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The Tax Publishers DCIT v. Vivimed Labs Ltd. [ITA No. 121/Hyd/2014, dt. 13-5-2016] : 2016 TaxPub(DT) 2541 (Hyd-Trib) Penalty under section 221 - does is warrant an order under section 143(1) or 143(3) for assessee to be held in default *Facts:* Assessee computed and returned his income without paying the self-asst. tax due to paucity of funds. Assessing officer applied penalty @ 25% of unpaid self-asst. tax under section 221. This was reduced to 15 lakhs by Commissioner (Appeals). On further cross appeals by both parties, the department questioned the reduction of penalty, while the assessee took a plea that they had a valid reason of paucity of funds + to hold one in default under section 221 an order under section 143(1) and 143(3) was sine qua non + they had paid taxes before levy of penalty: Held in favour of the assessee that the fact of paucity of funds being a genuine cause, was remanded to check and establish the paucity of funds on facts through bank accounts etc. and then consider dropping the penalty of 15 lakhs as appropriately. To levy penalty under section 221 no order under section 143(1) o 143(3) is sine qua non as the scheme of act is to first compute and admit a self-assessment liability, once this is done liability is triggered then payment is warranted the default of which triggers section 221 penalty.

The Tax Publishers

DCIT v. Vivimed Labs Ltd. [ITA No. 121/Hyd/2014, dt. 13-5-2016] : 2016 TaxPub(DT) 2541 (Hyd-Trib)

Penalty under section 221 - does is warrant an order under section 143(1) or 143(3) for assessee to be held in default

Facts:

Assessee computed and returned his income without paying the self-asst. tax due to paucity of funds. Assessing officer applied penalty @ 25% of unpaid self-asst. tax under section 221. This was reduced to 15 lakhs by Commissioner (Appeals). On further cross appeals by both parties, the department questioned the reduction of penalty, while the assessee took a plea that they had a valid reason of paucity of funds + to hold one in default under section 221 an order under section 143(1) and 143(3) was sine qua non + they had paid taxes before levy of penalty:

Held in favour of the assessee that the fact of paucity of funds being a genuine cause, was remanded to check and establish the paucity of funds on facts through bank accounts etc. and then consider dropping the penalty of 15 lakhs as appropriately.

To levy penalty under section 221 no order under section 143(1) o 143(3) is sine qua non as the scheme of act is to first compute and admit a self-assessment liability, once this is done liability is triggered then payment is warranted the default of which triggers section 221 penalty.