASE A SEPARATE NOTICE OF DEMAND ON THE PRESCRIBED FORM HAS TO BE SERVED B Y THE ASSESSING OFFICER UPON THE ASSESSEE SPECIFYING THE SUM SO PAYABLE IN ACCORDANCE WITH THE PROVISION OF S. 156 . IN THIS CASE, THE AMOUNT FOUN D PAYABLE BY THE ASSESSEE IS IN ACCORDANCE WITH THE RETURN OF INCOME FURNISHED BY T HE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR AND SO PAYABLE AS SELF-ASSESSMENT TAX UNDER THE STATUTORY PROVISION OF S. 140A(1) AND THE IT ACT, 1961 NOWHER E PROVIDES FOR ISSUE OF ANY NOTICE OF DEMAND U/S. 156, IN CASE THE AMOUNT OF TA X OR INTEREST IS FOUND PAYABLE ON THE BASIS OF RETURN FURNISHED BY THE ASSESSEE. THE PROVISION OF S. 221 PROVIDES FOR LEVY OF PENALTY, WHEN AN ASSESSEE IS I N DEFAULT OR IS DEEMED TO BE IN DEFAULT IN MAKING THE PAYMENT OF TAX. THE ASSESSEE HAVING FAILED TO PAY THE AMOUNT OF TAX ON THE BASIS OF THE RETURN FURNISHED BY IT FOR THE RELEVANT I.T.A. NO.789/COCH/2013 12 ASSESSMENT YEAR IN ACCORDANCE WITH THE PROVISIONS O F S. 140A(1) IS DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF THE TAX OR INTEREST OR BOTH REMAINING UNPAID AS PER THE STATUTORY PROVISION OF S. 140A(3 ). THE PROVISION OF S. 140A(3) FURTHER PROVIDES THAT IN CASE THE ASSESSEE IS DEEME D TO BE IN DEFAULT, ALL THE PROVISIONS OF THIS ACT SHALL APPLY TO THE CASE OF T HE ASSESSEE. THE WORDS ALL THE PROVISIONS OF THIS ACT SHALL INCLUDE THE PROVISIO N OF S. 221 ALSO, WHICH PROVIDES FOR LEVY OF PENALTY WHEN AN ASSESSEE IS IN DEFAULT OR IS DEEMED TO BE IN DEFAULT IN MAKING THE PAYMENT OF TAX ETC. THERE IS NO REQUIRE MENT OF THE PROVISION OF S. 221 FOR SERVICE OF SEPARATE NOTICE OF DEMAND U/S. 1 56 ON THE PRESCRIBE FORM BEFORE THE LEVY OF PENALTY ON THE ASSESSEE AND THE ONLY REQUIREMENT OF PROVISIONS OF S. 221 FOR LEVYING OF PENALTY IS THAT THE ASSESSEE SHOULD BE IN DEFAULT OR DEEMED TO BE IN DEFAULT IN MAKING THE PA YMENT OF TAX ETC. THE ASSESSEE, IT SEEMS, IS MIXING UP THE TWO ESSENTIALL Y DIFFERENT ISSUES AND PROCEDURE THEREOF AS PER THE PROVISIONS OF THE ACT WITH RESPECT OF THE AMOUNT OF TAX OR INTEREST PAYABLE BY AN ASSESSEE ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE AS SELF-ASSESSMENT TAX AND THE OTHER ISS UE OF LEVY OF TAX ETC. BY THE ASSESSING OFFICER ON ASSESSMENT OF THE ASSESSEE A S PER THE VARIOUS PROVISIONS OF THE ACT. THE SCHEME OF THE IT ACT, 1961 IS ENTI RELY DIFFERENT WHILE DEALING WITH THE CASES OF ASSESSED TAX AND THE TAX PAYABL E AS PER RETURN OF INCOME FILED BY THE ASSESSEE AS SELF-ASSESSMENT TAX AS PE R THE STATUTORY PROVISION OF S. 140A(1). THE PROVISIONS OF S. 221 PROVIDING FOR PEN ALTY PAYABLE WHEN TAX IS IN DEFAULT APPLIES TO BOTH THE