COMMISSIONER OF INCOME TAX Vs. NARESH KUMAR JAGGI

JUDGEMENT

(1.) The challenge in this appeal by the revenue under Section 260A of the Income Tax Act, 1961 ('Act' in short) is to the order dated March 31, 2014 passed by the Income Tax Appellate Tribunal, Delhi Bench ('Tribunal', in short), whereby the Tribunal, in cross appeals filed by the appellant-revenue and the respondent-assessee, upheld the order of the Commissioner of Income Tax (Appeals), restricting the penalty imposed under Section 140A (3) to 25%.

(2.) The relevant facts of the case are, the respondent-assessee filed return of income for the Assessment Year 2009-10 on 03.11.2010 declaring an income of Rs. 6,23,36,790/-, on which tax at Rs.1,26,46,875/- was due and payable after reducing the advance tax paid of Rs. 14,60,000/-. The respondent-assessee had not paid this admitted tax liability under Section 140A of the Act. The return was processed under Section 143(1) of the Act. The intimation under Section 143(1) of the Act was served upon the assessee on 02.01.2011 and the assessee was required to make the payment by 01.02.2011. The assessee did not make the payment of outstanding demand by the said date. Accordingly, a show cause notice under Section 140A(3) of the Act was served upon the assessee by the Assessing Officer vide a letter dated November 22, 2011. In the reply to the show cause notice, it was the stand of the assessee that the admitted tax of Rs. 1,41,06875/- for the Assessment Year 2009-10 stands paid by him inasmuch as Rs.14,00,000/- was paid as advance tax and the balance amount of Rs. 1,26,46,875/- was paid in the month of April, 2011 and in support of the same, he attached necessary challans. He requested that he should not be treated as in default and the action under Section 140A(3) of the Act be not initiated. The Assessing officer was of the view that nothing has come from the reply of the assessee to overcome the default committed under Section 140A(3) of the Act. According to him, the assessee had not shown and established a reasonable cause for non payment of the admitted tax liability. The Assessing Officer referred to six judgments of the different High Courts and the Supreme Court and was of the view that in the absence of any reasonable cause for non payment of the admitted tax liability, penalty should be imposed. He imposed penalty at 100% of the admitted tax liability i.e. Rs.12646875/- or an amount equal to the unpaid tax liability.

(3.) The respondent assessee filed an appeal before the Commissioner of Income Tax (Appeals), who was of the following view: