DCIT, Bangalore V. M/s. Metal Closures Pvt. Ltd, Bangalore

ITA 1214/BANG/2010

• Counselvise Citation: 121421114 RSA 2010
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-09-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: V SRINIVASAN
• Keywords: Opportunity of being heard; Initiation of penalty proceedings

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI N.K.SAINI, ACCOUNTANT MEMBER AND SMT. P MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO.1214(BANG.)/2010 (ASSESSMENT YEAR : 2008-2009) THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-11(4), BANGALORE APPELL ANT VS M/S METAL CLOSURES PVT. LTD., NO.39/4B, 12TRH K.M. KANAKAPURA ROAD, BANGALORE-560 058 PAN NO.AABCM1666J RESPONDENT REVENUE BY : SMT SUSAN THOMAS JOSE, JCIT ASSESSEE BY : SHRI V.SRINIVASAN, CA DATE OF HEARING : 22-09-2011 DATE OF PRONOUNCEMENT : 29-09-201 1 O R D E R PER SMT P. MADHAVI DEVI, JM ; THIS APPEAL BY THE REVENUE RELATES TO ASSESSMENT YE AR 2008-09. THE REVENUE HAS RAISED THE FOLLOWING GRO UNDS IN ITS APPEAL; 1. THE LD.CIT(A) ERRED IN DELETING PENALTY OF RS.30.00 LAKHS U/S 221 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS PAID SELF ASSESSMENT ITA.NO.1214(B)/10 2 TAX ONLY AFTER INITIATION OF PENALTY PROCEEDINGS U/S 221. 2. THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FAC T THAT THE ASSESSEE HAW BEEN A HABITUAL DEFAULTER AS REGARDS PAYMENT OF ADVANCE TAX IN THE PRECEDING ASSESSMENT YEARS AND THE SAME CONDUCT CONTINUED IN THE ASSESSMENT YEAR 2008- 09 ALSO; AND HAS BEEN PAYING ONLY SELF ASSESSMENT TAX IN LUMPSUM IN THE PAST AND FOR THE ASSESSMENT YEAR UNDER CONSIDERATION HE HAD NOT PAID THE SELF ASSESSMENT TAX ALSO EVEN AFTER THE RETURN WAS FILED. 3. THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS CONTINUED TO DEFAULT IN PAYING ADVANCE TAX EVEN FOR THE ASSESSMENT YEAR SUBSEQUENT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE AO MAY BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A MANUFACTURER OF METAL CAPS, METAL CROWNS, METAL JAC KETS ETC. FOR THE RELEVANT ASSESSMENT YEAR, IT FILED ITS RETU RN OF INCOME ON 30-09-2008, DECLARING A SUM OF RS.1,47,06,940/- BUT THE SAID ITA.NO.1214(B)/10 3 TAX WAS NOT PAID BY THE ASSESSEE. THE AO ISSUED NO TICE U/S 221 ALONG WITH THE SHOW CAUSE NOTICE WHICH WAS SERV ED ON THE ASSESSEE TO APPEAR BEFORE HIM ON 26-11-2008. THE REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE AO AND APPRISED HIM ABOUT THE FINANCIAL DIFFICULTIES OF TH E ASSESSEE AND REQUESTED TIME UPTO 10-12-2008 TO PAY THE TAXES. HO WEVER, THE ASSESSEE COULD NOT MAKE THE ENTIRE AMOUNT BUT ONLY PAID A PART PAYMENT OF RS.25.00 LAKHS TOWARDS SELF ASSESSMENT T AX ON 26- 11-2008. THE EXPLANATION OF THE ASSESSEE THAT THE ASSESSEE IS IN FINANCIAL DIFFICULTIES WAS NOT ACCEPTED BY THE A O AND HE PROCEEDED TO LEVY PENALTY OF RS.30.00 LAKHS U/S 221 OF THE ACT VIDE HIS ORDER DATED 26-11-2008. 2.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BE FORE THE CIT(A) DETAILING THE REASONS FOR ITS INABILITY TO P AY THE TAXES ON TIME. 3. AFTER CONSIDERING THE ASSESSEE SUBMISSIONS, TH E CIT(A) OBSERVED THAT THE AO HAS FAILED TO GIVE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHICH IS PRE-REQUISITE U/S 221 OF THE ACT. THEREAFTER, HE PROCEEDED TO OBSERVE THAT THE AO RELIED UPON THE LIQUIDITY POSITION OF THE ASSESSEE AS ON 3 1-03-2008 AND NOT AS ON 30-09-2008 FOR DECLINING THE TIME SOU GHT BY THE ASSESSEE. HE ALSO CONSIDERED THE ASSESSEES SUBMISS IONS AND ITA.NO.1214(B)/10 4 ACCEPTED THE CONTENTION OF THE ASSESSEE THAT IT WAS UNDER SEVERE FINANCIAL DIFFICULTIES. HE ACCORDINGLY, DEL ETED THE PENALTY AND THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DR PLACED RELIANCE UPON THE ORDER O F THE AO STATING THAT SUFFICIENT OPPORTUNITY OF HEARING W AS GIVEN TO THE ASSESSEE BUT INSPITE OF ITS OWN UNDERTAKING TO PAY THE TAXES BEFORE 10-12-2008, THE ASSESSEE HAS NOT PAID ANY AM OUNT. 5. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OT HER HAND, RELIED ON THE ORDERS OF THE CIT(A). 6. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, W E FIND THAT THE CIT(A) HAS STATED THAT THE AO HAS NOT GIVEN SUF FICIENT OPPORTUNITY TO THE ASSESSEE, WHILE ON THE OTHER HAN D, HE HOLDS THAT THE AO HAS CONSIDERED THE LIQUIDITY POSITION A S ON 31-03- 2008 AND NOT ON 30-09-2008. THUS, THE FINDINGS OF C IT(A) ARE CONTRARY TO EACH OTHER IN AS MUCH AS THE AO CANNOT CONSIDER ASSESSEES SUBMISSION WITHOUT HEARING THE ASSESSEE. FURTHER, THE CIT(A) HAS ALSO NOT CALLED FOR ANY REMAND REPOR T FROM THE ASSESSING AUTHORITY ON THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE CIT(A) ONLY, WHICH IS IN VIOLATION OF RU LE 46A OF IT RULES. UNDER THESE CIRCUMSTANCES, WE DEEM IT FIT A ND PROPER TO REMAND THIS ISSUE TO THE FILE OF THE AO TO RECONSID ER THE SAME IN ITA.NO.1214(B)/10 5 ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE A SSESSEE SHALL BE GIVEN A FAIR OPPORTUNITY OF HEARING. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 29 TH SEPTEMBER, 201. SD/- SD/- ( N.K.SAINI) (SMT. P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIA L MEMBER PLACE: BANGALORE DATED: 29-09-2011 AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) BY ORDER AR, ITAT, BANGALORE