DCIT 17(2), MUMBAI V. PRASHANT R. SAMDANI, MUMBAI

ITA 1921/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1925 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Period of limitation; Reasonable cause; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , MUMBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1921/MUM/2014 FOR (ASSESSMENT YEAR: 2012-13) DCIT-17(2), ROOM NO. 217, 2 ND FLOOR, PIRAMAL CHAMBERS, MUMBAI-400012. VS. PRASHANT R. SAMDANI FLAT NO. 301, ATHARVA BUILDING, BHAUDAJI ROAD, MATUNGA (E), MUMBAI-400019. PAN: AOFPS1873Q (APPELLANT) (RESPONDENT) CROSS OBJECTION (C.O.) NO.161/MUM/2015 FOR (ASSESSM ENT YEAR : 2012-13) PRASHANT R. SAMDANI FLAT NO. 301, ATHARVA BUILDING, BHAUDAJI ROAD, MATUNGA (E), MUMBAI-400019. PAN: AOFPS1873Q VS. DCIT-17(2), ROOM NO. 217, 2 ND FLOOR, PIRAMAL CHAMBERS, MUMBAI-400012. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.S.KEMWAL (DR ) ASSESSEE BY : SHRI PRADIP N. KAPA SI (AR) DATE OF HEARING : 24.10.2016 DATE OF PRONOUNCEMENT : 23.11.2016 O R D E R PER PAWAN SINGH, JM: 1. THIS APPEAL U/S 253 OF THE INCOME-TAX ACT (ACT) I S DIRECTED BY REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX-29 (FOR SHORT THE CIT(A)-29), MUMBAI DATED 13.12.2013 FOR ASSESSMENT YEAR (AY) 20 12-13. THOUGH THE REVENUE HAS RAISED AS MANY AS FOUR GROUNDS OF APPEA L BUT AS PER OUR CONSIDERED OPINION ONLY SUBSTANTIAL GROUND IS THAT WHETHER LD. CIT(A) ERRED IN REDUCING THE QUANTUM OF PENALTY U/S 221(1) FROM 100% TO 10%. 2 ITA NO.1921/M/2014 & C.O.161/M/15 PRASHANT R. SA MDANI 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S PROPRIETOR OF M/S GUNINA VENTURES, FILED RETURN OF INCOME FOR RELEVANT AY O N 30.09.2012 DECLARING TOTAL INCOME AT RS. 12,61,13,591/-. ON THE INCOME DECLARE D BY THE ASSESSEE, THE TAX PAYABLE WAS RS. 4,25,81,870/- WHICH WAS PAYABLE BE FORE FILING OF RETURN OF INCOME. ON VERIFICATION, THE ASSESSING OFFICER (AO) NOTICED THAT THE SELF-ASSESSMNT TAX WAS NOT PAID BY ASSESSEE BEFORE FILING RETURN O F INCOME. DUE TO NON-PAYMENT OF SELF-ASSESSMENT TAX, THE ASSESSEE WAS DEEMED TO BE ASSESSEE IN DEFAULT IN RESPECT OF TAX AND INTEREST AS BOTH REMAINED UNPAID IN ACCORDA NCE WITH THE PROVISIONS OF SECTION 140A(3) OF THE ACT. THE AO DIRECTED THE ASS ESSEE TO MAKE THE PAYMENT OF SELF-ASSESSMENT TAX VIDE NOTICE DATED 09.11.2012. A LONG WITH THE DIRECTION FOR SELF- ASSESSMENT TAX, A SHOW-CAUSE NOTICE U/S 221(1) WAS ALSO ISSUED ASKING THE ASSESSEE AS TO WHY PENALTY SHOULD NOT BE LEVIED. THE ASSESSE E CONTESTED THE PROCEEDINGS AND FILED HIS REPLY DATED 12.11.2012. IN REPLY, THE ASS ESSEE CONTENDED THAT HE HAD SUPPLY SCHOOL BAGS TO BY MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM) AND HIS HUGE AMOUNT OF RS. 16 CRORE. THE SAID AMOUNT IS BL OCKED MCGM FROM LAST THREE MONTHS AGAINST THE SUPPLY OF SCHOOL BAG FROM HIS PA RTNERSHIP FIRM, THE ASSESSEE IS MAKING THE CONSTRAINT COMMUNICATION WITH THE MCGM. THE ASSESSEE FURTHER CONTENDED THAT A SUM OTHER AMOUNT RECEIVABLE FROM MAHARASHTRA STATE CONSUMER CO-OPERATIVE FEDERATION (MSCCF) IS ALSO BLOCKED. TH E ASSESSEE CONTENDED THAT HE IS FACING SEVERE FINANCIAL CRISIS DUE TO NON-PAYMEN T OF HUGE BALANCES DUE TO VARIOUS GOVERNMENT AGENCIES. THE ASSESSEE ASSURED THE AO T O MAKE THE ENTIRE TAX BEFORE 31.12.2012. THE REPLY OF THE ASSESSEE WAS NOT ACC EPTED BY AO. THE AO VIDE ORDER DATED 19.02.2013 LEVIED 100% PENALTY ON THE T AX DUE I.E. RS. 4,25,81,870/-. ON APPEAL BY ASSESSEE BEFORE THE LD. CIT(A), THE PE NALTY WAS RESTRICTED TO 10% OF THE TOTAL TAX PAYABLE IN THE YEAR. THUS, AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE HAS FILED C.O. AGAINST RESTRICTING THE PEN ALTY TO 10% OF TAX LIABLITY. 3. WE HAVE NOTICED THAT THE C.O. FILED BY ASSESSEE IS BEYOND 61 DAYS OF PERIOD OF LIMITATION. THE ASSESSEE ALONG WITH C.O. FILED APPL ICATION FOR CONDONATION OF DELAY WHICH IS FURTHER SUPPORTED BY AN AFFIDAVIT OF PRASH ANT R. SAMDANI. IN THE APPLICATION, THE ASSESSEE CONTENDED THAT ASSESSEE R ECEIVED NOTICE OF APPEAL BY REVENUE ON 07.07.2015. THE ASSESSEE COULD FILE HIS C.O. TILL 06.08.2015. THE 3 ITA NO.1921/M/2014 & C.O.161/M/15 PRASHANT R. SA MDANI ASSESSEE FILED HIS OBJECTION ONLY ON 30.09.2015. TH US, THERE IS DELAY OF 60 DAYS IN FILING THE C.O. THE CONTENTS OF THE AFFIDAVIT FURTH ER DISCLOSED THAT ASSESSEE APPROACHED SHRI PRADIP N. KAPASI, C.A. IN THE FIRST WEEK OF AUGUST 2015 AND AFTER ADVICE OF C.A. ASSESSEE DECIDED TO FILE C.O. 4. ON APPLICATION FOR CONDONATION OF DELAY, WE HAVE HE ARD LD. AR OF THE ASSESSEE AND LD. DR FOR THE REVENUE AND PERUSED THE CONTENTS OF APPLICATION UNDER AFFIDAVIT FILED IN SUPPORT OF CONDONATION OF DELAY APPLICATION. THE LD. AR OF THE ASSESSEE ARGUED THAT ASSESSEE HAS GOOD CASE ON MERIT AND THERE IS L IKELIHOOD TO SUCCEED THE ASSESSEE ON MERIT. THERE WAS NO INTENTIONAL DELAY ON THE PAR T OF ASSESSEE. MAIN DELAY OCCURRED DUE TO FORMING OF OPINION AND CONSULTING L EGAL GROUNDS. IT WAS FURTHER ARGUED THAT THOUGH THE ASSESSEE APPROACHED HIS CA IN FIRST WEEK OF AUGUST 2015, BUT THE C.O. COULD BE FILED ONLY ON 30 TH SEPTEMBER 2015. IT WAS ARGUED THAT THE MAIN CAUSE OF DELAY IN FILING OF CO WAS IN FRAMING THE OPINION. THE LD AR FURTHER ARGUED THAT ASSESSEE HAS SUFFICIENTLY EXPLAINED THE DELAY IN FILING THE C.O. AND PRAYED THAT LENIENT VIEW MAY BE TAKEN. ON THE OTHER HAND, LD. DR FOR REVENUE STRONGLY OBJECTED FOR CONDONING THE DELAY AND WOULD FURTHER ARGUE THAT THE ASSESSEE IS NOT FOLLOWING THE DUE PROCESS OF LAW AND IS ALWA YS CASUAL FOLLOWING THE PROVISIONS OF LAW. 5. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES. THE ASSESSEE HAS EXPLAINED IN HIS AFFIDAVIT THAT HE APPROACHED HIS C.A. IN F IRST WEEK OF AUGUST 2015, THOUGH HIS CONSULTANT ADVISED HIM TO FILE C.O. IN THIRD WEEK OF AUGUST 2015. WE HAVE NOTICED THAT THE CONDUCT OF ASSESSEE IN EXPLAINING THE DELAY IS CASUAL, THE GROUND WHICH IS DISCLOSED BEFORE US IS NOT SUFFICIENT. THO UGH THE LD AR FOR ASSESSEE HAS FAIRLY ADMITTED THAT THE DELAY WAS ON THE PART OF C A OF THE ASSESSEE. THOUGH WE ARE NOT SATISFIED WITH THE GROUND OF CONDONATION OF DEL AY. HOWEVER, KEEPING IN VIEW THE PRINCIPLE OF NATURAL JUSTICE, WE DEEM IT APPROP RIATE TO CONDONE THE DELAY IN FILING C.O. AND TO DECIDE THE SAME ON MERIT. HENCE, THE APPLICATION FOR CONDONATION OF DELAY IN FILING THE C.O. IS ALLOWED. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) FOR REVENUE AND AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR THE REVENUE ARGUED THAT A SSESSEE FAILED TO PAY DUE TAX BEFORE FILING THE RETURN OF INCOME. THE ASSESSEE FU RTHER FAILED TO PAY THE AMOUNT OF 4 ITA NO.1921/M/2014 & C.O.161/M/15 PRASHANT R. SA MDANI DUE TAX DESPITE THE NOTICE OF INITIATION OF PENALTY . THE ASSESSEE WAS CASUAL IN FOLLOWING THE PROVISIONS OF LAW. THE AO BEFORE LEVY ING THE PENALTY ISSUED A SHOW- CAUSE NOTICE AND THE PENALTY WAS LEVIED AFTER GIVIN G THE OPPORTUNITY AND CONSIDERING THE CONTENTIONS OF THE ASSESSEE. THE LD . DR FOR THE REVENUE PRAYED THAT ORDER OF AO BE RESTORED BY SETTING-ASIDE THE ORDER PASSED BY LD. CIT(A). ON THE OTHER HAND, LD. AR FOR ASSESSEE ARGUED THAT ON RECE IPT OF NOTICE FROM AO U/S 221(1), THE ASSESSEE REQUESTED VIDE HIS APPLICATION DATED 12.11.2012 AND PRAYED THAT ASSESSEE WOULD MAKE ENTIRE DUE OUTSTANDING FOR ASSESSMENT YEAR 2012-13 MAXIMUM BY 31.12.2012. THE LD. AR OF THE ASSESSEE F URTHER ARGUED THAT ASSESSEE HAS MADE THE PAYMENT OF SUBSTANTIAL AMOUNT BEFORE 3 1 ST DECEMBER 2012 AND THE AO FAILED TO REFER IN HIS ORDER ABOUT THE DEPOSIT O F THE TAX, WHILE PASSING THE ORDER OF PENALTY. IT WAS FURTHER ARGUED THAT ASSESSEE HAS PAID THE ENTIRE LIABILITY BEFORE PASSING THE ORDER BY LD. AO. THE LD. AR OF THE ASS ESSEE WOULD ARGUE THAT ASSESSEES PARTNERSHIP FIRM IS ENGAGED IN MANUFACTU RING OF SCHOOL BAGS, THE ASSESSEE SUPPLIED ORDER OF MCGM WORTH RS. 16 CRORE WHICH WAS BLOCKED BY THEM. THE ASSESSEE MADE CONSTRAINT COMMUNICATION WITH THE OFFICER OF MCGM. THE ASSESSEE ALSO SUPPLIED CERTAIN MATERIAL TO MAHARASH TRA STATE CONSUMER COOPERATIVE FEDERATION (MSCCF). THE MSCCF ALSO BLOCKED THE PAYM ENT OF ASSESSEE FOR LONG TIME, THOUGH INITIALLY DEDUCTED TDS. DUE TO NON-PAY MENT BY THE GOVERNMENT AGENCIES, THE ASSESSEE WAS FACING SEVERE FINANCIAL CRISIS AND WAS NOT IN A POSITION TO PAY THE SELF-ASSESSMENT TAX. THE ASSESSEE DURING THE PENALTY PROCEEDINGS ASSURED THE AO THAT HE WOULD PAY THE AMOUNT BY 31.12.2012. THE ASSESSEE ALSO HAD SHOWN THE STATEMENT OF HIS BANK ACCOUNT WHEREIN THERE WAS NO SUFFICIENT CASH BALANCE. LD. AR OF THE ASSESSEE WOULD ARGUE THAT ASSESSEE SU FFICIENTLY EXPLAINED THE CIRCUMSTANCES BEFORE THE AO IN THE PENALTY PROCEEDI NGS AND THE SAME WAS SUFFICIENTLY EXPLAINED AS PER 2 ND PROVISO TO SECTION 221(1) OF THE ACT. THE LD. CIT(A) CONSIDERED THE CIRCUMSTANCES AND GRANTED TH E PARTIAL RELIEF TO THE ASSESSEE. THE ASSESSEE IS NOT LIABLE TO PAY THE AMOUNT OF LIA BILITY SADDLED UPON HIM. THERE WAS NO INTENTIONAL OR DELIBERATE DEFAULT ON THE PAR T OF ASSESSEE. IN SUPPORT OF CROSS OBJECTIONS IT WAS ARGUED BY THE LD. AR OF THE ASSES SEE THE 10% PENALTY SUSTAINED BY LD. CIT (A) MAY ALSO BE DELETED. 