Kamalyam Shankarnarayan, Pune V. Income-tax Officer,

ITA 1037/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0951 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 21-09-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 17-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMITRA BANERJI
• Keywords: Opportunity of being heard; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.1037/PN/2016 / ASSESSMENT YEAR : 2012-13 SHRI KAMALYAM SHANKARNARAYAN, AP. CTS NO.6297, FLAT NO.03, OPP. MAYUR CLASSIC, PIMPRI, PUNE 411018 PAN : ABZPS0783L . / APPELLANT V/S ITO, WARD - 8(4), PUNE . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SMT. SUMITRA BANERJI / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 15-02-2016 OF THE CIT(A)-9, PUNE RELATING TO ASSES SMENT YEAR 2012-13. 2. THIS APPEAL WAS FIRST FIXED FOR HEARING ON 23-08-2016. THE NOTICE WAS DULY SERVED ON THE ASSESSEE. SINCE NONE AP PEARED ON THAT DATE, THE CASE WAS ADJOURNED TO 21-09-2016, BY ISSUE O F FRESH NOTICE THROUGH RPAD. THE NOTICE WAS DULY SERVED AND ACKNOWLE DGEMENT IS PLACED ON RECORD. HOWEVER, WHEN THE NAME OF THE ASSESS EE WAS CALLED NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOUR NMENT APPLICATION SEEKING ADJOURNMENT OF THE CASE IS FILED. THEREFOR E, THIS APPEAL IS BEING DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. / DATE OF HEARING :21.09.2016 / DATE OF PRONOUNCEMENT:23.09.2016 2 ITA NO.1037/PN/2016 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS TH E PROPRIETOR OF M/S. CROSSWORD INDUSTRIES ENGAGED IN THE BUSINESS OF P LANT ERECTION AND FABRICATION. THE ASSESSEE FILED HIS RETURN OF INCOME ON 29-09- 2012 DECLARING TOTAL INCOME OF RS.48,65,420/- AND FURTHER D ISCLOSING LIABILITY TOWARDS SELF ASSESSMENT TAX AT RS.10,58,320/- FOR TH E IMPUGNED ASSESSMENT YEAR. THE AO ISSUED NOTICE U/S.221 (1) RW.S. 140A(3) OF THE I.T. ACT ON 26-12-2012. AFTER ALLOWING THE A SSESSEE AN OPPORTUNITY OF BEING HEARD THE AO PASSED THE ORDER U/S .221(1) LEVYING PENALTY OF RS.10,58,320/- VIDE ORDER DATED 13-03-2013. 4. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT THE AMOUNT OF PENALTY CANNOT EXCEED THE AMOUNT OF TAX IN ARREAR, I.E. RS.9,30,341/ -. IT WAS SUBMITTED THAT THE ASSESSEE WAS IN SEVERE FINANCIAL DIFFICULT Y FOR MAKING PAYMENT OF SELF ASSESSMENT TAX AND THERE WAS NO INTENTION OF AVOIDING LIABILITY FOR PAYMENT OF TAX. IT WAS ACCORDINGLY SUB MITTED THAT THERE WAS A REASONABLE CAUSE FOR WHICH THE ASSESSEE CO ULD NOT DISCHARGE HIS LIABILITY. THEREFORE, THE PENALTY SHOULD BE DELET ED. THE AMENDMENT MADE BY THE FINANCE ACT, 2013 TO PROVISIONS O F SECTION 139(9) WAS ALSO BROUGHT TO THE NOTICE OF THE CIT(A). 5. HOWEVER, THE LD.CIT(A) WAS NOT FULLY SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE HOWEVER DIRECTED T HE AO TO RESTRICT THE PENALTY EQUIVALENT TO THE AMOUNT OF TAX IN A RREAR, I.E. RS.9,30,341/- BY OBSERVING AS UNDER : I HAVE CONSIDERED CAREFULLY THE FACTS OF THE CASE AND ABOVE CONTENTIONS MADE THROUGH ITS SUBMISSIONS. AS REGARD SECOND CONTENTION OF THE APPELLANT THAT THERE WAS REASONAB LE CAUSE FOR NOT DISCHARGING THE STATUTORY LIABILITY, I HAVE CONSIDER THE FACTS OF THE CASE. I HAVE GONE THROUGH THE BANK STATEMENTS OF THE ASSESSEE FOR THE RELEVANT PERIOD AND FOUND THAT THOUGH THE ASSESSEE HAD BEEN RAISING FUNDS THROUGH THE BANK LIMIT FOR RUNNING ITS BUSINE SS BUT THE ARGUMENT THAT IT WAS ALWAYS FACING SHORTAGE OF FUND AND DID NOT HAVE FUND EVEN TO DISCHARGE HIS LIABILITY AGAINST SELF A SSESSMENT TAX OF RS. 10 LAKHS APPROXIMATELY IS NOT ONLY UNACCEPTABLE BUT UNBELIEVABLE. IT 3 ITA NO.1037/PN/2016 IS SEEN THAT THE ASSESSEE HAD A LOT OF FUND INFLOW DURING THE RELEVANT PERIOD OUT OF WHICH IT COULD HAVE DISCHARGED THE TA X LIABILITY UNDER QUESTION AT THE TIME OF FILING THE RETURN OR AT TIM E OF SHOW