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Without there being any requisite corresponding amendment to Sec. 221 of the Act in consonance with the amendments carried out in Sec. 140A(3) of the Act w.e.f. 01.04.1989, the Assessing Officer erred in levying the impugned penalty. Thus, on this aspect, we hereby set-aside the order of CIT(A) and direct the Assessing Officer to delete the penalty imposed u/s 140A(3) r.w.s. 221(1) of the Act.

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Sec. 221(1) of Income Tax Act, 1961— Penalty —penalty u/s 221 was not attracted for default in payment of self-assessment tax, thus, the Assessing Officer erred in levying the penalty without there being any requisite corresponding amendment to Sec. 221 in consonance with the amendments carried out in Sec. 140A(3) w.e.f. 01.04.1989

Facts: The assessee filed an appeal against the assessment order before the CIT(A), who accepted the revised computation of income and deleted the addition made by the AO. However, the CIT(A) confirmed the penalty u/s.221(1) levied by AO against which, the assessee is in further appeal before the Tribunal

Held, the fact that the amended Sec. 140A(3) w.e.f. 01.04.1989 does not envisage any penalty for non-payment of self-assessment tax, the Assessing Officer was not justified in levying the impugned penalty by making recourse to Sec. 221 (1). Before parting, we may again emphasise that Sec. 221 remains unchanged, both during the pre and post amended Sec. 140A(3) and even in the pre-amended situation, penalty u/s 221 was not attracted for default in payment of self-assessment tax, which was expressly covered in pre 01.04.1989 prevailing Sec. 140A(3). Thus, without there being any requisite corresponding amendment to Sec. 221 in consonance with the amendments carried out in Sec. 140A(3) w.e.f. 01.04.1989, the Assessing Officer erred in levying the impugned penalty. Thus, on this aspect, we hereby set-aside the order of CIT(A) and direct the Assessing Officer to delete the penalty imposed u/s 140A(3) r.w.s. 221(1). - SAMA RAMACHANDRA REDDY HYDERABAD V/s DEPUTY CIT - [2020] 26 ITCD Online 073 (ITAT-HYDERABAD)