Sreemitra Estates Pvt. Ltd., Hyderabad V. Additional Commissioner of Income Tax, Hyderabad

ITA 1275/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77843 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 18-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M MADHUSUDHAN
• Keywords: Reasonable cause
• Section: 273B; 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1275/HYD/2013 A.Y. : 2005-06 SREEMITRA ESTATES PVT. LTD., HYDERABAD PAN AADCS2217D VS. ADDL. COMMISSIONER OF INCOME-TAX, RANGE 15, HYDERABAD. APPELLANT RESPONDENT ASSESSEE BY: SHRI M. MADHUSUDHAN REVENUE BY: SHRI JEEVANLAL LAVIDIYA DATE OF HEARING: 27.03.2014 DATE OF PRONOUNCEMENT: 11.04.2014 O R D E R PER SAKTIJIT DEY, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-II, HYDERABAD DATED 26/07/2013 FOR THE ASSES SMENT YEAR 2005- 06. 2. THE GRIEVANCE OF THE ASSESSEE IN THE PRESENT APP EAL IS WITH REGARD TO THE ORDER PASSED BY THE CIT(A) CONFI RMING PENALTY IMPOSED U/S 272A(2)(K) OF THE ACT. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE A COMPANY IS ENGAGED IN REAL ESTATE BUSINESS OF DEVELOPING AND SALE OF F LATS. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN CASE OF THE AS SESSEE ON 10/03/2008 TO VERIFY TDS COMPLIANCE. IN COURSE OF S URVEY, IT WAS NOTICED THAT THE ASSESSEE HAS FAILED TO FILE QU ARTERLY RETURNS IN THE PRESCRIBED FORM I.E. 24Q AND 26Q FOR THE FY 2004-05 WITHIN THE STIPULATED TIME AND THERE WAS A DELAY F OR ALL THE FOUR QUARTERS. ON THE BASIS OF SURVEY REPORT, THE ASSES SING OFFICER I.T.A. NO. 1275/HYD/2013 SREEMITRA ESTATES PVT. LTD. 2 WAS OF THE VIEW THAT AS PER THE PROVISIONS CONTAINE D U/S 200(3) OF THE IT ACT, READ WITH RULE 31A OF THE IT RULES, THE ASSESSEE BEING A DEDUCTOR IS UNDER STATUTORY OBLIGATION TO F URNISH QUARTERLY STATEMENTS WITH DETAILS OF TAX DEDUCTED AT SOURCE TO THE PRESCRIBED AUTHORITY IN THE PRESCRIBED FORM WIT HIN THE STIPULATED TIME. SINCE NON-COMPLIANCE TO THE AFORES AID STATUTORY PROVISIONS ATTRACTS PENAL CONSEQUENCES U/S 272A(2)( K) OF THE ACT, THE ITO, WARD 15(2), HYDERABAD SUGGESTED FOR INITIATION OF PENALTY U/S 272A(2)(K). ON SUCH BASIS, THE ADDL. CIT, RANGE 15, HYDERABAD ISSUED A SHOW CAUSE NOTICE TO THE A SSESSEE TO EXPLAIN WHY PENALTY SHALL NOT BE IMPOSED. IN RESPO NSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE CONTENDED THAT THE REAL ESTATE BUSINESS HAS SUFFERED A DEADLY BLOW DUE TO TELENGAN A AGITATION, RECESSION IN ECONOMY, GENERAL BUSINESS DECLINE, PAR TICULARLY IN INFORMATION TECHNOLOGY BUSINESS AND VARIOUS OTHER R EASONS DURING THE LAST 4/5 YEARS. DUE TO THIS