Income Tax Appeal No. 191 of 2004 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 191 of 2004 Date of decision: 23.11.2010 Commissioner of Income Tax Panchkula --- Appellant Versus M/s. Chief Electoral Officer, Haryana, Chandigarh. --- Respondent --- CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. Yogesh Putney, Senior Standing Counsel for the appellant. Mr. Pankaj Jain, Advocate for the respondent. --- AJAY KUMAR MITTAL, J. This order will dispose of Income-Tax Appeal Nos. 191 and 257 of 2004 as both of them arise out of the same order and a common question of law is involved therein. The facts have been taken from Income Tax Appeal No. 191 of 2004. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the Revenue against the order dated 4.6.2003, passed by the Income Tax Appellate Tribunal Income Tax Appeal No. 191 of 2004 2 (in short “the Tribunal”) in ITA No. 523/CHANDI/99, relating to the assessment year 1994-95. The following substantial question of law has been claimed for determination of this Court: “Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal has erred in law in cancelling the order imposing penalty of Rs. 2,67,420/-, u/s 221(1) of the Income Tax Act, 1961, for the assessment year 1994-95, when the ITAT has referred the question of law in quantum appeal to the Hon’ble Punjab and Haryana High Court, vide order dated 31.3.1999, which is still pending?” The facts, in brief, necessary for adjudication, as narrated in the appeal are that penalty proceedings under Section 221 of the Act were initiated against the assessee as it had failed to make the payment of Rs. 26,74,200/- by the stipulated date. The demand for the said sum had been created under Section 201 of the Act. The assessee took a plea that payment could not be made due to paucity of funds and it had made a request to the Government to grant permission to make payment after some time, but the assessing officer found that no such sanction had been granted. The assessing officer, thus, imposed penalty of Rs. 2,67,420/-, i.e. amount equivalent to 10% of total outstanding demand, vide order dated 8.10.1997. The Commissioner of Income Tax (Appeals), for short [“CIT(A)”] held that the assessing officer was not justified in imposing the aforesaid penalty and consequently, vide order dated 1.3.1999, Income Tax Appeal No. 191 of 2004 3 allowed the appeal carried by the assessee and cancelled the penalty. The Tribunal, vide order under appeal, upheld the order of the CIT(A) observing that the penalty had been rightly deleted by the CIT(A) because the same was not exigible when the demand itself had been quashed by the Tribunal. We have heard learned counsel for the parties and have perused the record. In view of order of even date passed in ITR No.183 of 1999 (Commissioner of Income Tax, Chandigarh Vs. The Chief Electoral Officer, Haryana, Chandigarh) wherein the order of the Tribunal dated 15.5.1998 in quantum appeal has been upheld, we find no merit in the present appeals. Accordingly, the appeals are dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) November 23, 2010 JUDGE *rkmalik*