M/s. H.T. Foods (P) Ltd, Cochin V. The JTCIT(TDS), Cochin

ITA 201/COCH/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4052 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 28-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 25-04-2016
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: S KARTHIKA
• Keywords: Opportunity of being heard
• Section: 27

Judgement Text

ITA NO.201/COCH/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL , COCHIN BENCH, COCHIN , , BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE.K, JM ./ I.TA NO.201/COCH/2016 (ASST YEAR : 2011-12) M/S. H.T. FOODS (P) LTD., PLOT NO. 17, SDF, GROUND FLOOR, UNIT 3&4, CSEZ, KAKKANAD, KOCHI-682 037. VS THE JOINT COMMISSIONER OF INCOME-TAX(TDS), KOCHI. ( !' /ASSESSEE APPELLANT) ( #$ !' /REVENUE -RESPONDENT) PAN NO. AABCH5596A % & /ASSESSEE BY SMT. S. KARTHIKA, ADV. #$ ! % & / REVENUE BY SHRI A. DHANARAJ, SR. DR '( % )* /DATE OF HEARING 29/09/2016 +, % )* /DATE OF PRONOUNCEMENT 31 ST /10/2016 - /ORDER PER GEORGE GEORGE K., JM THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DI RECTED AGAINST THE ORDER OF THE CIT(A)-III, KOCHI DATED 10/02/2016. THE RELEVANT A SSESSMENT YEAR IS 2011-12. 2 . THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERA TION IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY U/S. 27 1C OF THE ACT. ITA NO.201/COCH/2016 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE AS F OLLOWS: THE ASSESSEE-COMPANY HAD REMITTED THE TAX DE DUCTED AT SOURCE BELATEDLY TO THE CENTRAL GOVERNMENT ACCOUNT. THE J OINT COMMISSIONER OF INCOME TAX INITIATED PENALTY PROCEEDINGS AND LEVIED A PENALTY OF RS.14,78,242/- U/S. 271C FOR THE ASSESSMENT YEAR 20 11-12. 4. AGGRIEVED BY THE ORDER OF LEVY OF PENALTY U/ S. 271C OF THE ACT, THE ASSESSEE PREFERRED APPEAL TO THE CIT(A). THE CIT( A) CONFIRMED THE LEVY OF PENALTY U/S. 271C OF THE ACT BY FOLLOWING THE JUDGM ENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF M/S. US TECHNOLOGIES INTE RNATIONAL (P) LTD. (2010) 195 TAXMAN 323. THE CIT(A) ALSO RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF CLASSIC CONCEPT HOME INDIA (P) LIMITED VS. CIT (2015) 6 TMI 399. ACCORDINGLY, THE CIT(A) WAS OF THE OPINION THAT THE PENALTY LEVIED U/S. 271C OF INCOME TAX ACT, 1961 WAS BASED ON THE CORRECT LEGAL POSITION AND MATERIAL AVAILABLE ON RECORD. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS: A. THE COMMISSIONER OF APPEALS FAILED TO APPLY T HE DECISION OF THE HONBLE HIGH COURT OF KERALA IN US TECHNOLOGIES INT ERNATIONAL (P) LTD. VS. COMMISSIONER OF INCOME TAX (2010) 195 TAXMAN 323 (K ER), WHEREIN IT WAS HELD THAT WHEN THE REMITTANCE OF TAX WITH INTEREST IS MADE BEFORE DETECTION, OR PAID BEFORE IMPOSITION OF PENALTY, THE CASE CALL S FOR REDUCTION OR WAIVER OF PENALTY. ITA NO.201/COCH/2016 3 B. THE COMMISSIONER OUGHT TO HAVE HELD THAT PROV ISION OF SEC. 271C IS NOT APPLICABLE IN THE CASE OF LATE REMITTANCE AFTER IT WAS DEDUCTED AT SOURCE BY THE APPELLANT. C. THE FACT THAT THE APPELLANT HAD REMITTED THE T DS COLLECTED BEFORE ACTION WAS INITIATED BY THE DEPARTMENT IS A MITIGAT ING FACT WHICH OUGHT TO HAVE WEIGHED WITH THE RESPONDENT IN REDUCING THE PE NALTY PAYABLE. D. THE APPELLANT HAD ALREADY REMITTED TDS COLLECT ED BY IT WITH INTEREST AND ON THAT SOLE GROUND, PENALTY OUGHT NOT TO HAVE BEEN IMPOSED BY THE RESPONDENT. THE EXCHEQUER HAS NOT INCURRED ANY LOS S ON ACCOUNT OF DELAYED PAYMENT OF TDS BY THE APPELLANT AS INTEREST THEREIN HAS BEEN PAID ALREADY. E. THE REASON STATED BY THE APPELLANT BEFORE TH E JOINT COMMISSIONER THAT, IT WAS DUE TO SEVERE LIQUIDITY CRUNCH AND HUGE LOSS ES INCURRED BY THE COMPANY DURING FINANCIAL YEAR 2010-11, WAS NOT CONS IDERED BY THE RESPONDENT IN THE PROPER LEGAL PERSPECTIVE. F. THE RESPONDENT FAILED TO CONSIDER THAT AFTER RE CTIFICATION TOTAL DEFAULT AMOUNT WAS RS.9,74,580/-. IN VIEW OF THE CORRECTIO N STATEMENT FILED BY THE APPELLANT, THE QUANTUM OF PENALTY OUGHT TO HAVE BEE N REDUCED BY THE RESPONDENT. IN ANY CASE THE APPELLANT IS NOT LIABLE FOR A PENALTY OF RS.14,78,242/- U/S. 271C OF INCOME TAX ACT AS HELD BY THE RESPONDENT. G. THE ORDER UNDER APPEAL IS OPPOSED TO WELL ESTAB LISHED PRINCIPLES OF LAW AND TO THE EVIDENCE AVAILABLE IN THE CASE. THE ORDE R IS ALSO VITIATED ON THE GROUND OF NON CONSIDERATION OF MATERIALS ON PRODUCE D AND AVAILABLE IN THE CASE AND FOR NON APPLICATION OF MIND. H. THE DECISIONS OF THE HONBLE SUPREME COURT RE LIED ON BY THE JOINT COMMISSIONER AND THE RESPONDENT IN FINDING THAT THE IMPOSING OF PENALTY U/S. 271C OF THE ACT IS JUSTIFIED HAS NO APPLICATIO N IN THE FACTS OF THIS CASE. ITA NO.201/COCH/2016 4 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT AFTER RECTIFICATION, THE TOTAL DEFAULT AMOUNT IS ONLY RS.9,74,580/- AND HENC E, THE ASSESSEE-COMPANY IS NOT LIABLE TO PAY PENALTY OF RS.14,78,242/- U/S. 27 1C OF THE ACT. IT WAS FURTHER SUBMITTED THAT THERE WERE MITIGATING CIRCUMSTANCES FOR NOT REMITTING THE TAX DEDUCTED AT SOURCE TO THE CENTRAL GOVERNMENT ACCOUN T ON TIME. FURTHER, IT WAS SUBMITTED THAT THE MOMENT THE DEFAULT WAS POINT ED OUT BY THE DEPARTMENT, THE TAX ALONGWITH THE INTEREST WAS DULY PAID AND NO TAX WAS OUTSTANDING TO THE GOVERNMENT A/C AS ON THE DATE OF INITIATION OF PENALTY PROCEEDING U/S. 271C OF THE ACT. HENCE, IT WAS SU BMITTED THAT THE PENALTY IS NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. BANK OF SCOTIA (380 ITR 550), FOR THE PROPO SITION THAT FOR THE LEVY OF PENALTY U/S. 271C OF THE ACT, THERE SHOULD BE CONTU MACIOUS CONDUCT ON THE PART OF THE ASSESSEE, WHICH ACCORDING TO THE LEARNE D AR IS ABSENT IN THIS CASE. THE LEARNED DR WAS DULY HEARD. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL ON RECORD. IT IS THE CASE OF THE ASSESSEE THAT THE DEFAULT AMO UNT IS ONLY RS.9,74,580/- INSTEAD OF RS.14,78,242/- AS COMPUTED BY THE ASSESS ING OFFICER. WE NOTICE THAT THE QUANTUM OF IMPOSITION OF PENALTY WAS NOT EXAMIN ED BY THE CIT(A). THE CIT(A) BY FOLLOWING THE JUDGMENT OF THE HONBLE KER ALA HIGH COURT IN THE CASE OF M/S. US TECHNOLOGIES INTERNATIONAL (P) LTD. (SUP RA) AND CLASSIC CONCEPT ITA NO.201/COCH/2016 5 HOME INDIA (P) LIMITED (SUPRA) DECIDED THE ISSUE A GAINST THE ASSESSEE. IN THE INTEREST OF JUSTICE AND EQUITY, WE ARE OF THE VIEW THAT THE MATTER NEEDS FRESH CONSIDERATION BY THE CIT(A). FURTHER, THE CIT(A) S HALL FOLLOW THE DICTUM LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF CIT V S. BANK OF SCOTIA (SUPRA) AND TAKE INTO ACCOUNT ANY MITIGATING CIRCUMSTANCES WHICH HAD LED THE ASSESSEE FOR NOT REMITTING THE TAX DEDUCTED AT SOUR CE ON TIME. ACCORDINGLY, THIS ISSUE IS REMITTED TO THE FILE OF THE CIT(A) FO R DE NOVO CONSIDERATION. THE CIT(A) SHALL DISPOSE OFF THE MATTER AS EXPEDITIOUSL Y AS POSSIBLE IN ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST -10-2016. SD/- SD/- ( . . ) (B. P. JAIN) ( . ) (GEORGE GEORGE K.) /ACCOUNTANT MEMBER /JUDICIAL MEMBER / /DATED: 31ST OCTOBER, 2016 GJ COPY TO: 1. M/S. H.T. FOODS (P) LTD., PLOT NO. 17, SDF, GRO UND FLOOR, UNIT 3&4, CSEZ, KAKKANAD, KOCHI-682 037. 2. THE JOINT COMMISSIONER OF INCOME-TAX (TDS), KOC HI. ITA NO.201/COCH/2016 6 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-III, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI 5. THE DR/ITAT, COCHIN BENCH. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN