SUNIL MANTRI REALTY LTD, MUMBAI V. ASST CIT CEN CIR 29, MUMBAI

ITA 1841/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0797 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Keywords: Search and seizure; Reasonable cause
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGA RWAL, AM ITA NO. 3295/MUM/2012 ASSESSMENT YEAR : 2008-09 DCIT CENTRAL CIRCLE 29, MUMBAI VS. M/S. SUNIL MANTRIL REALITY LTD. G1, COURT CHAMBERS, GROUND FLOOR, M K MARG, V THAKERSEY MARG, 35, NEW MARINE LINES, CHURCHGATE, MUMBAI PAN AADCM6966F (APPELLANT) (RESPONDENT) ITA NO. 1841/MUM/2012 ASSESSMENT YEAR : 2008-09 M/S. SUNIL MANTRIL REALITY LTD. MUMBAI PAN AADCM6966F VS DCIT CENTRAL CIRCLE 29, MUMBAI (APPELLANT) (RESPONDENT) REVENUE BY : DR A K NAYAK ASSESSEE BY : NONE DATE OF HEARING : 2 7 .0 4 .2017 DATE OF PRONOUNCEMENT : 09 .0 5 .2017 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THESE CROSS APPEALS ARISE OUT OF A COMMON ORDER DA TED 09.12.2012 OF LEARNED CIT(A)-40, MUMBAI, SUSTAINING A PART OF THE PENALTY IMPOSED U/S. 220(1) R.W.S. 140A OF THE I.T. ACT, 1961 FOR THE AS SESSMENT YEAR 2008-09. ITA NOS.3295 & 1841/MUM/2012 M/S. SUNIL MANTRIL REALTY LTD. 2 2. BRIEFLY, THE FACTS AS FOUND FROM RECORD ARE ASSE SSEE A COMPANY IS ENGAGED IN THE BUSINESS AS A BUILDER IN DEVELOPING RESIDENTIAL AND COMMERCIAL PROPERTY. A SEARCH AND SEIZURE OPERATION U/S 132(1 ) OF THE ACT WAS CONDUCTED IN CASE OF THE ASSESSEE AS WELL AS ITS DI RECTORS ON 09.07.2008. IN COURSE OF SEARCH AND SEIZURE OPERATION DISCLOSURE O F ADDITIONAL INCOME WAS MADE. SUBSEQUENTLY, THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.YS. 2007- 08 AND 2008-09 DECLARING INCOME OF ` .0.72 CRORES AND ` .35.50 CRORES RESPECTIVELY. WHILE VERIFYING THE RETURN OF INCOME FILED BY THE ASSESSEE FOR A.Y. 2008-09, IT WAS NOTICED BY THE AO, THOUGH, AS PER THE COMPUTATION OF INCOME FILED BY THE ASSESSEE THE TAX DUE ON DECLARE D TOTAL INCOME OF ` .35,50,44,715/- WAS ` .13,39,36,817/-, HOWEVER, AT THE TIME OF FILING OF RETURN ASSESSEE HAS PAID TAX INCLUDING TDS OF ` .7,02,05,803/- AND BALANCE AMOUNT OF ` . 6,37,31,014/- SHOWN AS PAYABLE BY SELF ASSESSMENT TAX WAS ACTUALLY NOT PAID BY THE ASSESSEE. DUE TO NON-PAYM ENT OF SELF ASSESSMENT TAX, THE AO TREATING THE ASSESSEE AS ASSESSEE IN DE FAULT INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY U/S. 221(1) R.W.S. 140A O F THE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE, THOUGH, THE ASSESSEE SUBMITT ED ITS EXPLANATION STATING THE REASONS WHICH PREVENTED IT FROM PAYING THE SELF ASSESSMENT TAX, HOWEVER, THE AO REJECTING THE EXPLANATION OF THE AS SESSEE PASSED AN ORDER IMPOSING PENALTY OF ` .1 CRORE U/S. 221(1) OF THE ACT. THE ASSESSEE CHALLENGED THE IMPOSITION OF PENALTY BEFORE THE CIT (A). ITA NOS.3295 & 1841/MUM/2012 M/S. SUNIL MANTRIL REALTY LTD. 3 3. THE LEARNED CIT(A) AFTER CONSIDERING ELABORATE S UBMISSIONS OF THE ASSESSEE AND KEEPING IN VIEW THE RELEVANT CASE LAWS CITED BEFORE HIM THOUGH, AGREED WITH THE AO THAT PENALTY U/S. 221(1) IS IMPO SABLE UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, HOWEVER, HE DI D NOT AGREE WITH THE QUANTUM OF PENALTY IMPOSED BY THE AO. THE LEARNED CIT(A) HELD THAT IN THE FACTS OF THE CASE, PENALTY @2% OF THE SELF ASSESSME NT TAX PAYABLE WOULD SERVE THE INTEREST OF JUSTICE. ACCORDINGLY, HE WOR KED OUT THE PENALTY PAYABLE U/S 221(1) R.W.S. 140A AT ` .12,74,620/-. BEING AGGRIEVED BOTH THE ASSESSEE AND THE DEPARTMENT ARE BEFORE US. 4. WHEN THE APPEALS WERE CALLED FOR HEARING, NO ONE WAS PRESENT FOR THE ASSESSEE. THEREFORE, WE PROCEED TO DISPOSE OF THE APPEALS EXPARTE QUA-THE ASSESSEE, AFTER HEARING THE LEARNED DR AND ON THE B ASIS OF MATERIAL AVAILABLE ON RECORD. 5. THE LEARNED DR JUSTIFYING THE QUANTUM OF PENALTY IMPOSED BY THE AO SUBMITTED THAT THE FACTS DISCUSSED BY THE AO IN THE PENALTY ORDER CLEARLY DEMONSTRATES THAT THE ASSESSEE HAD SUFFICIENT LIQUI DITY OF FUNDS TO MAKE VARIOUS INVESTMENTS, HOWEVER, IT DIDNT PAY THE SEL F ASSESSMENT TAX PAYABLE BY IT. THEREFORE, THE PROVISIONS OF SECTION 221(1) ARE CLEARLY ATTRACTED AS THE ASSESSEE HAS NOT MADE OUT A REASONABLE CAUSE FOR TH E DEFAULT. ITA NOS.3295 & 1841/MUM/2012 M/S. SUNIL MANTRIL REALTY LTD. 4 6. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIALS ON RECORD. UNDISPUTEDLY, AT THE TIME OF FILING OF RETURN OF IN COME, THE ASSESSEE HAS NOT DISCHARGED ITS INCOME-TAX LIABILITY FULLY AS SELF A SSESSMENT TAX TO THE TUNE OF ` .6.37 CRORES WAS NOT PAID BY THE ASSESSEE AT THE TI ME OF FILING OF RETURN. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO CONCLUSIVELY PROVE THE FACT THAT ASSESSEE DIDNT HAVE FINANCIAL CAPABILITY TO DISCHA RGE THE LIABILITY ON ACCOUNT OF SELF ASSESSMENT TAX. THEREFORE, IN TERMS OF SEC TION 220(1) R.W.S. 140A, ASSESSEE HAS TO BE TREATED AS ASSESSEE IN DEFAULT A ND PENALTY PROVISIONS ARE CLEARLY ATTRACTED AS THE ASSESSEE HAS FAILED TO SHO W REASONABLE CAUSE FOR THE DEFAULT IN NON-PAYMENT OF SELF ASSESSMENT TAX. HAV ING HELD SO, IT IS NECESSARY NOW TO DEAL WITH THE QUANTUM OF PENALTY W HICH CAN BE SAID TO BE REASONABLE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. AS COULD BE SEEN, FOR NON-PAYMENT OF SELF ASSESSMENT TAX OF ` .6.37 CRORES THE AO HAS IMPOSED PENALTY OF ` . 1 CRORE. THE AO HAS NOT GIVEN ANY BASIS FOR ARRI VING AT THE FIGURE OF ` .1 CRORE. THOUGH, THE PROVISIONS OF SECTION 220(1) EMPOWERS THE AO TO DIRECT THE ASSESSEE TO PAY PENALTY AS MAY BE QUANTIFIED BY HIM, HOWEVER, SUCH POWER TO LEVY PENALTY CANNOT BE EXERC ISED BY THE AO IN AN ARBITRARY AND WHIMSICAL MANNER. IT IS SEEN FROM TH E SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LEARNED CIT(A) THAT SUBSEQUENTL Y IT HAS NOT ONLY PAID THE SELF ASSESSMENT TAX LIABILITY OF ` .6.37 CRORES BUT HAS ALSO PAID INTEREST U/S. 234B AND 234C AMOUNTING TO ` .1.32 CRORES. THUS, WHEN THE ASSESSEE HAS ITA NOS.3295 & 1841/MUM/2012 M/S. SUNIL MANTRIL REALTY LTD. 5 DISCHARGED THE UNPAID SELF ASSESSMENT TAX LIABILITY ALONG WITH STATUTORY INTEREST, IMPOSITION OF PENALTY AT SUCH A HIGH AND EXCESSIVE FIGURE IN OUR VIEW IS UNCALLED FOR. IN OUR CONSIDERED OPINION, THE DE CISION OF THE CIT(A) IN RESTRICTING THE PENALTY U/S. 220(1) TO @2% OF THE SELF ASSESSMENT TAX PAYABLE IS FAIR AND REASONABLE AND WOULD SERVE THE INTEREST OF JUSTICE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) ON T HE ISSUE. 7. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DAY OF MAY, 2017. SD/- SD/- (MANOJ KUMAR AGGARWAL) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI; DATED : 9 TH MAY, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, E BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI