DCIT., CIRCLE-8(1), HYDERABAD vs. LATE SAMA RAMACHANDRA REDDY L/R BY HIS WIFE SAMA YASHODHA, HYDERABAD
आयकर अपीलीय अधिकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘B’ Bench, Hyderabad
श्री विजय पाल राि, उपाध् यक्ष एिं
श्री मिुसूदन सािडिया, लेखा सदस् य के समक्ष ।
BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER
आ.अपी.सं /ITA Nos.1065/Hyd/2012 & 1611/Hyd/2014
(निर्धारण वर्ा/Assessment Year:2007-08)
W/o Late Sama
Ramachandra Reddy,
Hyderabad.
PAN: AUAPS0609R
(Appellant)
(Respondent)
निर्धाररती द्वधरध/Assessee by: None.
रधजस् व द्वधरध/Revenue by: Dr. Sachin Kumar.
सुिवधई की तधरीख/Date of hearing: 16/09/2025
घोर्णध की तधरीख/Pronouncement: 26/09/2025
आदेश/ORDER
PER VIJAY PAL RAO, VICE PRESIDENT :
These two appeals by the Revenue are directed against the two separate orders of Learned Commissioner of Income Tax (Appeals) dated 15.06.2011 & 30.06.2014 arising from the assessment order passed u/s.143(3) r.w.s. 153 of the Income Tax Act, 1962 (“the Act”)
ITA Nos.1065/Hyd/2012 &
1611/Hyd/2014
2
and penalty order u/s.221(1) of the Act respectively for the A.Y.
2007-08. 2. The Revenue has raised the grounds of appeal in ITA
No.1065/Hyd/2012 as under :
ITA Nos.1065/Hyd/2012 &
1611/Hyd/2014
3
1 The Revenue has raised the grounds of appeal in ITA No.1611/Hyd/2014 as under : “ 1. The order of the Ld. CIT(A) is erroneous both in law and on facts of the case. 2. The Ld. CIT(A) ought to have upheld the order of the Assessing Officer passed, levying the penalty of rs.95,97,051/- u/221(1) of the IT Act. 3. Any other ground that may be urged at the time of hearing.” 3. None has appeared on behalf of the assessee when these appeals were called for hearing. It transpires from the record that the assessee had already expired long back and this fact was brought to the notice of the Tribunal at the time of hearing on 10.03.2025. Accordingly, the Tribunal vide order dated 10.03.2025 directed the parties to bring the legal heir / representative of the deceased- assessee on record by filing the application within the time. For ready reference the order sheet dated 10.03.2025 is reproduced as under :
ITA Nos.1065/Hyd/2012 &
1611/Hyd/2014
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Several adjournments were granted awaiting steps to be taken for bringing the legal representative of the deceased-assessee on record. Thereafter, the Authorised Representative of the assessee filed an application seeking permission for withdrawal of its authorisation / power of attorney on 16.07.2025 which reads as under :
ITA Nos.1065/Hyd/2012 &
1611/Hyd/2014
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Thereafter, the Revenue has filed the Revised Form No.36 whereby the legal representative of the deceased-assessee was brought on record. The Revised Form No.36 filed by the department for both the years are taken on record. In the appeal arising from the assessment order u/s.153A of the Act, the Learned Departmental
Representative has submitted that the Assessing Officer has raised an objection against the maintainability of the appeal of the assessee
ITA Nos.1065/Hyd/2012 &
1611/Hyd/2014
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as the assessee did not pay the self-assessment tax. This fact is duly recorded by the Ld. CIT(A) in para No.2.3 of the impugned order. The Ld. CIT(A) has not given any findings or even allowed the assessee further time for payment of the self-assessment tax but passed the impugned order which is not sustainable in view of the provisions of section 249(4) r.w. section 140A of the Act. Thus the Ld. DR has submitted that the assessee has not paid the self-assessment tax and the appeal of the assessee before the Ld. CIT(A) was not maintainable and liable to be dismissed on this ground alone instead of adjudication of the appeals on merit. He has further submitted that the Ld. CIT(A) has entertained the additional evidences filed by the assessee in violation of Rule 46A of the Income Tax Rules, 1962. He further argued that the impugned order of the Ld. CIT(A) is not sustainable in law and liable to be set aside. He has relied upon the order of Assessing Officer as well as the decision of co-ordinate bench of this Tribunal dated 21.04.2017 in the case of ACIT Vs. P.
Madhusudan Reddy in ITA Nos.1070 to 1075/Hyd/2012. ITA Nos.1065/Hyd/2012 &
1611/Hyd/2014
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We have considered the submission of the Ld. DR and perused the impugned order of the Ld. CIT(A). The Ld. CIT(A) in para No.2.3 of the impugned order has recorded this fact that the Assessing Officer has requested that the appeal may be dismissed u/s.249(4) of the Act as the assessee has not paid the self-assessment tax. Despite this fact, the Ld. CIT(A) has neither considered the objection raised by the Assessing Officer nor given any finding on the same. It is also not the case where the assessee sought sometime or exemption from payment of the self-assessment tax. Even the assessee has not paid the self-assessment tax till date and therefore in view of the provisions of section 249(4) r.w. section 140A of the Income Tax Act, the appeal of the assessee before the Ld. CIT(A) was not maintainable. Accordingly, we set aside the impugned order of the Ld. CIT(A) and restore the order of the Assessing Officer in view of the matter that the appeal filed by the assessee before the Ld. CIT(A) was not maintainable for want of payment of self-assessment tax.
