Assistant Commissioner of Income-tax, V. Kumar Urban Development Pvt. Ltd.,ishi utpanna Bazar Samittee, Pune

ITA 2176/PUN/2012

• Counselvise Citation: 217624514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-03-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2176/PN/2012 (A.Y. 2010-11) ACIT, CIRCLE 11(1), PUNE APPELLANT VS. KUMAR URBAN DEVELOPMENT PVT. LTD., 2413, KUMAR CAPITAL, EAST STREET, CAMP, PUNE 411001 PAN: AAACK7659N RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI NIK HIL PATHAK DATE OF HEARING: 26.03.2014 DATE OF ORDER : 27.03.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-I, [SHORT CI T(A)] PUNE, DATED 19.04.2012 FOR A.Y. 2010-11 ON THE FOLLOWING GROUNDS. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AN D CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) GRO SSLY ERRED IN WAIVING 50% OF THE PENALTY OF RS.16,13,500 /- LEVIED BY THE ASSESSING OFFICER U/S.221(1) OF THE I NCOME- TAX ACT, 1961 INSTEAD OF SUSTAINING THE ENTIRE PENA LTY. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN GIVING ANY CREDENCE TO PAYMENTS MA DE BY THE ASSESSEE AFTER BEING PUT TO NOTICE FOR LEVY OF PENALTY. 2 4. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) GRO SSLY ERRED IN FAILING TO APPRECIATE THAT PENALTY U/S,221 (1) IS LEVIABLE EVEN AFTER THE ASSESSEE PAYS FULL AMOUNT O F THE TAXES AND THE ONLY THING TO BE CONSIDERED IS WHETHE R OR NOT THE ASSESSEE HAD ANY REASONABLE CAUSE FOR FAILU RE TO PAY THE TAXES BY THE DUE DATES. IN THE PRESENT CA SE NOT SUCH REASONABLE CAUSE EXISTED. 5. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) GRO SSLY ERRED IN FAILING TO APPRECIATE THAT THE ASSESSEE HA D CASH BALANCE OF RS.4,66,84,735/- AS ON 31.03.2010 AND HA D ALSO PROVIDED FOR CURRENT TAX OF RS.4,00,00,000/- I N ITS ACCOUNTS FOR THE YEAR-ENDED 31.03.2010 WHICH WOULD AMPLY ESTABLISH THAT IT HAD MORE LIQUID FUNDS THAN WAS REQUIRED FOR PAYING THE TAX DUES AND, THEREFORE, TH ERE WAS NO REASONABLE CAUSE WHICH COULD HAVE PREVENTED THE ASSESSEE FROM PAYING THE TAXES WITHIN THE SPECIFIED DUE DATES OR WHILE FILING THE RETURN OF INCOME. 6. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED COMMISSIO NER OF INCOME-TAX(APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OR ALL THE GROUNDS OF APPEAL. 2. THE ASSESSEE COMPANY KUMAR URBAN DEVELOPMENT LTD . HAD FILED RETURN OF INCOME FOR A.Y. 2010-11 DECLARING T OTAL INCOME OF 17,98,01,350/- BUT WITHOUT PAYING TAX DUE PAYABLE U NDER SELF ASSESSMENT OF 2,51,34,870/-, EVEN AFTER CONSIDERING THE TDS, ETC. THE SELF ASSESSMENT TAX REMAINED UNPAID FOR A LONG TIME, EVEN AFTER FILING OF THE RETURN WITHOUT PAYMENT OF SELF ASSESSMENT TAX. THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOT ICE U/S.221(1) IN THIS REGARD. THE ASSESSEE AGREED TO PAY THE SAI D TAX BY 28.02.2011. SOME OF THE INSTALLMENTS WERE PAID BY THE GIVEN DATE, HOWEVER, THE ASSESSEE COULD NOT PAY TO THE TU NE OF 1,61,35,000/- BY 28.02.2011. THE ASSESSING OFFICER LEVIED THE PENALTY @ 10% OF TAX REMAINING PAYABLE ON THE DATE OF LEVY OF PENALTY . 3 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) RESTRICT ED THE PENALTY TO 50% OF 16,13,500/- LEVIED BY ASSESSING OFFICER. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE. N O APPEAL HAS BEEN FILED ON BEHALF OF ASSESSEE WITH REGARD TO SUS TAINING OF PENALTY. THE LEARNED DEPARTMENTAL REPRESENTATIVE S UBMITTED THAT THE CIT(A) GROSSLY ERRED IN WAIVING 50% OF THE PENALTY OF 16,13,500/- LEVIED BY THE ASSESSING OFFICER U/S.221 (1) OF I.T. ACT, 1961 INSTEAD OF SUSTAINING THE ENTIRE PENALTY. THE CIT(A) FAILED TO APPRECIATE THAT PENALTY U/S.221(1) IS LEVIABLE E VEN AFTER THE ASSESSEE PAYS FULL AMOUNT OF THE TAXES AND THE ONLY THING TO BE CONSIDERED IS WHETHER OR NOT THE ASSESSEE HAD ANY R EASONABLE CAUSE FOR FAILURE TO PAY THE TAXES BY THE DUE DATES . ACCORDINGLY, THE PART RELIEF GRANTED BY THE CIT(A) HAS BEEN OPPO SED BY REVENUE. