Penalty us 221(1) on tax due as per revised return of income. It is not correct to levy penalty on the amount due as per original return of income-ITAT

Penalty us 221(1) on tax due as per revised return of income. It is not correct to levy penalty on the amount due as per original return of income-ITAT

ABCAUS Case Law Citation:
1058 (2016) (11) ITAT

Brief Facts of the Case:
The assessee filed its original return of income u/s 139(1) of the Income Tax Act, 1961. As per the original return of income, self assessment tax payable was Rs. 21,83,340/-. The assessee did not pay self assessment tax and hence the Assessing Officer (AO) levied penalty u/s 221(1) for non-payment of self assessment tax computed @ 25% self assessment tax payable.

The assessee subsequently filed a revised return of income u/s 139(5) as per which self assessment tax payable was worked out at Rs. 4,68,812/- only. The assessee challenged the penalty order before the CIT(A) unsuccessfully and later before the ITAT contending that the CIT(A) did not considered the revised return filed by the assessee.

The Tribunal had restored the matter to the file of the CIT(A) for deciding the issue afresh, However, in the set aside proceedings, the CIT(A) again confirmed the penalty levied by the Assessing Officer and hence the assessee filed this present appeal before ITAT

Contentions of the Assessee:
The assessee submitted that the revised return filed by the assessee had replaced the original return of income and hence penalty u/s 221(1) should have been levied only on the self assessment tax payable as per revised return of income.

It was further submitted that the assessee did not pay self assessment tax as per original return of income, as the assessee was contemplating to file a revised return of income. The assessee also did not pay tax due as per revised return of income, since certain refunds were due to the assessee for earlier years.

It was submitted that the assessee had sufficient cause for not paying self assessment tax. Accordingly, the assessee prayed that the penalty levied may be deleted.

Contentions of the Revenue:
The Departmental Representative submitted that the explanations furnished by the assessee were not supported by any material. Further self assessment tax becomes payable as per provisions of section 140A upon filing of original return of income.

Observations made by the Tribunal:
The ITAT was of the view that the assessee could not be considered to have shown sufficient cause for not paying the self assessment tax.

However, the Tribunal observed that since the self assessment tax payable as per the revised return of income had come down, it might not be correct to levy penalty on the amount of tax due as per the original return of income.

However since it was not shown as to when the self assessment tax was actually paid, the ITAT opined that the assessee should be liable to pay penalty on the amount due as self assessment tax as per revised return of income.

Held:
Penalty 221(1) should be levied on amount due as per revised return of income.