ITAT Special Bench (ITAT
SB) holds that penalty u/s. 221(1) attracted for default in payment of
self-assessment tax due u/s 140A while filing original tax-return even though
assessee subsequently files a revised return of income and pays tax; Assessee
(a listed Pharmaceutical company) had filed its return of income for AY 2008-09 reporting a self-assessment tax liability; Subsequently, after being put on notice by the AO about the non-payment of self-assessment tax, assessee accepted non-payment on account of the financial stringency and liquidity crunch and thereafter immediately filed a revised return and also paid self-assessment tax; The AO levied Rs 50 lakhs penalty u/s 221(1) for non-payment of self-assessment tax while filing the original return of income; ITAT SB holds that by paying the tax at the time of filing revised return, the lapse committed by not paying the admitted tax liability at the time of filing the original return does not get obliterated or wiped out; ITAT SB lays down distinction between claims made in tax return and actions connected with the original return becoming a legal nullity and observes that it would be a superfluous approach to hold that "revised income tax return also substitutes original income tax return for all legal purposes, including penal consequences in respect of defaults committed in respect of the original income tax return"; ITAT SB distinguishes assessee's reliance on several HC rulings, ITAT SB notes that crux of these HC rulings is that the revised return substitutes the original return and claims made in revised return alone could be considered by the AO; ITAT SB holds that "The observations made by Their Lordships in this context cannot be viewed on standalone basis as a complete exposition of law on the question which did not even come up for consideration before Their Lordships", ITAT SB adds that "What has been stated in the context of computation or assessment of income does not really hold good in respect of lapse committed at the time of filing of the original income tax return- which is required to be visited with penal consequences under section 221(1)"; Concluding that the law is clear and unambiguous, ITAT SB concludes that subsequent tax payment whether with or without revision of income tax return is not relevant for the penal consequences u/s 221(1); ITAT SB overrules ratio of ITAT Division Bench ruling in Shri Shakti Credits Limited [(2014) 66 SOT 0175]; After answering the question of law framed for consideration of the Special Bench, ITAT SB at the end directs the Division Bench to examine merits of levy of Rs 50 lakh penalty on the assessee considering peculiar facts and after considering if the default was for good and sufficient reasons:ITAT
(a listed Pharmaceutical company) had filed its return of income for AY 2008-09 reporting a self-assessment tax liability; Subsequently, after being put on notice by the AO about the non-payment of self-assessment tax, assessee accepted non-payment on account of the financial stringency and liquidity crunch and thereafter immediately filed a revised return and also paid self-assessment tax; The AO levied Rs 50 lakhs penalty u/s 221(1) for non-payment of self-assessment tax while filing the original return of income; ITAT SB holds that by paying the tax at the time of filing revised return, the lapse committed by not paying the admitted tax liability at the time of filing the original return does not get obliterated or wiped out; ITAT SB lays down distinction between claims made in tax return and actions connected with the original return becoming a legal nullity and observes that it would be a superfluous approach to hold that "revised income tax return also substitutes original income tax return for all legal purposes, including penal consequences in respect of defaults committed in respect of the original income tax return"; ITAT SB distinguishes assessee's reliance on several HC rulings, ITAT SB notes that crux of these HC rulings is that the revised return substitutes the original return and claims made in revised return alone could be considered by the AO; ITAT SB holds that "The observations made by Their Lordships in this context cannot be viewed on standalone basis as a complete exposition of law on the question which did not even come up for consideration before Their Lordships", ITAT SB adds that "What has been stated in the context of computation or assessment of income does not really hold good in respect of lapse committed at the time of filing of the original income tax return- which is required to be visited with penal consequences under section 221(1)"; Concluding that the law is clear and unambiguous, ITAT SB concludes that subsequent tax payment whether with or without revision of income tax return is not relevant for the penal consequences u/s 221(1); ITAT SB overrules ratio of ITAT Division Bench ruling in Shri Shakti Credits Limited [(2014) 66 SOT 0175]; After answering the question of law framed for consideration of the Special Bench, ITAT SB at the end directs the Division Bench to examine merits of levy of Rs 50 lakh penalty on the assessee considering peculiar facts and after considering if the default was for good and sufficient reasons:ITAT
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