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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals), Puducherry, dated 19.10.2016, for the assessment year 2014-15, confirming the penalty levied by the Assessing Officer under Section 221 of the Income-tax Act, 1961 (in short 'the Act').
Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the Assessing Officer leived penalty under Section 221 of the Act since the assessee could not pay the self assessment tax of ₹65,43,850/-. According to the Ld. counsel, the assessee was in great financial hardship. In fact, the assessee has paid ₹46 lakhs on 14.03.2015 and another sum of ₹19,32,225/- on 24.04.2015 and the balance was also paid along with interest under Section 234A, 234B and 234C of the Act over and above the taxes due. According to the Ld. counsel, as on date, no tax was due to be paid.
Shri S. Sridhar, the Ld.counsel for the assessee, further submitted that in fact, the assessee availed overdraft facility for business. The assessee exceeded overdraft facility sanctioned by the banker. Therefore, according to the Ld. counsel, practically, the assessee has no liquid cash to pay the self assessment tax when the return was filed. As and when the cash was available with the assessee, according to the Ld. counsel, it was immediately paid along with interest under Section 234A, 234B and 234C of the Act. Hence, according to the Ld. counsel, there was a reasonable cause for non payment of self assessment tax as provided in the second proviso to Section 221 of the Act.
Referring to the order of the CIT(Appeals), Shri S. Sridhar, the Ld.counsel for the assessee, submitted that in fact, the assessee filed a petition before the Principal Commissioner under Section 264 of the Act and the same was rejected. According to the Ld. counsel, the assessee filed writ petition before the High Court challenging the correctness of the order passed by the Principal Commissioner under Section 264 of the Act. The High Court, in fact, set aside the order of the Principal Commissioner passed under Section 264 of the Act and remanded back the matter. Since the assessee has filed revision petition under Section 264 of the Act, according to the Ld. counsel, the CIT(Appeals) in the impugned order found that the appeal is not maintainable. Referring to the judgment of Madras High Court in CIT v. D. Lakshminarayanapathi (2001) 250 ITR 187, the Ld.counsel submitted that on identical set of facts, the Madras High Court found that the appeal is maintainable.
Therefore, according to the Ld. counsel, the CIT(Appeals) is not correct in rejecting the appeal of the assessee.
On the contrary, Shri Asish Tripathy, the Ld. Departmental Representative, submitted that the assessee could not pay the self assessment tax of ₹65,43,850/-. Mere payment of amount subsequently cannot be a reason for not levying penalty. According to the Ld. D.R., there was no reasonable cause for not paying self assessment tax.
Hence, the Assessing Officer in addition to interest has also levied penalty under Section 221 of the Act, which was rightly confirmed by the CIT(Appeals). Referring to the judgment of Madras High Court in the case of D. Lakshminarayanapathi (supra), the Ld. D.R. submitted that this judgment of Madras High Court is not applicable to the facts of the case, therefore, the CIT(Appeals) has rightly found that the appeal filed by the assessee is not maintainable.
We have considered the rival submissions on either side and perused the relevant material available on record. The CIT(Appeals) dismissed the appeal of the assessee on the ground that it is not maintainable since the assessee has filed petition before the Principal Commissioner under Section 264 of the Act. Placing reliance on the judgment of Madras High Court in D. Lakshminarayanapathi (supra), the Ld.counsel for the assessee claims that on identical circumstances, the Madras High Court found that the appeal was maintainable.
We have carefully gone through the judgment of Madras High Court in D. Lakshminarayanapathi (supra). In the case before Madras High Court, the issue arose for consideration was when the assessee has invoked revisional jurisdiction of Commissioner, whether the assessee can file an appeal before the appellate authority? The Madras High Court found that even though for invoking revisional jurisdiction, it is a pre-condition that the appellate jurisdiction should not have been invoked. There is no bar for filing appeal when the assessee has invoked revisional jurisdiction. Notwithstanding unsuccessful effort of the assessee in the revisional proceeding, still the assessee can file an appeal. In fact, the Madras High Court has observed as follows:-
“Though there is no limitation on the exercise of the appellate power in the statute on the ground that the assessee had invoked the revisional power unsuccessfully, it is contended for the Revenue that such a limitation should be read into the provision dealing with appeals under the Income-tax Act. There is no provision in the Act in express terms, which supports the arguments so advanced by the Revenue. It is not disputed that the provisions dealing with the appellate authorities do not bar an appellant from invoking the jurisdiction, if he had invoked revisional jurisdiction, even though for invoking revisional jurisdiction, it is a pre-condition that the appellate jurisdiction should not have been invoked. The argument advanced before us is that by inferential reasoning we should hold that if there is a limitation on exercise of revisional power a similar limitation should be read into the exercise of the appellate power. It does not require any authority to hold that it is not the province of the court to rewrite the law on the ground that the provision should have been worded in a different manner in order to make it seemingly consistent with some other provision. Moreover, it is wholly unnecessary for Parliament to impose the same kind of restriction for invoking different kinds of jurisdiction. It is open to the law-maker to provide more than one remedy to the aggrieved party and so long as such remedies are available, the aggrieved parties can certainly invoke them. The Tribunal has rightly held that the assessee, notwithstanding his unsuccessful effort at having the order revised, could still file an appeal as invoking the revisional jurisdiction could not constitute a bar to the filing of an appeal. It is for the Legislature to impose such a bar if it considers it necessary to do so. We, therefore, find no error in the order of the Tribunal. We answer the question as to “whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the Appellate Assistant Commissioner was justified in entertaining the assessee’s appeal against the assessment even though the Commissioner of Income-tax had passed an order under section 264 against the assessee and holding that the provisions of section 154 were applicable and a revision was not barred by limitation” in favour of the assessee and against the Revenue.”
In view of the above judgment of Madras High Court, this Tribunal is of the considered opinion that when the assessee invoked revisional jurisdiction under Section 264 of the Act, it cannot constitute a bar for invoking the appellate jurisdiction. Therefore, the judgment of Madras High Court is squarely applicable to the facts of the case. Hence, the appeal filed before the CIT(Appeals) is maintainable. Therefore, the CIT(Appeals)’s finding that the appeal is not maintainable cannot be upheld.
Now coming to merit of the appeal, the assessee admittedly paid the tax belatedly along with interest under Section 234A, 234B and 234C of the Act. In view of the second proviso to Section 221 of the Act, unless there was a good and sufficient reason, the assessee is liable to pay penalty in addition to interest. In the case before us, assessee claims that the overdraft facility availed from the bank was exceeded and the assessee has no liquid cash for making payment. This fact is not disputed by the Revenue. When the assessee has availed overdraft facility from the bank and exceeded the limit sanctioned by the bank and the assessee has no liquid cash to make the self assessment tax, this Tribunal is of the considered opinion that there is a good and sufficient reason for not making payment of self assessment tax. Therefore, in view of the second proviso to Section 221 of the Act, there cannot be any levy of penalty. Hence, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, orders of both the authorities below are set aside and the penalty levied by the Assessing Officer under Section 221 of the Act is deleted.
In the result, the appeal filed by the assessee is allowed.