RAMCHANDRA PESTICIDES P LTD Vs. CIT

JUDGEMENT

(1.) THE judgment of the court was delivered by.

(2.) THE relevant assessment year is 1983 -84. The assessee filed a return of income declaring a total income of Rs. 1,94,530. The assessee paid advance tax on the due dates. However, the balance of Rs. 51,531 had not been paid within one month of filing of the return of income as required under section 140A of the Act. The assessing officer issued a show -cause notice on 27 -3 -1986, and on 29 -12 -1987, to which there was no response. Therefore, the assessing officer held that the assessee had no explanation to offer and proceeded to levy penalty of Rs. 12,360 under section 140A(3) of the Act. In appeal, the Commissioner (Appeals) confirmed the levy of penalty. The assessee preferred a second appeal to the Tribunal. Before the Tribunal, a copy of the explanation offered in response to the penalty under section 140A(3) and a copy of the petition for waiver of penalty under section 220(2A) before the Central Board of Direct Taxes were filed on behalf of the assessee. In the waiver petition, it was contended that the assessee delayed the payment due to financial crisis that was existing at that time on account of cyclone in Andhra Pradesh and drought situation in certain areas of Karnataka where the business of the assessee was concentrated. The tax on self -assessment has been paid. However, it was noticed that a sum of Rs. 1,02,500 had to be included voluntarily as a credit note to that effect was received after paying tax under section 140A. Since the impact of inclusion of the credit note amount resulted in further payment a tax amounting to Rs. 51,533, it could not be paid immediately. It was also stated that there had been a steep fall in the sales in Andhra Pradesh due to severe cyclone devastating agricultural crops which resulted in poor recoveries from the consumers of the area. They pleaded that there was no deliberate or wilful intention on the part of the assessee for denying payment of defective tax.

(3.) LEARNED counsel for the assessed submitted that it is mandatory on the part of the assessee to pay tax before furnishing the return and on failure to pay such tax, the imposition of penalty is not automatic. The assessee is entitled to a reasonable opportunity of being heard before the penalty is imposed and if he is able to show sufficient cause to the authority then, the authority has the discretion not to impose the penalty.