Case Law Details
During the assessment proceeding, the Assessing Officer observed that tax liability of Rs.1,09,71,691/- on the income declared in the return of income was shown payable under section 140A of the Act. In view of non-payment of admitted tax liability under section 140A(1) of the Act the Assessing Officer asked the assessee to furnish the evidence of tax paid as computed in the return of income and issued show cause that in absence of no such evidence as why the penalty might not be levied for non-payment of admitted tax. In the show cause notice, the Assessing Officer mentioned the section 140A(3) of the Act for levy of penalty.
In response, the assessee submitted the circumstances under which the admitted tax could not be paid including liquidity crunch. The assessee also referred to provision of section 221 of the Act, which says that if there is sufficient reason for non-payment of tax under section 140A, no penalty should be levied. But, the assessee also referred the relevant section of penalty as under section 140A(3) of the Act.
The Assessing Officer considered the submission of the assessee, however, in absence of any supporting documentary evidence of liquidity crunch, he was not satisfied with the reasons cited by the assessee for non-payment of admitted tax. The Assessing Officer held the assessee in default for not making payment of admitted tax liability of Rs.1 ,09,71 ,691/-and levied a penalty of an amount equal to admitted tax liability quoting section 140A(3) of the Act.
Before the Ld. Commissioner of Income Tax (Appeals), the assessee raised the ground that the order passed by the Assessing Officer was illegal and liable to be quashed as the penalty has been levied under section 140A(3) of the Act, whereas it should have been levied under section 221 of the Act. The Ld. CIT(A), however, held that the provisions of section 292B of the Act would cover such inadvertent mistake in quoting the correct section as the appellant had participated in the proceedings without rendering any objection.
Regarding the good and sufficient reason for non-payment of admitted tax liability, no submissions were filed by the assessee before the Ld. CIT(A). The Ld. CIT(A) observed that admitted tax liability was not paid even till the passing of the appellate order and therefore, he questioned the bonafides of the assessee in honoring his own commitment of tax payment on the returned income. Accordingly, he dismissed the appeal of the assessee. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above.
Held by ITAT
In the judgment of PK Palanisamy (supra), the Hon’ble Supreme Court observed as under:
“It is a well settled principle of law that mentioning of a wrong provision or non-mentioning of a provision does not invalidate an order if the court and/ or statutory authority had the requisite jurisdiction therefor.
In Ram Sunder Ram v. Union of India & Ors. [2007 (9) SCALE 197], it was held:
” It appears that the competent authority has wrongly quoted Section 20 in
the order of discharge whereas, in fact, the order of discharge has to be read having been passed under Section 22 of the Army Act. It is well settled that if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does exist and can be traced to a source available in law [see N. Mani Vs. San geetha Theatre and Ors. (2004) 12 SCC 278]. Thus, quoting of wrong provision of Section 20 in the order of discharge of the appellant by the competent authority does not take away the jurisdiction of the authority under Section 22 of the Army Act. Therefore, the order of discharge of the appellant from the army service cannot be vitiated on this sole ground as contended by the Learned Counsel for the appellant.”
In N. Mani Vs. San geetha Theatres & Ors. [(2004) 12 SCC 278], it is stated:
“9. It is well settled that if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does exist and can be traced to a source available in law.”
In the instant case also, before levy of the penalty, the assessee has been communicated exact nature of contravention, for which the assessee was liable, for penalty under section 221 of the Act. We find that the Assessing Officer has mentioned all the allegations and charges against the assessee in clear terms in the show cause notice and the assessee has also duly responded to those charges. The assessee in its submission also referred to the relevant section for levy of penalty as 140A(3) of the Act. In the circumstances, respectfully following the judgment of the Hon the Assessing Officer cannot be held as invalid.
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