INCOME TAX ACT, 1961

Section 221

Penalty under section 221 - Validity - Assessee-in-default under section 201 -

A survey came to be conducted under section 133A in business premises of assessee and an order under section 201(1) came to be passed enclosing therewith a demand notice. Assessee paid the amount demanded under the notice together with interest as required under section 201(1)(A). Subsequently, proceedings under section 221 came to be initiated by issuance of show cause notice to assessee. Assessee contended that lapse in remittance of amount collected by way of TDS and retained by assessee was out of acute liquidity crunch and not deliberate or intentional negligence. However, plea of the assessee came to be rejected and penalty was levied. CIT(A) deleted the penalty, 'however' Tribunal restricted the penalty to part amount. Held: In penalty proceedings, assessee admitted that it was an assessee-in-default. However, a plea came to be raised that within four days of the order passed under section 201, amount which was required to be remitted along with interest had been remitted/paid and contended that delay of 15 months in not remitting the amount of tax which was relatable to salary deductions, contract payments, professional fee, etc., paid or payable to parties. Finding recorded by Tribunal to arrive at a conclusion was based on sound appreciation of material available before it. In fact, a clear finding has been recorded by Tribunal that question of financial stringency pleaded by assessee was not proved. By extending its benevolence, Tribunal had directed AO to restrict the of penalty levied by AO. This finding would not call for interference by court, particularly when assessee having been declared as an assessee-in-default under section 201(1) and said order having not been challenged by assessee.

REFERRED :

FAVOUR : Against the assessee

A.Y. :

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