AANJANEYA LIFECARE LTD, MUMBAI V. DCIT 10(2), MUMBAI

ITA 1333/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9357 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: HARSHAVARDHANA DATAR
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI P.M. JAGTAP (A.M.) ITA NO. 1333/MUM /2012 ASSESSMENT YEAR : 2010-11 M/S AANJANEYA LIFECARE LTD., C/O JAYESH SANGHRAJKA & CO., CHARTERED ACCOUNTANTS, UNIT NO. 405, HIND RAJASTHAN CENTRE, D.S. PHALKE ROAD, DADAR (E), MUMBAI 400 014. PAN AAGCA0851L VS. DY. COMMISSIONER OF INCOME- TAX- RANGE 10(2), AAYAKAR BHAVAN, MUMBAI 400 020. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI HARSHAVARDHANA DATAR DEPARTMENT BY : SHRI A.B. KOLI DATE OF HEARING 03-12-2012 DATE OF PRONOUNCEMENT 03-12-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DTD. 10-01-2012 PASSED BY THE LD. CIT(A)- 21, MUMBAI FOR THE A.Y. 2010-11 SUSTAINING THE PENALTY OF RS. 72,67,594/- I MPOSED BY THE A.O. U/S 221 (1) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOMESTIC COMPANY DERIVES INCOME FROM MANUFACTURING AND SALE OF DRUGS AND MEDICINES. THE RETURN WAS FILED ON 15-10-2010 DECLARING TOTAL INCOME OF ITA NO. 133 3/MUM/2012 2 RS. 19,09,47,637/- AND SHOWING SELF ASSESSMENT TAX PAYABLE AT RS. 7,26,75,944/-. THE A.O. NOTED THAT THE ASSESSEE HAS NOT PAID SELF ASSESSMENT TAX TILL THE DATE OF FILING OF RETURN OF INCOME AND ALSO TILL DATE EVEN AFTER ISSUANCE OF NOTICES U/S 140A(3) OF THE A CT AND REMINDERS. ACCORDINGLY, THE ASSESSEE WAS ASKED TO SHOW CAUSE A S TO WHY PENALTY U/S 221 OF THE ACT SHOULD NOT BE IMPOSED. IN RESPON SE, IT WAS SUBMITTED BY THE ASSESSEE THAT SELF ASSESSMENT TAX HAS NOT BE EN PAID DUE TO CONTINUING FINANCIAL CRUNCH. HOWEVER, THE A.O. WAS OF THE VIEW THAT ACCORDING TO SECTION 140A OF THE ACT WHICH MANDATES THAT THE ASSESSEE HAS TO SUBMIT THE RETURN OF INCOME ACCOMPANIED WITH PROOF OF PAYMENT OF TAX PAYABLE BY THE ASSESSEE. IF THE ASSESSEE FA ILS TO PAY THE TAX DETERMINED BY ITSELF I.E. SELF ASSESSMENT TAX, THEN IT MAKES ITSELF LIABLE TO BE TREATED AS ASSESSEE IN DEFAULT. HE FURTHER OBSE RVED THAT THE MAIN REASON CITED BY THE ASSESSEE FOR NON-PAYMENT OF TAX IS FINANCIAL CRUNCH, HOWEVER, THE ASSESSEE COULD NOT PROVE ITS CONTENTIO NS WITH COGENT AND RELEVANT DOCUMENTARY EVIDENCE. HE FURTHER OBSERVED THAT, IN FACT, SUBSTANTIAL FUNDS HAVE BEEN DIVERTED TO RELATED CON CERNS. THEREFORE, THE A.O. HELD THAT THERE WAS NO GOOD OR SUFFICIENT REAS ONS FOR NON-PAYMENT OF SELF ASSESSMENT TAX AND ACCORDINGLY HE IMPOSED PENA LTY OF RS. 72,67,594/- BEING 100% OF THE DEFAULTED AMOUNT OF R S. 7,26,75,944/- VIDE ORDER DTD. 30-3-2011 PASSED U/S 221(1) OF THE ACT. ON APPEAL, THE LD. CIT(A) PROVIDED MANY OPPORTUNITIES TO THE ASSES SEE. HOWEVER, THERE WAS NO COMPLIANCE BY THE ASSESSEE. THE LD. CIT(A) O BSERVED THAT THE ITA NO. 133 3/MUM/2012 3 APPEAL FILED BY THE ASSESSEE DESERVES TO BE DISMISS ED. HE FURTHER OBSERVED THAT BEFORE THE A.O. IT WAS STATED BY THE ASSESSEE THAT THE SELF ASSESSMENT TAX WAS NOT PAID DUE TO FINANCIAL CRUNCH , HOWEVER, THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE AS THE ASSE SSEE FAILED TO PROVE THE SAME BY SUPPORTING DOCUMENTARY EVIDENCE. THE LD. CI T(A) FURTHER OBSERVED THAT EVEN DURING THE APPELLATE PROCEEDING DESPITE AMPLE OPPORTUNITIES PROVIDED TO THE ASSESSEE, THE ASSESSE E FAILED TO PROVE THAT IT WAS HAVING A GOOD AND SUFFICIENT REASON FOR NON-PAY MENT OF SELF ASSESSMENT TAX AND ACCORDINGLY HE CONFIRMED THE PEN ALTY IMPOSED BY THE A.O. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUND OF APPEAL :- ON THE FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEM ENTS; HONBLE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE LEVY OF PENALTY U/S 221(1) OF THE ACT, SUCH LEVY OF PENALTY AND ITS CONFIRMATION IS BAD IN LAW AND ERRONEOUS IN FACTS AND LIABLE TO BE DELETED. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE FILED AN AFFIDAVIT WHICH READS AS UNDER:- AFFIDAVIT I, DR. KANNAN VISHWANATH, VICE CHAIRMAN & MANAGING DIRECTOR OF M/S AANJANEYA LIFECARE LTD. ON BEHALF OF M/S AANJANEYA LIFECARE LTD HAVING ADDRESS AT PLOT NO. 34, AANJANEYA HOUSE, POSTAL COL ONY, CHEMBUR, MUMBAI 400071 HEREBY SOLEMNLY AFFIRM AND STATE AS UNDER:- 1. APPEAL WITH CIT (APPEALS) FOR AY 2010-11 WAS SCH EDULED FOR HEARING ON VARIOUS DATES. ITA NO. 133 3/MUM/2012 4 2. NOTICES WERE GIVEN TO CONSULTANT WHO COULD NOT A PPEAR BEFORE CIT (APPEALS). 3. MATTER IS PRIMA FACIE COVERED IN FAVOUR OF APPEL LANT. 4. PRAYER FOR STAY IS MADE BECAUSE: I. DEMAND IS ON ACCOUNT OF PENALTY UNDER SECTION 22 1 THAT HAS BEEN LEVIED BY THE LD. AO. II. ASSESSEE HAS ALREADY PAID THE SELF ASSESSMENT T AX DUES. III. APPELLANT HAD REQUESTED LD. AO AS WELL AS JURISDICTIONAL ADDL. CIT TO GRANT THE INSTALMENTS T O PAY THE TAX ON ACCOUNT OF FINANCIAL DIFFICULTIES. IV. THERE WILL BE A SEVERE HARDSHIP ON THE APPELLANT IF STAY ON RECOVERY IS NOT GRANTED. V. APPELLANT GIVES UNDERTAKING THAT IT WILL NOT PART W ITH ANY FIXED ASSET TILL DISPOSAL OF APPEAL AT ITAT. 5. PRAYER IS MADE FOR STAY ON RECOVERY BE GRANTED A ND/OR MATTER BE POSTED ON OUT OF TURN BASIS FOR HEARING. 6. UNDERTAKING IS HEREBY MADE TO COMPLY WITH THE IN COME TAX DEPARTMENT AND GOVERNMENT OF INDIA. I, DR. KANNAN VISHWANATH DO HEREBY VERIFY ON OATH T HAT THE CONTENTS OF THE AFFIDAVIT ABOVE ARE TRUE TO MY PERS ONAL KNOWLEDGE AND NOTHING MATERIAL HAS BEEN CONCEALED OR FALSELY STATED. SOLEMNLY AFFIRMED AT MUMBAI, ON THIS 10 APR. 2012. SIGNATURE OF DEPONENT SD/- DR. KANNAN VISHWANATH (DEPONENT) IN THE LIGHT OF THE ABOVE AFFIDAVIT, THE LD. COUNSE L FOR THE ASSESSEE SUBMITS THAT SINCE THE ASSESSEES CONSULTANT COULD NOT BE APPEARED BEFORE THE LD. CIT(A), THEREFORE, IN THE INTEREST O F JUSTICE, ONE MORE OPPORTUNITY BE PROVIDED TO THE ASSESSEE TO EXPLAIN ITS CASE BEFORE THE LD. CIT(A). ITA NO. 133 3/MUM/2012 5 5. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING ON THE ORDER OF THE A.O. AND LD. CIT(A) SUBMITS THAT HE HAS NO OBJECTIO N IF THE MATTER IS SET ASIDE TO THE FILE OF THE LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUT E THAT AS PER THE RETURN OF INCOME THE ASSESSEE HAS DETERMINED ITS SELF ASSE SSMENT TAX LIABILITY RS. 7,26,75,944/- WHICH WAS NOT PAID BY THE ASSESS EE BEFORE FILING OF THE RETURN. IT WAS EXPLAINED BY THE ASSESSEE THAT DUE TO FINANCIAL CRUNCH THE ASSESSEE COULD NOT PAY THE LIABILITY OF SELF ASSESS MENT TAX BEFORE FILING OF THE RETURN. IN THE ABSENCE OF ANY COGENT MATERIAL SUPPORTED BY DOCUMENTARY EVIDENCE, THE ASSESSEES EXPLANATION WA S NOT ACCEPTED BY THE A.O. AND THE LD. CIT(A). BEFORE US THE ASSESSE E HAS FILED AN AFFIDAVIT STATING INTER ALIA THAT THE LD. CIT(A) PASSED EX PA RTE ORDER AS THE CONSULTANT FAILED TO APPEAR BEFORE THE LD. CIT(A). 7. IN MAHAVEERPRASAD JAIN V. CIT (1988) 172 ITR 331 (M.P) IT HAS BEEN HELD (HEADNOTE): WHERE AN APPLICANT ENGAGES A COUNSEL, HE WOULD BE JUSTIFIED IN PRESUMING THAT THE COUNSEL WOULD ATTEND TO THE CASE . THE APPLICANT CANNOT BE MADE TO SUFFER FOR THE NEGLIGENCE OF THE COUNSEL. AN APPEAL CANNOT BE DISMISSED BECAUSE THE COUNSEL FAILED TO A PPEAR WHEN THE CASE WAS POSTED FOR HEARING. 8. IN CIT VS. KHEMRAJ LAXMICHAND (1978) 114 ITR 75 (M.P) IT HAS BEEN HELD THAT (HEADNOTES): ITA NO. 133 3/MUM/2012 6 HELD, THAT THE QUESTION WHETHER THE MISTAKE OF TH E COUNSEL WAS BONA FIDE BEING ONE OF FACT AND THE TRIBUNAL HAVING COME TO THE CONCLUSION THAT THE LAPSE ON THE PART OF THE COUNSEL WAS BONA FIDE, THE TRIBUNAL WAS JUSTIFIED IN CONDONING THE DELAY AND UPHOLDING THE REGISTRATION OF THE FIRM. 9. RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE DE CISIONS AND KEEPING IN VIEW THAT THE REASONS GIVEN BY THE ASSESSEE IN I TS AFFIDAVIT WAS NOT CONTROVERTED BY THE REVENUE, WE ARE OF THE VIEW THA T THERE WAS SUFFICIENT CAUSE FOR NOT APPEARING BEFORE THE LD. CIT(A) AND, HENCE, WE, IN THE INTEREST OF JUSTICE, CONSIDER IT FAIR AND REASONABL E THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE LD. CIT(A) AND ACCORDING LY WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND RESTORE THE MATTER BAC K TO THE FILE OF THE LD. CIT(A) TO DECIDE THE APPEAL AFRESH AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR S TATISTICAL PURPOSE. 10. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 03-12-2012. SD/- (P.M. JAGTAP ) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 03-12-2012. RK ITA NO. 133 3/MUM/2012 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 10, MUMBA I 4. DIT (INTERNATIONAL TAXATION) 1, MUMBAI. 5. DEPARTMENTAL REPRESENTATIVE, BENCH D, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI