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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ NEW DELHI
PER K.N. CHARY, JUDICIAL MEMBER Aggrieved by the order dated 17.1.2014 in Appeal No. 143/2012-13 passed by the learned CIT(A) XXXI New Delhi, assessee preferred this appeal on the following grounds: “
i. The learned CIT(Appeals), erred in law and facts by confirmed the penalty of Rs. 1,11,49,191/- levied u/s 140A(3) of IT Act, 1961. ii. The assessee craves leave for addition, modification, deletion, any of grounds of appeal either before the hearing of appeal or at the time of appeal.”
2. Briefly stated facts are that the assessee filed the return of income for the assessment year 2010-11 on 20.5.2011 declaring total income of Rs. Rs. 2,60,46,770/- and the record reveals that as
per the computation chart filed with the return of income, the tax liability of Rs. 1,11,49,191/- was shown as payable under Section 140A of the Income Tax Act. The assessee has not paid the admitted tax liability under Section 140A(1) of the Act. While completing the assessment, the AO initiated penalty proceedings and concluded them by the levy of penalty of Rs. 1,11,49,191/- under Section 140A(3) of the Act. Appeal preferred by the assessee was dismissed by way of impugned order. Hence this second appeal by the assessee before us. 3. It is the argument of the learned AR that Section 140A as was introduced by Finance Act 1964 w.e.f. 1.9.1964 provided vide subsection (3), for the levy of penalty if the assessee fails to pay the tax or any part thereof in accordance with provisions of Section 140A but subsequently it was amended from time to time and by way of amendment by direct taxes (Amendment Act, 1983) w.e.f. 1.4.1989 it stood as follows: “If any assessee fails to pay the whole or any part of such tax [or interest or both] in accordance with the provisions of sub-section (1), he shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of the tax [or interest or both] remaining unpaid, and all the provisions of this Act shall apply accordingly.]” and now as the section stands, it does not empower the AO to levy any penalty. In so far as this plea taken by the assessee before the learned CIT(A), Learned CIT(A) observed that Section 292B of the Act covers such incidents.
However, as could be found from the statute, section 292-B was introduced wef October 1, 1975 is to the effect that no return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of the Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of the Act. Further, by circular no. 179 dated 30th September, 1975, the scope of section 292-B was explained and it has been stated in the said circular that this provision has been made to provide against purely technical objections without substance coming in the way of the validity of assessment proceedings, etc. It is, therefore, clear that it is only to overcome certain technical objections that section 292-B can be resorted to, and where there is violation of any clear provisions of the law, section 292-B is of no help to validate any incurable legal defect.
In this matter, we are of the considered opinion that resorting to the provisions under section 140A(3) is a fundamental infirmity and not a technical irregularity, as such having considered the matter in the light of the law as on the date we are of the considered opinion that Section 140A(3) of the Act does not empower AO to initiate or levy any penalty and the proceedings are initiated. We therefore find it difficult to sustain the penalty and accordingly direct the AO to delete the same.
In the result, appeal of the assessee is allowed. The order is pronounced in the open court on 20th, 2017.