Law:

Section:

Section 140A(3) [as it stood prior to 1-4-1989], read with section 260A of the Income-tax Act, 1961 - Assessment - Self-assessment - Assessment year 1981-82 - Whether in view of provisions of sub-section (3) of section 140A [as it stood prior to 1-4-1989] non-payment of self-assessment tax was a continuing default and wrong commenced from date of default and continued from month-to-month until compliance was made and default came to an end - Held, yes FACTS The assessee had not paid the self-assessment tax even after 19 years of the filing of the return. The Tribunal sustained the penalty levied upon the assessee under section 140A(3) [as it stood prior to 1-4-1976] for failure on his part to pay the self-assessment tax on the basis of the returned income. On appeal to the High Court, the assessee contended, that the Tribunal had misdirected itself in basing its decision on an irrelevant fact, namely, that the assessee had not paid the self-assessment tax even after 19 years of the filing of the return, and that once he had failed to deposit the self-assessment tax on account of non-availability of funds, the default, if any, stood concluded there and then and non-payment thereafter was of no consequence. HELD From the language of sub-section (3) of section 140A [as it stood prior to 1-4-1989], it was clear that non-payment of self-assessment tax was a continuing default. The wrong commenced from the date of the default and continued from month-to-month until the compliance was made and the default came to an end. The rule of de die in diem is applicable on monthly basis. Proviso to sub-section (3) enjoins on the Assessing Officer to afford a reasonable opportunity to the assessee of being heard before he decides to impose a penalty. It is at that stage that the assessee can show a cause for the non-payment of the tax. Thus, the ingenious argument of the assessee that once the assessee had failed to deposit the self-assessment tax on account of financial constraints, the default was complete and non-payment thereafter was of no consequence was ex facie without any substance. [Para 6] Whether the non-payment of tax stems from a reasonable cause or not is purely…

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