5 ITA NO.1921/M/2014 & C.O.161/M/15 PRASHANT R. SA MDANI 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND SEEN THE ORDER OF AUTHORITIES BELOW. THE AO ISSUED NOTICE TO THE ASSE SSEE ON 09.11.2012. THE ASSESSEE IMMEDIATELY FILED HIS REPLY VIDE REPLY DAT ED 12.11.2012. THE ASSESSEE EXPLAINED THE CIRCUMSTANCES THAT HUGE AMOUNT OF RS. 16 CRORE OF PAYMENT WAS BLOCKED BY MCGM AND FURTHER AMOUNT WAS NOT PAID BY MSCCF. THE ASSESSEE ALSO MADE THE REQUEST TO THE AO, FOR NOT TO RESORTING TO THE CO-ERCIVE MEASURES. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY AO H OLDING THAT THE ASSESSEE IN EARLIER AY HAS ALSO DEFAULTED ON PAYMENT OF SELF-AS SESSMENT TAX. THE TAX WERE RECOVERED FROM ASSESSEE WHEN CO-ERCIVE ACTION WAS I NITIATED. THE AO CONCLUDED THAT ASSESSEE FAILED TO PAY DEMAND BEFORE FILING OF RETURN WITHOUT REASONABLE CAUSE. WE HAVE NOTICED THAT THERE IS NO MINIMUM PENALTY PR ESCRIBED UNDER THE LAW ON MAKING THE DEFAULT IN DEPOSITING THE ADMITTED TAX, THE AO LEVIED THE MAXIMUM PENALTY PRESCRIBED. THE AO HAS NOT RECORDED HIS SAT ISFACTION AS TO WHY THE MAXIMUM PENALTY OF 100% OF TAX IN ARREAR WAS LEVIED . THE AO FURTHER NOT RECORDED AS TO HOW MUCH AMOUNT ON ACCOUNT OF ARREARS OF TAX WAS DUE ON THE DATE OF PASSING OF THE ORDER OF PENALTY. THE LD. CIT(A) WHILE CONSI DERING THE GROUNDS OF APPEAL OBSERVED THAT ASSESSEE HAS PROMISED TO PAY OUTSTAND ING SELF-ASSESSMENT TAX BY 31.12.2012 AND PAID MOST OF THE AMOUNT BY THAT DATE . THOUGH, THE ASSESSEE HAS NOT COMPLETED HIS ENTIRE LIABILITY BY 31.12.2012, HOWEV ER, COMPLETED BY 15.01.2013, THEREFORE, THE OBSERVATIONS OF AO THAT THE ASSESSEE HAS NOT FULFILLED HIS OBLIGATION TO PAY TAX IS NOT CORRECT. THE ASSESSEE HAS PAID TILL 31.12.2012 AN AMOUNT OF RS. 3,77,00,000/- AND REMAINING BALANCE OF RS. 47,76,31 0/- WAS PAID ON 15.01.2013. THE LD. CIT(A) ALSO CONSIDERED THE FINANCIAL CONSTR AINT OF THE ASSESSEE AND OBSERVED THAT THE CONTENTIONS OF THE ASSESSEE THAT NON-DEPOSIT OF ADMITTED TAX LIABILITY DUE TO THE DELAY IN RECEIPT OF PAYMENT FR OM MCGM APPEARS TO BE CORRECT AND THE ASSESSEE TRIED HIS BEST EFFORT TO WIPE OUT THE TAX LIABILITY. THE LD. CIT(A) CONSIDERED THE TOTALITY OF THE FACT AND THE CASE HI STORY RELATED TO THE EARLIER YEARS FOR AY 2010-11 AND 2011-12 OBSERVED THAT SUCH PENALTY WAS LEVIED FOR THOSE YEARS AND RESTRICTED THE PENALTY TO 10% OF THE TOTAL TAX PAYABLE. THUS IN OUR OPINION THE ORDER PASSED BY LD. CIT(A) IS REASONED ONE AND DOES NOT REQUIRE ANY FURTHER INTERFERENCE AT OUR END. 6 ITA NO.1921/M/2014 & C.O.161/M/15 PRASHANT R. SA MDANI 8. IN THE RESULT THE APPEAL FILED BY REVENUE, AND THE C.O. FILED BY ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD NOVEMBER, 2016. SD/- SD/- (B.R.BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 23/11/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/