JUDGMENT : 1. This appeal is preferred by the Revenue challenging the order of the Income Tax Appellate Tribunal, Amritsar Bench (hereinafter to be referred as "the Tribunal") in ITA Nos. 341(Asr)/2014 & 398(Asr)/2014, dated 13.04.2016. The relevant facts of the case are as follows:- "The assessee in this case filed return of income on 30.09.2010 declaring a profit of Rs. 10.34 crores. Assessee did not pay advance tax or self assessment tax. Out of the total tax liability of Rs. 1,75,84,292/-, the assessee had paid only Rs. 25.20 lakhs on account of TDS leaving a balance tax demand of Rs. 1,50,55,026/-." The Assessing Officer observed that the said tax was payable but was not paid and in terms of the provisions of Section 140-A of the Income Tax Act, 1961 (hereinafter referred to be referred as "the Act") assessee is in default. Therefore, the assessee was visited with a show cause notice under Section 221(1) of the Act for non-payment of self assessment tax. In reply, the assessee submitted that entire balance tax of Rs. 1,50,55,026/- has been paid on various dates and the last instalment was paid on 01.12.2010. The details of the payments are as follows:- S.No. Date Amount (i) 15.11.2010 Rs.25,00,000/- (ii) 23.11.2010 Rs. 25,00,000/- (iii) 30.11.2010 Rs. 35,00,000/- (iv) 01.12.2010 Rs.65,55,026/- Total Rs.1,50,55,026/- This was besides the tax liability discharged by way of TDS amounting to Rs. 25.20 lakhs. In the proceedings under Section 221(1) of the Act, the Assessing Officer held that the assessee has not deposited the self assessment tax, as required and it is only after the department noticed the default of the assessee that the payments were made. Therefore, the assessing officer held that the assessee had defaulted in making payment of self assessment tax. The assessee was also called upon to furnish cash flow statement to determine the availability of cash for deciding the proceedings under Section 221(1) of the Act. Based on that, the assessing officer passed an order in terms of Section 221(1) of the Act imposing penalty of Rs. 1,50,55,026/-. Aggrieved thereby the assessee filed appeal before the Commissioner of Income Tax (Appeals), which allowed the appeal in part holding as follows :- "4.4 Ground of Appeal Nos. Based on that, the assessing officer passed an order in terms of Section 221(1) of the Act imposing penalty of Rs. 1,50,55,026/-. Aggrieved thereby the assessee filed appeal before the Commissioner of Income Tax (Appeals), which allowed the appeal in part holding as follows :- "4.4 Ground of Appeal Nos. 4 to 6, 8 & 9 related to the plea of the appellant that the appellant deposited the tax within two months of the filing of return and the delay was on account of reasonable cause. The appellant during the course of penalty proceedings argued that the tax could not be deposited on time because of shortage of funds. However, on verification of cash flow statement submitted by the appellant himself, it was observed by the AO that funds of Rs. 93,86,475/- was available with the appellant which could have been used for meeting its income tax liabilities. It was desirable that the taxes should have been paid as soon as income was earned. The appellant during the course of appellate proceedings has submitted that out of the said balance of Rs. 93.86 lakhs, the amount of Rs. 75.48 lakhs was in corporation bank which was later on used for repayment of bank borrowings. First of all, no such plea was taken before the AO and such additional evidences could not be accepted under Rule 46-A as there was no reasonable cause for not providing such evidences during penalty proceedings. Further, if the funds were borrowed by the appellant for running of business, the payment of income tax liability was also a part of business and priory in repayment of bank loan over income tax liability where there is nothing on record to show that there was undue pressure from bank authorities to liquidate the loan could not be considered as reasonable cause for non-payment of tax. However, it is noticed that since the funds available with the company was only Rs. 93,86,475/- and the tax liability was Rs. 1,50,55,026/- it may be considered reasonable for non-payment of tax to the extent of Rs. 56,68,551 (i.e. Rs. 1,50,55,026/- - Rs. 93,86,475). Further in my opinion, it would be very harsh to levy penalty of 100% of balance income tax payable, as the appellant has deposited the tax with interest after the show cause notice was issued to the appellant but before passing of the order. 56,68,551 (i.e. Rs. 1,50,55,026/- - Rs. 93,86,475). Further in my opinion, it would be very harsh to levy penalty of 100% of balance income tax payable, as the appellant has deposited the tax with interest after the show cause notice was issued to the appellant but before passing of the order. I have considered the submissions dated 19.03.2014 and 27.03.2014 of the appellant reiterating the liquidity crunch faced by the appellant. The appellant has pleaded that cash in flow was less than the cash out flow and the reasons given were that the huge inventory (24.13 crores) and sundry debtors (65.35 crores) were financed out of borrowed funds of Rs. 86.81 crores. It was also pointed out that due to volatile condition in the State of J&K during the relevant period in 2011, the entire business were closed for several months which delayed the process of realization of sale receipts. Due to this disturbed condition the CDBT extended the dates of filing return up to 31st January, 2011. On other hand the AO in the penalty order has mentioned that Rs. 93.86 lacs was available with the appellant as per the cash flow statement furnished by the appellant before him. The appellant disputed this and stated that the liquidity was mostly in terms of cheques of various parties which were sent for collection. Out of such cheques deposited an amount of Rs. 61.08 lacs was received from the bank in the account only after closure of the financial year 2010. The argument of the appellant is considered and found that for advance tax payment this may be of some relevant but does not explain as to why the deposit of tax was not made immediately after the close of the financial year and deferred till the first week of month of December, 2011. In CIT v. Smt. Vijaynathimala, (1977) 108 ITR 882, (Mad), it was observed that once an assessee has failed to pay the amount of advance tax on the due date, default has occurred and liable for penalty. The fact that the assessee has subsequently paid the amount after the issue of notice by the Assessing Officer could not wipe out the default which had already occurred. The fact that the assessee has subsequently paid the amount after the issue of notice by the Assessing Officer could not wipe out the default which had already occurred. In principle, I agree so far as levy of penalty is concerned but do not agree entirely with the quantum of penalty levied which was at the maximum amount prescribed under the statute. As per scheme of Act, any number of penalties could be levied u/s. 221(1) without any time limitation is suggestive of the fact that the maximum penalty may not be levied in the first instance unless situation warrants otherwise. The minimum and maximum penalty prescribed are such amount as the AO may impose for default or continuing default and amount of tax in arrear respectively. From facts and circumstances of the case the gravity of default did not warrant maximum penalty in this case. The AO is to see the seriousness of default and the chronic defaulter is to penalized with maximum penalty. The maximum penalty is meant for habitual and chronic defaulter and the facts of this case suggest that the appellant cannot be put under this category. So far as the Assessing Officer's observation is concerned that Rs. 93.86 lacs was available was per cash flow statement given by the appellant himself before him, in my view, it is harsh to expect that the entire amount available with the appellant should have been utilized for the tax payment and bringing the finances in the business to a halt. The appellant has to see the business expediency, other pressing needs and what is the best for his business at that point of time. Nevertheless, the payment of Income Tax is also an integral part of the business liability. I am of the view that out of Rs. 93,86,475/- the appellant should have spared certain percentage towards the tax liability. Since the appellant has liquidated the entire tax liability with interest in first week of December 2011, the intensity of default is mitigated to some extent. I therefore hold that penalty of 25% of the amount of Rs. 93,86,475/- (i.e. liquidity available on said date) is reasonable and justified in the interest of justice. Accordingly, I reduce the quantum of penalty from Rs. 1,50,55,000/- to Rs. 23,46,619/-. 4.5. Ground of Appeal No. 7 relates to the plea of the appellant that the appellant has deposited the tax voluntarily. 93,86,475/- (i.e. liquidity available on said date) is reasonable and justified in the interest of justice. Accordingly, I reduce the quantum of penalty from Rs. 1,50,55,000/- to Rs. 23,46,619/-. 4.5. Ground of Appeal No. 7 relates to the plea of the appellant that the appellant has deposited the tax voluntarily. The appellant has argued that the tax has been deposited before the order u/s. 221(1) was passed by the AO and accordingly the penalty imposed by the AO is not justifiable. It is noticed that the tax was paid by the appellant after the show cause notice which was issued to the appellant for imposition of penalty for default in payment of self assessment tax. The explanation to the Section 221(1) clearly covers such cases and provides that an assessee shall not cease to be liable to any penalty under this sub-section merely by reason of the fact that before the levy of such penalty he has paid the tax. Therefore, this plea of the appellant is not tenable. The appellant has also argued that the due date of filing of return was extended up to 31.01.11 and the appellant has paid entire tax by 01.12.2010 i.e. prior to such date and accordingly the penalty u/s. 221(1) should not be levied on the appellant. It is observed that as per the provisions of Section 140-A, the assessee shall be liable to pay tax together with interest before furnishing the return and the return shall be accompanied by the proof of payment of such tax and interest. Therefore, the assessee is in default for making payment of tax, if he does not deposit self assessment tax before filing of return. Section 140-A talks about payment of tax before filing of return and not before due date of return. Therefore, the appellant could not take the benefit of extended period upto due date of filing of return for deposit of tax, if return was filed before the due date of filing of return. Therefore, this plea of the appellant could not be sustained as per the provisions of income tax Act. For the sake of arguments, it is also noticed that as per the present provisions, the return is treated as defective return u/s. 139(9) if tax is not deposited before the filing of return. Therefore, this plea of the appellant could not be sustained as per the provisions of income tax Act. For the sake of arguments, it is also noticed that as per the present provisions, the return is treated as defective return u/s. 139(9) if tax is not deposited before the filing of return. Now, if the return is filed before due date without deposit of self assessment tax, the return is to be considered as defective and assessee cannot plead that the return cannot be treated as defective till the due date of filing of return. This ground of appeal of the appellant is, accordingly, dismissed." (Emphasis supplied) The Appellate Authority holding as above reduced the penalty to 25% tax default of the amount based on the liquidity available with the assessee on the date. Aggrieved by that order assessee as well as Revenue filed appeal before the Income Tax Appellate Tribunal, Amritsar Bench. The issues raised by the Revenue as well as assessee were considered by the Tribunal and while allowing the appeal of the assessee Revenue's appeal was dismissed. The present appeal is filed by the Revenue. 2. The contention on behalf of the Revenue is that the assessee had to pay the self assessment tax at the time of filing of the return, which he failed to do on 30.09.2010. The implication of non-payment of self assessment tax as aforesaid is covered under the provisions of Section 140-A(1) & (3) of the Act and on such default penalty is provided in terms of Section 221(1) of the Act. The implication of non-payment of self assessment tax as aforesaid is covered under the provisions of Section 140-A(1) & (3) of the Act and on such default penalty is provided in terms of Section 221(1) of the Act. Provisions of Section 140(A)(1) and (3) and Section 221 (1) read as follows:- "140-A Self-assessment.-(1) Where any tax is payable on the basis of any return required to be furnished under Section 115WD or Section 115WH or Section 139 or Section 142 or Section 148 or Section 153A or, as the case may be, Section 158BC, after taking into account;- (i) the amount of tax, if any, already paid under any provision of this Act; (ii) any tax deducted or collected at source; (iii) any relief of tax or deduction of tax claimed under Section 90 or Section 91 on account of tax paid in a country outside India; (iv) any relief of tax claimed under Section 90-A on account of tax paid in any specified territory outside India referred to in that section; and (v) any tax credit claimed to be set off in accordance with the provisions of Section 115JAA, the assessee shall be liable to pay such tax, together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return and the return shall be accompanied by proof of payment of such tax and interest. [Explanation-Where the amount paid by the assessee under this sub-section falls short of the aggregate of the tax and interest as aforesaid, the amount so paid shall first be adjusted towards the interest payable as aforesaid and the balance, if any, shall be adjusted towards the tax payable.] ................................. [(3) If any assessee fails to pay the whole or any part of such tax or interest or both in accordance with the provisions of sub-section (1), he shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of the tax or interest or both remaining unpaid, and all the provisions of this Act shall apply accordingly." Section 221(1) of the Act. "221. "221. Penalty payable when tax in default.-[(1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of Section 220, be liable, by way of penalty, to pay such amount as the [Assessing Officer] may direct, and in the case of a continuing default, such further amount or amounts as the [Assessing Officer] may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears: Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard: Provided further that where the assessee proves to the satisfaction of the Assessing Officer that the default was for good and sufficient reasons, no penalty shall be levied under this section. [Explanation.-For the removal of doubt, it is hereby declared that an assessee shall not cease to be liable to any penalty under this sub-section merely by reason of the fact that before the levy of such penalty he has paid the tax." 3. The departments plea is that penalty under Section 221(1) of the Act is leviable is on the ground that the assessee is liable to pay tax on the total income on the basis of the return filed u/s. 139 of the Act after reducing the advance taxes and tax deducted at source, if any and such return shall be accompanied with the proof of payment of such taxes and interest which the assessee failed to deposit. 4. A reading of Sub-section 3 of Section 140-A with Section 140-A(1) makes it clear that it applies in respect of return required to be furnished u/s. 139 of the Act. No doubt, the return in the present case in terms of Section 139 of the Act was filed on 30.09.2010 but in the State of Jammu & Kashmir the period for filing the return was extended up to 31.01.2011 in terms of an order passed under Section 119 of the Act, which is not disputed by the Revenue. No doubt, the return in the present case in terms of Section 139 of the Act was filed on 30.09.2010 but in the State of Jammu & Kashmir the period for filing the return was extended up to 31.01.2011 in terms of an order passed under Section 119 of the Act, which is not disputed by the Revenue. The assessee after filing the return on 30.09.2010 discharged the tax liability before December, 2010 much before the last date by which date assessee is require to file the return i.e. 31.01.2011 as was extended specifically in the instance case. 5. Taking note of the above factual scenario, the Tribunal after discussing the provisions of Section 140-A(1) & (3) held that tax having been paid even before the date on which the return is required to be filed i.e. 31.01.2011, the assessee could not be found to be in default or liable for penalty in terms of Section 221(1) of the Act. Reliance was placed on a decision of the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa, 83 ITR 26, where it has been held as under:- "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that company was not a dealer. Granting that they erred, no case for imposing penalty was made out." (Emphasis supplied) 6. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that company was not a dealer. Granting that they erred, no case for imposing penalty was made out." (Emphasis supplied) 6. On going through the provisions of Section 140-A(1) & (3) of the Act, the requirement is that when tax is payable on the basis of any return required to be furnished and only if any assessee fails to pay the whole or any part of such tax or interest or both in accordance with the provisions of sub-section (1) of Section 14C-A, he shall without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of the tax or interest or both. Therefore, emphasis is on the requirement of filing the return. 7. In this case undisputedly the return was filed on 30.09.2010 but the tax was paid before the last date when the requirement of filing of return ended i.e. 31.01.2011. If the date of filing of the return is extended for a certain period, it is deemed to be extended for all purposes. The rights that flow from extension of time for filing of return is to be understood that whatever the assessee could do before the last date of filing the return be it 30.09.2010 or the extended date i.e. 31.01.2011 is available to him. The mere filing of return will not foreclose his right that has been granted by law. Therefore, the Tribunal was correct in interpreting the said provisions because the date cannot be said to be extended only for a limited purpose. If the date is extended then it is extended for all purposes. 8. Moreover, the assessee, it appears, has given sufficient reasons as to why he could not pay self assessment tax, which the Assessing Officer had failed to consider and the Commissioner of Income Tax (Appeals) accepting it held in favour of the assessee partly. The Tribunal, however, after going through the provisions of the Act and the relevant dates on which the tax was paid came to the conclusion that the breach, if any, and a venial breach and is technical. The Tribunal, however, after going through the provisions of the Act and the relevant dates on which the tax was paid came to the conclusion that the breach, if any, and a venial breach and is technical. Since the tax has been paid before the statutory date requiring the assessee to file the return i.e. 31.01.2011, it held that the question of penalty does not arise. We concur with such finding. The decision of the Apex Court in Hindustan Steel Ltd. case (supra) is appropriate to the facts of the present case. The Tribunal exercised its discretion in accordance with the decision of the Apex Court cited supra and we find no reason to differ. We are in agreement with the view of the Tribunal. No question of law arises for consideration in this appeal. Therefore, the appeal is dismissed.