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUPPORTED THE ORDER OF CIT(A) ON THE ISSUE. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE PENALTY HAS BEEN LEVIED UN DER THE PROVISIONS OF SECTION 221(1) OF I.T. ACT. THE PROV ISIONS OF SECTION 221 READ AS UNDER: 221 [(1) WHEN AN ASSESSEE IS IN DEFAULT OR IS DEEM ED TO BE IN DEFAULT IN MAKING A PAYMENT OF TAX, HE SHALL, IN ADDITION TO THE AMOUNT OF THE ARREARS AND THE AMOUNT OF INTE REST PAYABLE UNDER SUB-SECTION(2) OF SECTION 220, BE LIA BLE, BY WAY OF PENALTY, TO PAY SUCH AMOUNT AS THE ASSESSING OFFICER MAY DIRECT AND IN THE CASE OF CONTINUING DEFAULT, S UCH FURTHER AMOUNT OR AMOUNTS AS THE ASSESSING OFFICER MAY, FROM TIME TO TIME, DIRECT, SO, HOWEVER, THAT THE TO TAL AMOUNT OF PENALTY DOES NOT EXCEED THE AMOUNT OF TAX IN ARR EARS: PROVIDED THAT BEFORE LEVYING ANY SUCH PENALTY, THE ASSESSEE SHALL BE GIVEN A REASONABLE OPPORTUNITY OF BEING HE ARD: [PROVIDED FURTHER THAT WHERE THE ASSESSEE PROVES TO THE SATISFACTION OF THE ASSESSING OFFICER THAT THE DEFA ULT WAS FOR GOOD AND SUFFICIENT REASONS, NO PENALTY SHALL BE LE VIED UNDER THIS SECTION.] 4 [EXPLANATION- FOR THE REMOVAL OF DOUBT, IT IS HEREB Y DECLARED THAT AN ASSESSEE SHALL NOT CEASE TO BE LIABLE TO AN Y PENALTY UNDER THIS SUB-SECTION MERELY BY REASON OF THE FACT THAT BEFORE THE LEVY OF SUCH PENALTY HE HAS PAID THE TAX .] (2) WHERE AS A RESULT OF ANY FINAL ORDER THE AMOUNT OF TAX, WITH RESPECT TO THE DEFAULT IN THE PAYMENT OF WHICH THE PENALTY WAS LEVIED, HAS BEEN WHOLLY REDUCED, THE PE NALTY LEVIED SHALL BE CANCELLED AND THE AMOUNT OF PENALTY PAID SHALL BE REFUNDED. FOR LEVY OF PENALTY U/S.221 OF ACT, THE ASSESSEE H AS TO BE AN ASSESSEE IN DEFAULT IN MAKING A PAYMENT OF TAX DUE FROM HIM. THE AFORESAID PENALTY HAS TO BE IN ADDITION TO TAX DUE AND INTEREST PAYABLE. THE PROVISION PRESCRIBED UPPER L IMIT OF LEVY OF PENALTY I.E. IT CANNOT EXCEED AMOUNT OF TAX DUE FOR WHICH THE ASSESSEE IS IN DEFAULT. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSEE HAS NOT PAID ANY ADVANCE TAX DURING THE PR EVIOUS ASSESSMENT YEAR. THE ASSESSEE IS ENGAGED IN THE BU SINESS OF REAL ESTATE AND HENCE, EVEN IF THERE ARE INVENTORIES AND CURRENT ASSETS MOUNTING IN BALANCE SHEET BUT THE SAME COULD NOT BE CONSIDERED NECESSARILY TO INDICATE THE EXISTENCE OF GOOD AND S UFFICIENT CAUSE FOR NOT PAYING THE TAX IN TIME, FOR WHICH, THIS PEN ALTY HAS BEEN LEVIED. THE MOOT QUESTION BEFORE US IS WHETHER THE RE IS DISCRETION WITH REVENUE AUTHORITIES. THE ASSESSING OFFICER HA S DISCRETION AS FAR AS QUANTUM OF PENALTY IS CONCERNED. THE UPPER LIMIT HAS BEEN PRESCRIBED I.E. THE AMOUNT OF PENALTY SHOULD N OT EXCEED THE AMOUNT OF TAX IN ARREAR, BUT THE LOWER LIMIT HAS NO T BEEN PRESCRIBED BY LEGISLATION. IT MEANS THAT THE REVEN UE AUTHORITIES HAVE DISCRETION FOR LEVYING LESSER PENALTY. THE JU RISDICTION OF CIT(A) IS CO-TERMINUS TO THAT OF ASSESSING OFFICER. IT MEANS THAT THE CIT(A) ALSO HAS DISCRETION FOR LEVYING LESSER P ENALTY. UNDER THE FACTS AND CIRCUMSTANCES, THE CIT(A) HAS RIGHTLY USED HIS DISCRETION FOR RESTRICTING THE PENALTY TO 50% WHICH COULD NOT BE FAULTED. SO, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF CIT(A), WHO HAS RESTRICTED THE PENALTY TO 50% ON 16 ,13,500/- 5 LEVIED BY ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 221(1) OF I.T. ACT AND THE SAME NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 27 TH OF MARCH, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH MARCH, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-I, PUNE 4) THE CIT-I, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE