1980-VIL-06-ITAT-

Equivalent Citation: TTJ 009, 442,

Income Tax Appellate Tribunal MADRAS

Date: 25.01.1980

R. KARUPPASAMY.

Vs

SECOND INCOME TAX OFFICER.

BENCH

Member(s)  : V. RAJAGOPALAN., RAM RATTAN.

JUDGMENT

3. We heard the learned counsel for the assessee and the learned departmental representative.

4. It is common ground that the assessee was in receipt of share income from firms and that he had no other source of income. As per the return filed on 7th Dec., 76, the assessee should have paid a tax of Rs. 33,936 under s. 140A. In the reply to the show-cause notice the assessee had mentioned that there was no sufficient credit balance in the capital account of the partners and he was also unable to raise loan to pay the tax. The Income-Tax Officer has not challenged the correctness of the position that the assessee was unable to comply with the provisions of s. 140A due to paucity of funds. He has merely stated that the explanation was unreasonable and that the assessee should have made arrangements to comply with the provisions of s. 140A. The AAC also held that the financial difficulty cannot be taken into account in considering that default under s. 140A. Both the authorities below have misdirected themselves. If really the assessee does not have the funds to pay the tax, there is no justification for penalising the default. It is not the case of the Revenue that the assessee had sufficient funds and yet defaulted. Further we find that in this case after the completion of the assessment on 13th July, 77 on a total income of Rs. 97,000 on which a tax demand of Rs. 43,306 was raised, the assessee has applied to the IAC, Tirunelveli, pleading inability to pay the tax for want of funds and praying for permission to pay the tax demanded in six monthly instalments commencing from 31st Oct., 77. The IAC by order, dt. 28th Nov., 77, has considered the above request of the assessee and granted the facility of payment of tax by instalments of Rs. 14,435 on or before 1st Dec., 77, Rs. 14,435 on or before 1st Jan., 78 and Rs. 14,436 on or before 1st Feb., 78. We are informed that the assessee had complied with the above direction of the IAC. The fact that the IAC had thought it fit to grant extension of time to the assessee for paying the tax in instalments establishes the inability of the assessee to pay the tax in a lump consequent upon want of funds which was pleaded before him. In these circumstances, we are satisfied that there was reasonable cause for the default committed by the assessee. We, therefore, see no justification for the levy of penalty under s. 140A(3). In view of our above order we do not think it necessary for us to consider the legal contention raised on behalf of the assessee about the constitutional validity of the provisions of s. 140A(3) of the Act decided by the Madras High Court in Sali Maricar vs. ITO. We accordingly cancel the penalty.

5. In the result, the appeal is allowed.

 

DISCLAIMER: Though all efforts have been made to reproduce the order accurately and correctly however the access, usage and circulation is subject to the condition that VATinfoline Multimedia is not responsible/liable for any loss or damage caused to anyone due to any mistake/error/omissions.