Law:

Section:

Section 140A of the Income-tax Act, 1961 - Assessment - Self-assessment - Assessment years 1966-67 to 1968-69 - Whether before levying penalty, assessee must be given a notice and reasonable opportunity of being heard - Held, yes - Whether, therefore, ITO is duty bound to consider reasons given by assessee for non-payment of tax within prescribed period and, if reasons are not considered order passed by ITO is bad - Held, yes FACTS For the relevant assessment years, the assessee was required to pay self-assessment taxes on the basis of its return of income within thirty days from the date of submission of the returns. The assessee failed to pay the taxes on the basis of self-assessment. So proceedings for imposition of penalty under section 140A(3) were initiated. Notice was issued requiring the assessee to show cause why penalty under that section should not be levied for non-payment of self-assessment taxes within the prescribed period. The assessee filed a written reply, for all the three assessment years stating that heavy construction works were undertaken during the relevant assessment years and the taxes as per returns could not be paid due to shortage of liquid funds and the assessee requested the ITO to drop the penalty proceedings. The ITO took the view that it was the duty of the assessee to make some provision for payment of taxes before making investment for other purposes. The ITO held that the assessee was liable to penalty under section 140A(3), and he, therefore, imposed penalties. On second appeal, the Tribunal held that the ITO was justified in imposing the penalties in all the three assessment years in question and that the AAC was justified in confirming the penalties. On reference : HELD Going through the provisions of section 140A, it is found that if after submitting a return the assessee does not pay the tax on the basis of the self-assessment made in the return submitted, within thirty days from the date of submission of the return, he is liable to penalty, which may be up to fifty per cent. of such tax. The proviso to the section lays down that before levying such penalty the assessee must be given a reasonable opportunity of being…

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