SITUATIONS, I.E., WHEN ASSESSEE IS IN DEFAULT IN RESPECT OF THE ASSESSED TAX OR IS DEEMED TO BE IN DEFAULT I N MAKING THE PAYMENT OF TAX UNDER SELF-ASSESSMENT TAX AS PER THE RETURN OF IN COME FILED BY THE ASSESSEE. SELF-ASSESSMENT TAX HAS TO BE CALCULATED ON THE B ASIS OF THE RETURN FILED BY THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR AND PAID TO THE CREDIT OF THE GOVERNMENT SUO MOTO BEFORE FURNISHING THE RETURN OF INCOME AND THE RETURN OF INCOME SHALL BE ACCOMPANIED BY PROOF OF PAYMENT OF SUCH TAX AND INTEREST AS PER THE STATUTORY PROVISIONS OF S. 140A(1) AND THER E IS NO REQUIREMENT OF ISSUE OF NOTICE OF DEMAND U/S. 156 BY THE ASSESSING OFFICER FOR MAKING SUCH PAYMENT OF I.T.A. NO.789/COCH/2013 13 TAX AND INTEREST OF THE SELF-ASSESSMENT TAX BEFOR E FURNISHING THE RETURN OF INCOME BY THE ASSESSEE. IN THIS VIEW OF THE MATTER, THE PENALTY U/S. 221 WAS RIGHTLY LEVIED ON THE ASSESSEE. 21. THE ASSESSEE HAS FURTHER MADE A CLAIM THAT THER E IS PROVISIONS OF SECTIONS 234A, 234B AND 234C TO TAKE CARE OF THE LOSS TO THE REVENUE ON NON PAYMENT OF TAX IN TIME AND BEING SO, THERE IS NO NECESSITY TO LEVY PENALTY U/S. 221 OF THE I.T. ACT AND HE ALSO TRIED TO COMPARE THE PRE-AMENDED PR OVISIONS OF SEC. 140A(3) WITH THE AMENDED PROVISIONS OF SEC. 140A(3) SO AS T O STATE THAT AS PER THE NEW AMENDED SECTION 140A(3), THE ASSESSEE CANNOT BE CON SIDERED AS DEEMED TO BE IN DEFAULT AND BEING SO, THE ASSESSEE CANNOT BE FAS TENED WITH THE LIABILITY OF PENALTY. THE ARGUMENT OF THE LD. COUNSEL FOR THE A SSESSEE IS DEVOID OF MERITS AS SEC. 140A(3) IS TO BE READ WITH SEC. 221 OF THE I.T . ACT AND WHICH EMPOWERS THE ASSESSING OFFICER TO LEVY PENALTY WHEN THERE IS A F AILURE ON THE PART OF THE ASSESSEE TO MAKE THE PAYMENT OF SELF ASSESSMENT TA X AND INTEREST AS STIPULATED IN SECTION 140A(1) OF THE I.T. ACT. THE PROVISION OF SECTION 221 IS PENAL IN NATURE. ON THE OTHER HAND PROVISION OF SECTION 23A, 23B AND 234C ARE COMPENSATORY IN NATURE. BEING SO, WE FIND NO MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE AND CONFIRM THE LEVY OF PE NALTY U/S. 221 R.W.S. 140A(3) OF THE I.T. ACT. 22. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 27-06 -2014. SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 27TH JUNE, 2014 GJ I.T.A. NO.789/COCH/2013 14 COPY TO: 1. M/S. HOPE MICRO CREDIT FINANCE (P) LTD., 14/748, SREE SAKTHI COMPLEX, COIMBATORE ROAD, KALAMANDAPAM, PALAKKAD-678 001. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCL E-1, PALAKKAD. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, KOCHI . 4. THE COMMISSIONER OF INCOME-TAX, TRICHUR. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN