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TAXAP/1672/2010 3/ 3 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1672 of 2010
=========================================================
COMMISSIONER
OF INCOME TAX-III - Appellant(s)
Versus
PRARTHANA
CONSTRUCTION (P) LTD - Opponent(s)
=========================================================
Appearance
:
MR
MANSH BHATT, SR COUNSEL
for
Appellant(s) : 1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 15/11/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
Revenue
is in appeal against the judgement of the Tribunal dated 22.2.2010
raising following question for our consideration :
“Whether
the Appellate Tribunal is right in law and on facts in restricting
the penalty levied u/s140A(3) r.w.s. 221 to Rs.15,20,737/-?
Issue
pertains to penalty under Section 221 of the Income Tax Act, 1961.
Facts are not in dispute. Assessee had paid self assessment tax in
time. Proceedings were therefore, carried on by the Assessing
Officer for penalty under Section 221 of the Act. Against the total
principal tax demand of Rs.58.87 lakhs, he imposed penalty of Rs.30
lakhs. Ultimately, the Tribunal though found that assessee was in
default and that therefore, penalty under Section 221 of the Act was
leviable, was of the opinion that penalty of Rs.30 lakhs was
excessive. Tribunal thereupon reduced penalty by providing formula
to impose penalty at the rate of 15% per annum for every month of
default till actual payment.
Counsel
for the Revenue submitted that the Tribunal seriously erred in
interfering with the order of the Assessing Officer. Under Section
221 of the Act, the Assessing Officer had discretion to impose
penalty upto maximum of 100% of the principal tax due. He submitted
that Tribunal without valid reasons interfered with such exercise of
discretion by the Assessing Officer. Counsel further submitted that
Tribunal has incorporated the order of Section 215, 216 and 217 of
the Income Tax Act in quantifying the penalty to be levied under
Section 221 of the Act.
It
is true that under Section 221 of the Act, penalty amount that can
be levied on assessee in case of default of payment of self assessed
tax is upto total principal sum of the tax due. However, there is no
minimum prescribed under said section. This however, does not mean
that penalty can be imposed without proper reason at the rate that
Assessing officer may impose. In the present case, as already noted
against the principal tax of Rs.58.87 lakhs, Assessing Officer
imposed penalty of Rs.30 lakhs. No reasons were indicated for
imposing such penalty. On the other hand Tribunal reduced the
penalty by providing that rate should be at the rate of 15% per
annum from the date of default till actual payment for every month
or part thereof. Counsel for the Revenue was justified in pointing
out that such formula incorporating previsions of Section 215, 216
or 217 into penalty proceedings under Section 221 would not be
ordinarily justified. However, we are of the view that order of
Tribunal is one quantifying the penalty relating to length of
default. In thus discretionary exercise of powers by Tribunal, we
see no question of law arising. Tax Appeal is dismissed.
(Akil
Kureshi,J.)
(Ms.
Sonia Gokani,J.)
(raghu)
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