REASON, THE CASH INFLOWS OF THE ASSESSEE WAS SERIOUSLY AFFECTED AND THE ASSESSE E WAS NOT ABLE TO PAY EVEN SALARIES IN TIME AND MEET OTHER FI NANCIAL COMMITMENTS INCLUDING TDS PAYMENTS. IT WAS SUBMITTE D THAT DUE TO THESE REASONS THERE WAS A DELAY IN FILING RE TURNS FOR TDS. THE EXPLANATION SUBMITTED BY THE ASSESSEE WAS HOWEV ER FOUND TO BE UNSATISFACTORY BECAUSE THE REASONS ON WHICH T HE ASSESSEE TRIED TO EXPLAIN THE DELAY IN FILING THE T DS RETURNS WAS FOUND TO BE NON-EXISTENT AS THE ECONOMIC RECESSION AS WELL AS TELENGANA AGITATION HAPPENED LONG AFTER THE PERIODS FOR WHICH THE ASSESSEE HAD DEDUCTED THE TAX. IT WAS FURTHER N OTED IN THE PENALTY ORDER THAT THE ASSESSEE WOULD NOT HAVE SUBM ITTED THE TDS RETURNS UNLESS THE SURVEY HAD TAKEN PLACE IN CA SE OF THE ASSESSEE. THEREFORE, REJECTING THE EXPLANATION OF T HE ASSESSEE, ORDER WAS PASSED IMPOSING PENALTY U/S 272A(2)(K) OF THE ACT. BEING AGGRIEVED OF THE PENALTY ORDER SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). I.T.A. NO. 1275/HYD/2013 SREEMITRA ESTATES PVT. LTD. 3 4. THE CIT(A) CONFIRMED THE PENALTY BY HOLDING AS U NDER: 6. THE INFORMATION ON RECORD IS CAREFULLY EXAMINED. FROM THE ABOVE TABLE IT IS EVIDENT THAT THE DELAY I N FILING OF TDS RETURNS IS ALMOST FOR MORE THAN 3 YEARS FOR ALL THE 4 QUARTERS. THIS CLEARLY INDICATES THAT THE APPELLA NT IS HABITUAL LATE FILER AND HAS SCANT RESPECT FOR STATU TORY PROVISIONS OF INCOME TAX ACT. THE REASONS GIVEN BY THE APPELLANT ARE COMPLETELY INCORRECT. IN FACT, THE DU E DATE TO FILE TDS RETURNS IN 2005 PERFECTLY COINCIDES WITH UNPRECEDENTED BOOM PERIOD IN REAL ESTATE BUSINESS I N ANDHRA PRADESH. THE BOOM PERIOD STARTED IN 2005 AND RECESSION TOOK OVER ONLY TOWARDS THE END OF 2008. I T IS PERTINENT TO MENTION THAT IT IS ONLY DUE TO SURVEY OPERATION U/S 133A ON 10/03/2008 IT WAS NOTICED THAT THE ASSE SSEE HAD NOT FILED TDS RETURNS AND SUBSEQUENT TO THE SUR VEY PROCEEDINGS, THE ASSESSEE WAS COMPELLED TO FILE THE TDS RETURNS WITH A DELAY OF MORE THAN 3 YEARS. AS PER T HE PROVISIONS OF SECTION 273B, NO PENALTY SHALL BE IM POSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF H E PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILUR E. SINCE THE APPELLANT HAD FAILED TO GIVE ANY REASONAB LE CAUSE FOR DELAY IN FURNISHING OF THE TDS RETURNS, T HE PENALTY LEVIED BY THE ASSESSING OFFICER OF RS. 11,1 6,000/- IS CONFIRMED. IT IS ALSO PERTINENT TO MENTION THAT NON-FILING OF THE TDS RETURN IN TIME, HAVING DEDUCTED THE MONE Y, WOULD CAUSE GREAT DIFFICULTY FOR THE DEDUCTEES TO T AKE CREDIT FOR THE SAID AMOUNTS. IN VIEW OF THE ABOVE DISCUSSION, SINCE THE APPELLANT HAPPENS TO BE A HAB ITUAL DEFAULTER AND HAS NOT SUBMITTED ANY REASONABLE CAUS E FOR THE SAID FAILURE OF NOT FILING THE TDS RETURN WITHI N THE STIPULATED TIME, THE PENALTY LEVIED BY THE ASSESSIN G OFFICER IS CONFIRMED. 5. THE LEARNED AR SUBMITTED BEFORE US THAT THERE IS A REASONABLE CAUSE FOR NOT FURNISHING QUARTERLY RETUR NS AND THE DELAY WAS DUE TO CIRCUMSTANCES BEYOND THE CONTROL O F THE ASSESSEE. IT WAS SUBMITTED THAT SINCE DURING THAT P ERIOD THERE WAS A CHANGE IN MANAGEMENT, AFFAIRS OF THE COMPANY WAS IN UTTER CHAOS, WHICH RESULTED IN DELAY IN FILING THE RETURNS. IT WAS SUBMITTED BY THE LEARNED AR THAT THE ASSESSEE HAS N OT ONLY PAID THE TAX BUT HAS ALSO PAID INTEREST IN TERMS OF SECTION 201(1A) OF THE ACT. THE DEPARTMENT IS NO WAY PREJUD ICED AS TAX I.T.A. NO. 1275/HYD/2013 SREEMITRA ESTATES PVT. LTD. 4 ALONG WITH INTEREST HAS BEEN PAID. IT WAS SUBMITTED THAT SINCE THERE IS A REASONABLE CAUSE IN TERMS OF SECTION 273 OF THE ACT, PENALTY SHOULD NOT HAVE BEEN IMPOSED IN CASE OF THE ASSESSEE. 6. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T SINCE THE ASSESSEE HAS NOT ONLY DEFAULTED IN MAKING PAYME NT OF THE TAX DEDUCTED AT SOURCE TO THE GOVERNMENT EXCHEQUER BUT HAS ALSO NOT FURNISHED QUARTERLY RETURNS WITHIN THE STI PULATED DATE, PENALTY LEVIED IS COMPLETELY JUSTIFIED. 7. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDER S OF THE REVENUE AUTHORITIES. THE UNDISPUTED FACTS ARE, THOU GH THE ASSESSEE HAS DEDUCTED TAX AT SOURCE, HE HAS FAILED TO REMIT THE TAX DEDUCTED TO THE GOVERNMENT ACCOUNT IN TERMS WIT H THE STATUTORY PROVISIONS. SO FAR AS THE TDS AMOUNT IS C ONCERNED, IT DOES NOT BELONG TO THE ASSESSEE BUT THE ASSESSEE IS MERELY A CUSTODIAN OF THE GOVERNMENT MONEY. THEREFORE, THE PARAMOUNT DUTY OF THE ASSESSEE IS TO REMIT THE TDS AMOUNT WIT HIN THE STATUTORY TIME LIMIT. PAYMENT OF INTEREST U/S 201(1 A) OF THE ACT WILL NOT ABSOLVE THE ASSESSEE FROM PENAL CONSEQUENC ES BECAUSE INTEREST IS COMPENSATORY IN NATURE WHEREAS PENAL PROVISIONS ARE BY WAY OF DETERRENT MEASURE. THEREFO RE, FOR ESCAPING FROM RIGORS OF PENALTY, THE ASSESSEE HAS T O SATISFY THE ASSESSING OFFICER THAT THERE WAS A REASONABLE CAUSE FOR THE DEFAULT COMMITTED BY HIM. AS CAN BE SEEN FROM THE E XPLANATION OF THE ASSESSEE, WHILE BEFORE THE ASSESSING OFFICER THE ASSESSEE HAD EXPLAINED THAT THE DELAY IN FILING OF THE QUARTERLY RETURNS WAS DUE TO TELENGANA AGITATION AND ECONOMIC RECESSION, AT THE TIME OF HEARING BEFORE US IT IS CONTENDED TH AT THERE WAS CHANGE IN MANAGEMENT WHICH RESULTED IN UTTER CHAOS IN AFFAIRS OF THE COMPANY. THIS CHANGE IN STANCE, IN OUR VIEW, WAS DUE TO THE FACT, AS HAS BEEN RIGHTLY BROUGHT OUT IN THE PE NALTY ORDER, I.T.A. NO. 1275/HYD/2013 SREEMITRA ESTATES PVT. LTD. 5 BOTH THE TELENGANA AGITATION AND ECONOMIC RECESSION WERE MUCH AFTER THE RELEVANT PERIOD. THEREFORE, THE EXPL ANATION FURNISHED BY THE ASSESSEE CANNOT BE TAKEN AT ITS FA CE VALUE AND APPEARS TO BE AN AFTER THOUGHT. IN THIS CONTEXT, AL LEGATION OF THE DEPARTMENT THAT ONLY BECAUSE OF THE SURVEY ACTION, ASSESSEE CAME FORWARD TO FILE THE RETURNS ASSUMES IMPORTANCE . SO FAR AS THE CONTENTION OF THE LEARNED AR THAT SINCE THE ASS ESSEE HAS PAID THE INTEREST U/S 201(1A) OF THE ACT, IT SHOULD BE ABSOLVED FROM PENAL CONSEQUENCES, WE ARE UNABLE TO ACCEPT IT . IF THIS ARGUMENT IS ACCEPTED, THEN, PENAL PROVISIONS WOULD BECOME REDUNDANT. IN EVERY CASE ASSESSEE WOULD COMMIT DE FAULT BY NOT PAYING TDS AMOUNT AND ABSOLVE ITSELF BY PAYING TDS AMOUNTS SUBSEQUENTLY ALONG WITH INTEREST U/S 201(1A ) AND COME FORWARD WITH A PLEA THAT SINCE IT HAS PAID INTEREST NO PENALTY SHOULD BE IMPOSED. IN OUR VIEW, SUCH ARGUMENT IS TO TALLY FALLACIOUS AND DESERVES TO BE REJECTED AT THE FIRST INSTANCE. SO FAR AS THE DECISION RELIED UPON BY THE LEARNED AR, THOUGH, THERE IS NO DISPUTE TO THE PRINCIPLES LAID DOWN THEREIN, BUT THE APPLICATION OF THE RATIO LAID DOWN DEPENDS ON THE P ARTICULAR FACTS INVOLVED IN A CASE. THE RATIO LAID DOWN IN A DECISION CANNOT BE APPLIED UNIFORMLY TO EVERY CASE IRRESPECT IVE OF THE FACTUAL POSITION. THEREFORE, CONSIDERING THE TOTALI TY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE FIRMLY OF THE VIEW THAT SINCE THE ASSESSEE HAS FAILED TO OFFER REASONABLE E XPLANATION IN TERMS OF SECTION 273B OF THE ACT, IMPOSITION OF PEN ALTY IN THE PRESENT CASE IS JUSTIFIED. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) IN UPHOLDING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 272A(2)(K). THE GROUNDS RAISED BY THE A SSESSEE IN THIS REGARD ARE DISMISSED. I.T.A. NO. 1275/HYD/2013 SREEMITRA ESTATES PVT. LTD. 6 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/04/ 2014. SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED 11 TH APRIL, 2014 KV COPY FORWARDED TO: 1. SREEMITRA ESTATES PVT. LTD., 302, SHILPA ARCADE, ROAD NO. 3, BANJARA HILLS, NAGARJUNA CIRCLE, ABOVE CHUTN EYS RESTAURANT, HYDERABAD 500 034. 2. ADDL. CIT, RANGE 15, HYDERABAD. 3. THE CIT(A)-II, HYDERABAD. 4. THE CIT-(TDS), HYDERABAD 5. THE DR, ITAT, HYDERABAD I.T.A. NO. 1275/HYD/2013 SREEMITRA ESTATES PVT. LTD. 7 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER