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In favour of: The assessee; Penalty u/s 140A(3) — Failure to pay self-assessment tax — Assessee-firm filed a return of income for AY 2006–2007 declaring income — It was assessed u/s 143(1) — No self-assessment tax (? 43.99 lakhs) was paid by assessee as prescribed u/s 140A — Assessee was treated in default and penalty was levied u/s 140A(3) — Assessee submitted that due to losses he has no fund to make payment, hence defaulted, but later on paid amount — CIT(A) deleted penalty imposed by AO holding that very fact installment facility was granted by AO points to acceptance of assessee’s claim that he had incurred huge losses and was experiencing severe financial crunch and that default was for good and sufficient reasons — Held, second proviso to s 221(1) prescribes that in a situation when assessee proves that there was a good and sufficient reason for nonpayment of self-assessment tax, no penalty is to be levied on assessee — Assessee has furnished a balance sheet and demonstrated that there was heavy losses incurred in share trading — Assessee had cash in hand of only ? 47,873, likewise, in bank accounts, balance was only ? 8,848 — There was heavy current liabilities against investment in shares — Assessee had no liquid funds to make payment of self-assessment although he had earned profit in financial year 2005–2006 but by time he was required to file return, he had suffered heavy losses and the entire profit had washed away due to losses in share trading — Assessee has shown that there was a good and sufficient reason for default in payment of self-assessment tax — Penalty imposed u/s 140A(3) was rightly set aside by CIT(A) — Revenues’ appeal dismissed.
CCH Citation: (2014) 40 CCH 114 AhdTrib