CAUSE NOTICE ISSUED BY THE A.O. MOREOVER, PAYMENT OF TAXES O N SPECIFIED DATES ARE STATUTORY LIABILITY AND THERE WAS NO REAS ON TO NOT COMPLIED WITH THE SAME. THEREFORE, THE ASSESSEE'S CONTENTION T HAT THERE WAS SUFFICIENT CAUSE FOR NOT DISCHARGING THE LIABILITY OF SELF ASSESSMENT TAX IS NOT ACCEPTED. THE ASSESSEE'S THIRD CONTENTION WITH REGARD TO AMENDMENT OF SECTION 139, IT IS HOLD THAT THE ASSESSEE DOES NOT FIND ANY SUPPORT FRO M AMENDMENT INTRODUCED THROUGH FINANCE ACT, 2013 BY INSERTING CL AUSE (AA) IN EXPLANATION TO SECTION 139(9) AS IT HAS BEEN NOT AMEND ED RETROSPECTIVELY. IN THE FIRST CONTENTION OF THE APPELLANT IT HAS CONT ENDED THAT THE PENALTY CANNOT EXCEED AMOUNT OF TAX. THE SECTION 220(1) STATE S THAT WHEN AN ASSESSEE IS IN DEFAULT OR IS DEEMED TO BE IN DEFAULT IN M AKING A PAYMENT OF TAX, HE SHALL, IN ADDITION TO THE AMOUNT OF THE ARRE ARS 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, HO WEVER, THAT THE TOTAL AMOUNT OF PENALTY DOES NOT EXCEED THE AMOUNT OF TAX IN ARREARS. DEFINITION OF 'INCOME TAX' UNDER SECTION 2(43) PROVIDES THAT 'T AX' IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1965 , AND ANY SUBSEQUENT ASSESSMENT YEAR MEANS INCOME-TAX CHARGEABLE UN DER THE PROVISIONS OF THIS ACT. IN THIS REGARD THE APPELLANT RE LIED ON CERTAIN CASE LAWS AS MENTIONED IN ITS REPLY. CONSIDERING THE LEGAL P OSITION LAID DOWN THROUGH VARIOUS CASE LAWS AS RELIED ON BY THE APPELLANT THE CONTENTION SEEMS TO JUSTIFIED. THEREFORE, THE A.O. IS DIRECTED TO RESTRICT THE AMOUNT OF PENALTY EQUIVALENT TO THE AMOUNT OF TAX IN ARREAR I .E. RS.9,30,341/-. THUS, THE APPEAL ON THIS GROUND IS PARTLY ALLOWED. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS : THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE T O EACH OTHER. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. 1. WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF T HE CASE THE LD.AO HAS ERRED IN LEVYING THE PENALTY U/S.221(1) OF THE ACT AND THE CIT(A)-9, PUNE HAS ERRED IN RETAINING THE PENALTY TO THE EXTENT OF RS.9,30,341/-. 2. WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF T HE CASE AND THE LAW OBTAINING AND THE FINANCIAL DIFFICULTY FACE D BY THE ASSESSEE THE AO HAS ERRED IN LEVYING THE PENALTY U/S.221(1) OF THE AC T AND THE LD.CIT(A)-9, PUNE HAS ERRED IN NOT DELETING THE ENTIRE PENALTY. 3. THE PENALTY OF RS.9,30,341/- U/S.221(1) OF THE INC OME TAX ACT IMPOSED ON THE ASSESSEE IS BAD IN LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 4 ITA NO.1037/PN/2016 7. I HAVE CONSIDERED THE ARGUMENTS OF THE LD. DEPART MENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE AO AND T HE CIT(A). IT IS AN ADMITTED FACT THAT THE ASSESSEE WHILE FILING THE RETURN O F INCOME HAS NOT PAID THE SELF ASSESSMENT TAX DUE. THE AO, THEREFORE, LEVIED PENALTY OF RS.10,58,320/- U/S.221(1) OF THE I.T. ACT. I FIND IN APPEAL TH E LD.CIT(A) RESTRICTED THE PENALTY TO RS.9,30,341/- BEING THE EQUIVALENT AMOUNT OF TAX IN ARREAR, I.E. RS.9,30,341/-. THE DETAILED REAS ONING GIVEN BY THE LD.CIT(A) HAS ALREADY BEEN REPRODUCED IN TH E PRECEDING PARAGRAPH. I FIND THE ORDER OF THE CIT(A) IN THE INSTANT C ASE IS IN ACCORDANCE WITH LAW SINCE THE ASSESSEE HAS FAILED TO PAY THE ADMITTED SELF ASSESSMENT TAX. IN ABSENCE OF ANY CONTRARY MATER IAL BROUGHT TO MY NOTICE AGAINST THE ORDER OF THE CIT(A) THE SAME BEING IN ORDER CANNOT BE DISTURBED. I, THEREFORE, UPHOLD THE ORDER OF T HE CIT(A) AND THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-09-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 23 RD SEPTEMBER, 2016. '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , /// // $ % / TRUE COP// // TRUE COPY // &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - 9, PUNE 4. THE CIT-9, PUNE 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.