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Facts
The assessee is aggrieved by a penalty order of Rs. 10,000/- imposed under Section 221(1) of the Income Tax Act, 1961, for non-payment of assessed demand. The penalty was confirmed by the CIT(A) despite the assessee's claim of non-receipt of notices and a high-pitched assessment.
Held
The Tribunal held that the penalty and the impugned order were in accordance with the law. The assessee had failed to prove that the default was for good and sufficient reason, and the notices were duly served.
Key Issues
Whether the penalty imposed under Section 221(1) for non-payment of demand is justified when the assessee claims non-receipt of notices and argues a high-pitched assessment, and whether principles of natural justice were violated.
Sections Cited
253, 221(1), 147, 246A, 220(6), 156
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M JOSHI
आदेश / O R D E R
Per Bench:
This is an appeal filed by the assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the “Act” for sake of brevity) before this Tribunal. The assessee is aggrieved by the order dated 11.12.2014 passed by the Ld. CIT(A) which is hereinafter referred to as the “Impugned order”. The relevant
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Jayant Security & Finance Ltd to 91/Ind/2025 - A.Ys.2010-11, 2013-14 to 2017-18 Assessment Year is 2010-11 and the corresponding previous year period is from 01.04.2009 to 31.03.2010.
FACTUAL MATRIX 2.1 That as and by way of a penalty order dated 29.06.2023 passed u/s. 221(1) of the Act, a penalty of Rs.10,000/- was imposed on the assessee which is hereinafter referred to as the “impugned penalty order”.
2.2 That it is recorded in the “impugned penalty order” that the assessment u/s 147 of the Act for the Assessment Year 2010- 11 was completed on 29.03.2018 in respect of which demand of Rs.6,30,49,440/- was outstanding and was not paid. Hence the recovery proceedings were initiated against the assessee.
2.3 That since the assessee was non compliant the penalty proceedings u/s 221(1) of the Act were initiated against the assessee and following notices in terms of Section 221(1) came to be issued to the assessee the details of which are as under:-
Sr.No. Notice u/s Date of Notices 1 220(1) 13.02.2022 2 221(1) 23.12.2022 3 Final notice u/s 221(1) 23.06.2023
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Jayant Security & Finance Ltd to 91/Ind/2025 - A.Ys.2010-11, 2013-14 to 2017-18 2.4 That since the assessee remained non compliant to the above notice(s) the Ld. A.O by the “impugned penalty order” imposed a penalty of Rs.10,000/- on the assessee u/s 221(1) of the Act.
2.5 That the assessee being aggrieved by the aforesaid “impugned penalty order” prefers first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “impugned order” has dismissed the appeal of the assessee on the grounds and reasons stated therein.
2.6 That the assessee being aggrieved by the “impugned order” has preferred the instant second appeal before this Tribunal and has raised following grounds of appeal in Form No.36 against the “impugned order” which are as under:-
“1. That on the facts and in the circumstances of the case Ld. AO has erred in levying the penalty and Ld. CIT (A)-3, Bhopal has erred in confirming the penalty of Rs. 10,000 U/s 221(1) of Income Tax Act, 1961.
That on the facts and in the circumstances of the case Ld. AO has erred in passing and Ld. CIT (A)-3, Bhopal has erred in confirming the impugned order without affording any opportunity of being heard against the principles of natural justice.
That the impugned penalty order and impugned CIT(A) order so passed is illegal and wrong. 4.That the assessee craves leave to add, amend, alter or delete any of the grounds of appeal and all the above grounds are without prejudice to each other”.
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Jayant Security & Finance Ltd to 91/Ind/2025 - A.Ys.2010-11, 2013-14 to 2017-18
Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 01.07.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interalia brought to our notice at the outset and threshold the “impugned order” is illegal, bad in law and not proper. It thus deserves to be set aside. The Ld. DR has placed on the record of this tribunal a paper book containing pages 1 to 14. A written submission containing pages 1 to 13 too, were placed on record by the Ld. AR. The Ld. AR then contended that no notice(s) (supra) were received by the assessee. The amount of demand in pursuance to the quantum assessment order is not paid as assessment perse is a high pitched assessment. That the assessee had filed a Return of Income which was of loss. The first appeal of the assessee is pending before the Ld. CIT(A). The Ld. AR however stated that no application is filed within the meaning of Section 220(6) of the Act. It was also stated that in pursuance to the notice of demand u/s 156 no request to the Ld. A.O was too made for any waiver or stay, pending the first appeal of the assessee. The Ld. AR stated that in high pitched assessment revenue should have waited as Page 4 of 9
Jayant Security & Finance Ltd to 91/Ind/2025 - A.Ys.2010-11, 2013-14 to 2017-18 on quantum assessment order the first appeal of the assessee is pending. The Ld. AR next contended that u/s 220(6) of the Act the Ld. A.O has a discretion not to treat the assessee in default in respect of amount in dispute in the appeal, even though time for payment has expired. No notice in terms of proviso to Section 221 was received by the assessee as stated in the “impugned penalty order”. The Ld. AR further stated and emphasized that none of the three notices were received by the assessee. The Ld.
