Rajesh Kumar vs Deputy Commissioner Of Income Tax
2003 Latest Caselaw 1364 Del

JUDGMENT

D.K. Jain, J.

1. This appeal by the assessed under Section 260 of the IT Act, 1961 (for short "the Act"), is directed against order, dt. 23rd June, 2003, passed by the Tribunal, Delhi Bench, New Delhi, (for short "the Tribunal"), in WTA No. 1144/Del/97, pertaining to the asst. yr. 1981-8.2. By the impugned order, the Tribunal has upheld the levy of penalty on the assessed under Section 140A(3) of the Act, for failure on his part to pay the self-assessment tax on the basis of the returned income.

2. According to the appellant, the order involves the following substantial question of law ;

"Whether on the facts and circumstances of the case, the learned Tribunal is correct in sustaining the penalty under Section 140A(3) of IT Act, 1961, and ignoring the Tribunal judgment dt. 14th Dec., 1989 which accepts non-availability of funds with the petitioner."

3. In support of the appeal, Mr. K.R. Manjani, learned counsel for the appellant, has vehemently submitted that the Tribunal has misdirected itself in basing its decision on an' irrelevant fact, namely, that the assessed had not paid the self-assessment tax even after 19 years of the filing of the return. In nutshell, the submission is that once the assessed had failed to deposit the self-assessment tax on account of non-availability of funds, the default, if any, stands concluded there and then and non-payment thereafter is of no consequence. It is, thus, urged that the appeal deserves to be admitted.

4. We are unable to persuade ourselves to agree with learned counsel for the assessed. Though, at the first blush, the argument appears to be attractive but considered in the light of the clear provisions of Sub-sections (1) and (3) of Section 140A of the Act, there is no substance in it.

5. Sub-sections (1) and (3) of Section 140A of the Act, as substituted by the Taxation Laws (Amendment) Act, 1975 w.e.f, 1st April, 1976, read as follows :

"(1) Where any tax is payable on the basis of any return required to be furnished under Section 139 or Section 148, after taking into account the amount of tax, if any, already paid under any provision of this Act, the assessed shall be liable to pay such tax before furnishing the return and the return shall be accompanied by proof of payment of such tax.

(3) If any assessed fails to pay the tax or any part thereof in accordance with the provisions of Sub-section (1), the ITO may direct that a sum equal to two per cent of such tax or part thereof, as the case may be, shall be recovered from him by way of penalty for every month during which the default continues:

Provided that before levying any such penalty, he shall be given a reasonable opportunity of being heard.

6. Sub-section (1) of Section 140A of the Act makes it mandatory for a person to pay, before furnishing the return, the tax on the basis of the return, after taking into account taxes already paid at the time of filing the return. Sub-section (3) of the section provides for levy of penalty for non-payment of self-assessment tax. From the language of Sub-section (3) it is clear that non-payment of self-assessment tax is a continuing default. The wrong commences from the date of the default and continues from month to month until the compliance is made and the default comes to an end. The rule of de die in diem is applicable on monthly basis. Proviso to Sub-section (3) enjoins on the AO to afford a reasonable opportunity to the assessed of being heard before he decides to impose a penalty. It is at this stage the assessed can show a cause for the non-payment of the tax. Thus, on a plain reading of the provision, the ingenious argument of learned counsel for the assessed that once the assessed had failed to deposit the self-assessment tax on account of financial constraints this default was complete and 'non-payment thereafter was of no consequence is ex facie without any substance.

7. As regards the question whether the non-payment of tax stems from a reasonable cause or not, it is purely a question of fact. The Tribunal has found that a bare statement by the assessed that he did not have sufficient funds to make payment towards self-assessment tax, could not be believed as nonpayment for 19 years was highly improbable for not arranging the funds. We also find that the CIT(A), while confirming the levy of penalty, had observed that two show-cause notices were issued to the assessed before levy of penalty but these evoked no response from the assessed. It was before the CIT that the assessed had taken the plea that he did not have the liquid funds to pay the tax.

8. Be that as it may, as noted supra, the question whether on the facts and circumstances of the case, there was a reasonable cause for non-payment of tax is essentially a question of fact. The impugned order does not involve any question of law, much less a substantial question of law. Accordingly, we decline to entertain the appeal. Dismissed.