SRINIDHI TEXTILES,ERODE vs. ACIT, ERODE
In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The tribunal held that pendency of an appeal is not a sufficient cause for non-payment of tax or non-response to a penalty notice. The assessee's indifferent attitude towards tax compliance was noted.
What were the facts?
The assessee failed to pay a tax demand of Rs. 57,82,640/- raised after assessment. Despite a show cause notice for penalty under Section 221(1) and the dismissal of their quantum appeal, the assessee neither paid the tax nor responded to the notice.
What were the issues?
Whether the penalty under Section 221(1) was rightly imposed when the assessee failed to pay tax demand and respond to the show cause notice, citing pendency of appeal as the reason.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S.SUNDER SINGH
आदेश / O R D E R PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:
1.0 The appeal is against the order of the CIT(A) in dated 04.07.2013 against the penalty imposed u/s.221(1) of Income Tax Act by the Assessing Officer (hereinafter referred to as ‘AO’). In this case, the assessment was completed u/s.143(3) for the AY 2008-09 on 31.12.2010 resulting in demand of Rs.57,82,640/-. The demand notice u/s.156 was served on the assesse on 07.01.2011 and the demand should
ITA No.1762/Mds/2016 :- 2 -: have been paid on or before 06.02.2011. Since, there was no payment of the demand, the Assessing Officer issued notice u/s.221(1) show causing the assesse to levy penalty and called for the explanation of the assesse.
The show cause notice was served on 15.07.2011 and the assesse neither paid the tax demand nor responded to the notice issued u/s.221(1). The Ld.CIT(A) dismissed the quantum appeal of the assessee by an order No.285/10-11 Dated 02.12.2011 and the assessee did not make the payment even after the dismissal of the appeal. Therefore, the AO has levied the penalty of Rs.5.00 lakhs against the maximum penalty of Rs.57,82,640/-. The assesse went on appeal before the Ld.CIT(A) against the penalty order and the Ld.CIT(A) confirmed the penalty imposed by the AO.
2.0 Aggrieved by the order of the Ld.CIT-A, the assesse filed an appeal before us.
3.0 The Ld.Counsel argued that the notice u/s.221(1) of Income Tax Act was issued during the pendency of appeal proceedings and the assessee was under the honest impression of getting relief from the Ld.CIT(A).
Therefore, assessee did not respond to the show cause and there was no intention on the part of the assesse to delay the payment of tax demand.
The Ld.AR has vehemently pleaded for cancelling the penalty imposed by the AO. On the other hand, the Ld.DR relied on the lower authorities orders.
ITA No.1762/Mds/2016 :- 3 -:
4.0 We heard both the parties and gone through the submissions and arguments made by them. In this case, the assessment was completed resulting in a demand of Rs.57,82,640/- and the demand notice was served to the assessee on 07.01.2011. Demand should be paid within 30 days from the date of the service of the demand notice i.e. on or before 06.02.2011. The assessee has neither filed the Stay Petition nor paid the taxes demanded by the AO. Therefore, the AO issued show cause notice proposing to impose penalty u/s.221(1) of Income Tax Act on 15.07.2011 i.e. after lapse of six months from the service of the demand notice. As
per the records, there was no response from the assesse to the notice issued u/s.221(1) also. Since, there was no response from the assesse, the AO has imposed the penalty u/s.221(1). Before the Ld.CIT(A) and also before this court, the assessee has not shown any reasonable cause for non response to the show cause notice and non-payment of demand.
Filing appeal before the Ld.CIT(A) and expecting relief is not a sufficient cause for non response to the show cause notice of penalty u/s221(1) of income tax act. Appeal and penalty are two different proceedings under the act before two different authorities. The assessee has merely pleaded that reason for non-payment of tax was pendency of appeal. Mere pendency of appeal does not give any right to the assesse for non- payment of taxes. The AO has issued show cause notice proposing to levy penalty but the assesse not responded to the notice which clearly shows the indifferent attitude towards the compliance of tax laws. From the date of service of the Assessment Order till the date of passing the penalty
ITA No.1762/Mds/2016 :- 4 -: order, there was a gap of one year and the assessee has not shown any inclination towards payment of taxes. Either before the AO or before the Ld.CIT(A) and also before this court, the assessee has not explained as to why the demand could not be paid as per the notice issued u/s.221(1) and he has not explained any reasonable cause for non-compliance of the show cause notice issued by the AO with tangible evidence. Therefore, we do not find any error in the order of lower authorities and penalty levied by the AO is firmed.
5.0 In the result, the appeal of the assessee is dismissed.
Order pronounced in the Open Court on 13th January, 2017, at Chennai.
More judgments on Section 221(1)
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- Bank of Baroda (E-Vijaya Bank), Delhi vs Addl Commissioner of Income Tax…ITA 1864/DEL/2026[2013-14]Status: Disposed5 Aug 2026AY 2013-14
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