INCOME TAX ACT, 1961

Section 221(1)

Penalty under section 221(1) - Leviability - Non-payment of self-assessment tax -

Assessee-society filed return of income declaring total income of Rs. Nil after claiming deduction under section 80P. AO disallowed the assessee's claim of deduction under section 80P on the ground that the assessee was a cooperative bank, other than a primary agricultural credit society and primary cooperative agricultural and rural development bank. Subsequently, the AO levied penalty under section 221(1) observing that the assessee was in default for non-payment of self-assessment tax. CIT(A) allowed claim of deduction under section 80P, however, upheld the penalty under section 221(1). Held: CIT(A) allowed assessee's claim of deduction under section 80P. Therefore, when the quantum addition had been deleted by CIT(A), penalty on such addition was not sustainable. Even otherwise, the assessee filed the return of income disclosing total income as Rs. Nil after claiming deduction under section 80P, which was allowed by CIT (A). When the assessee filed return of income with Rs. Nil, there was no question of payment of self-assessment tax. Therefore, the CIT (A) was not justified in confirming levy of penalty under section 221(1) and hence, such penalty was deleted.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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