AR further submitted that in all the years involved there is a loss return. Per contra the Ld. DR appearing for and on behalf of the Revenue contended that before Ld. CIT(A) no cogent ground is taken up by the assessee. Further before the Ld. CIT(A) no ground with regard to non receipt of three notice(s) were ever taken up by the assessee and whole of the impugned order was read out by Ld. DR during the course of hearing to demonstrate this fact. In the rejoinder argument the Ld. AR stated and supplemented that in Form No.36 ground about breach of principle of natural justice is taken. After an elaborate discussion and debate on the case, the Ld. AR stated that assessee does not want to go in to the controversy pertaining to Page 5 of 9
Jayant Security & Finance Ltd to 91/Ind/2025 - A.Ys.2010-11, 2013-14 to 2017-18 non receipt of notice(s) u/s 221 of the Act and stated that the quantum assessment order is high pitched assessment. The Ld.
DR further rejoined that if the assessee is of the view that the assessment is high pitched one then nobody prevented the assessee even to make an application u/s 220(6) of the Act which assessee has not done so. The assessee has also not made any application before the “High Pitched Assessment Committee” which are working from the office of PCCIT, Bhopal and Chhattisgarh at Bhopal for stay of demand. No submission or even a letter to Ld. A.O or to the Range head or to the Office of PCIT for the stay of demand was ever made. Further the Section 220(6) of the Act uses the word “may” and not “shall”.
Minuscule penalty is imposed against the huge outstanding dues.
Ld. DR further contended that till date no submission is made for stay of the outstanding dues. The Ld. AR further rejoined that as
per page 10 of written submission loss is clearly shown in computation of income chart. Hearing was concluded finally after placing reliance on few decisions of Hon’ble Delhi High Court as per written submission of Ld. AR.
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Jayant Security & Finance Ltd to 91/Ind/2025 - A.Ys.2010-11, 2013-14 to 2017-18 4. Observations,findings & conclusions.
4.1 We now have to decide the legality, validity and the proprietery of the “impugned order” basis records of the case and rival contentions canvassed before us.
4.2 We have carefully perused the records of the case as presented to this Tribunal by both Ld. AR & Ld. DR to determine the legality, validity of the “impugned order” basis law and by following due process .
4.3 We basis records of the case and so also after hearing and upon examining the contentions are of the considered opinion that both the “impugned penalty order” and so also “impugned order” are in accordance with law and in particular Section 221 of the Act. We observe and note that the Ld. AR for the assessee has given up the argument on service of 3 notices u/s 221(1) of the Act in his ultimate analysis and during the course of hearing. The Ld. AR sole argument remained on high pitched assessment against which 1st appeal is filed and that the same is pending hearing and final disposal before the Ld. CIT(A). We however are in the agreement with the views of the Ld. DR for revenue that there is nothing on record till date as to whether
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Jayant Security & Finance Ltd to 91/Ind/2025 - A.Ys.2010-11, 2013-14 to 2017-18 any application is made for stay u/s 220(6) of the Act by the assessee nor there is anything on record that any application for stay was made before the “High Pitched Assessment Committee” which is located in the office of PCCIT, MP & Chhattisgarh at Bhopal. Even though the grievance is made about high pitched assessment before us but nowhere be it u/s 220(6) or before any administrative authority any such grievance is made. Under these facts and circumstances we hold that notice(s) u/s 221(1) of the Act were duly given to the assessee to show cause as to why penalty should not be imposed upon him and it was up to the assessee to have made out a good case within the meaning of second proviso to Section 221(1) of the Act but the assessee has miserably failed to prove to the satisfaction of Ld. A.O that the default was for good and sufficient reason. Hence penalty imposed by Ld. A.O is justified in our considered view consequently we upheld the “impugned penalty order” and so also “impugned order”.
4.4 In the premises set out herein above “impugned order” is upheld.
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Jayant Security & Finance Ltd to 91/Ind/2025 - A.Ys.2010-11, 2013-14 to 2017-18 4.5 This decision and order will apply to ITA Nos. 87, 88, 89, 90 & 91 as facts and circumstances are pari materia/identical to the instant appeal.
Order 5.1 In the premises set out herein above all appeals of the assessee are dismissed.
Order pronounced in open court on 07.07.2025.
Sd/- Sd/- (B.M. BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore िदनांक / Dated : 07/07/2025 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
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