ITA Nos.1065/Hyd/2012 &
1611/Hyd/2014
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In the result, the appeal of in ITA No.1065/Hyd/2012 of Revenue is allowed. 6. In the appeal, the grounds arising from penalty order passed u/s.221(1) of the Act, the Ld. DR has submitted that, the Ld. CIT(A) has deleted the penalty on the wrong assumption of fact that the so called revised computation has been admitted by the Ld. CIT(A) as Return of Income. The Ld. DR has submitted that the penalty was levied by the Assessing Officer for non-payment of tax on the income admitted in the ITR and not on the assessed income. Therefore, in the absence of any revised Return of Income and non-payment of self-assessment tax, the penalty levied by the Assessing Officer u/s. 221(1) of the Act is valid and in accordance with law. He has submitted that the order of Ld. CIT(A) is not sustainable and liable to be set aside. In support of his contention, the judgment of Bombay High Court dated 01.07.2017 in the case of CIT Vs. Oryx Finance and Investment Pvt. Ltd. In ITA No.1 of 2015 as well as the decision of ITA Nos.1065/Hyd/2012 & 1611/Hyd/2014 9
Special Bench of ITAT, Ahmedabad in the case of Claris Life Sciences
Limited Vs. DCIT reported in 167 ITD 1. 7. We have considered the submissions of the Ld. DR and carefully perused the impugned orders of the Ld. CIT(A). The Ld. CIT(A) has deleted the penalty by considering the facts in para 5 as under :
“5. I have carefully considered the written submissions and oral argument of the appellant. I have also perused the penalty order, assessment order, CIT(A), Guntur order and also revised computation before Assessing Officer during the course of scrutiny. The Assessing
Officer did not consider the revised computation. However, the CIT(A),
Guntur, during the course of appellant proceedings has considered the revised computation filed by the assessee. Since the revised computation of income has been admitted by the CIT (Appeals), there is no tax payable u/140A. Therefore, it is implied that provisions of scrutiny
249(4) are not applicable to the appellant’s case. There is no default of any tax u/s. 140-A by the assessee. Hence, the penalty levied u/s. 221(1) amounting to Rs.95,97,051/- is deleted.”
7.1 Thus the only reason given by the Ld. CIT(A) for deleting the penalty is that during the course of appellate proceedings the revised computation was admitted by the CIT(A), whereby no tax payable was reported by the assessee. The fact remains that in the Return of ITA Nos.1065/Hyd/2012 &
1611/Hyd/2014
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Income the assessee has declared income and not paid the income tax on the same. Even subsequently if the assessee succeeds in getting the relief on wrong declaration of income, the requirement of payment of self-assessment tax would not obliterated as prescribed u/s. 149(4) of the Income Tax Act. The assessee if gets relief from the appellate authority, then that will result in refund of tax along with interest, if any. The assessee himself cannot choose not to pay the self-assessment tax. The Hon’ble Bombay High Court in the case of CIT Vs. Oryx Finance and Investment Ltd. (supra), as held in para 21 as under :
“ 21. In view of the aforesaid discussion and on reading the provisions of section 221 conjointly with the definition of “tax” as detailed under section 2(43), the irresistible conclusion that can be drawn is that the phraseology “tax in arrears” as envisaged in section 221 of the Act would not take within its realm the interest component. It would be abundantly clear that the Assessing Officer can impose penalty for default in making the payment of tax, but the same shall not exceed the amount of tax in arrears. Ta in arrears would not include the interest payable under section 220(2) of the Act. In the result, the substantial question of law are answered against the appellant. The appeal stands dismissed.
However, no order as to costs.”
ITA Nos.1065/Hyd/2012 &
1611/Hyd/2014
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2 The Special Bench of ITAT, Ahmedabad in the case of Claris Life Sciences Limited Vs. DCIT (supra) as relied upon by the Ld. DR has also held in para 20 as under : “ 20. In view of the above discussions, as also bearing in mind entirety of the case, in our considered view, the assessee is, in principle, covered by the scope of the penalty under section 221(1) of the Act in a case in which the though the assessee has not paid the admitted tax liability under section 140A, while filing the original return of income, the assessee subsequently pays the tax on the revised return of income, at the time of filing the revised return of income. We, therefore, answer the question referred to the special bench in affirmative and against the assessee. However, whether the penalty under section 221(1) r.w.s. 140A(1) is actually leviable on the facts of a particular case or not will depend on the facts of that case and depending on, inter alia, the factual finding as to whether or not the default of the assessee was for good and sufficient reasons- something with which we are not really concerned at this stage due to inherently limited scope of the question before the special bench.” Accordingly, in view of the facts and circumstances of the case as well as by following the decision of Hon’ble Bombay High Court and the Special Bench of this Tribunal, the impugned order of the Ld. CIT(A) is set aside and the order of the Assessing Officer passed
ITA Nos.1065/Hyd/2012 &
1611/Hyd/2014
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u/s.221(1) of the Act is restored. The appeal of the Revenue is allowed.
8. In the result, both the appeals of Revenue are allowed.
Order pronounced in the open Court on 26th Sept., 2025. (MADHUSUDAN SAWDIA) (VIJAY PAL RAO)
ACCOUNTANT MEMBER VICE PRESIDENT
Hyderabad.
Dated: 26.09.2025. * Reddy gp
Copy of the Order forwarded to :
Smt. Sama Yashoha, W/o Legal Heir of Sri Sama Ramachandra Reddy, No.1-10-48/A, F.No.101, Ashoka Ornata Apartments, Street No.2, Ashok Nagar, Hyderabad-500 020 2. DCIT, Circle 8(1), Hyderabad. 3. Pr.CIT, Hyderabad. / Pr.CIT (Central), Hyderabad 4. DR, ITAT, Hyderabad. 5. Guard file.
BY ORDER,