PERFECT VITAMINS PVT. LTD., MUMBAI V. DCIT RANGE 1(2), MUMBAI

ITA 2282/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1299 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 28-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SATYANARAYANA RAJU
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 139(5)

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 2282/ MUM/2016 ( / ASSESSMENT YEAR : 2011-12) PERFECT VITAMINS PVT. LTD., EVEREST BUILDING, BLOCK H/4&5, 9 TH FLOOR, TARDEO ROAD, MUMBAI 400 034. / V. DY. CIT, RANGE 1(2), MUMBAI. ./ PAN : AAFCP1189B ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI B. SATYANARAYANA RAJU , DR / DATE OF HEARING : 12-04-2017 / DATE OF PRONOUNCEMENT : 20-04-2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 2282/MUM/2016, IS DIRECTED AGAINST THE APPELLATE ORDER IN APPEAL NO. CIT(A)-2/IT/196/2014-15 DATED 12 TH JANUARY, 2016 PASSED BY LEARNED COMMISSIONER OF IN COME TAX (APPEALS)- 2, MUMBAI (HEREINAFTER CALLED THE CIT(A )), FOR THE ASSESSMENT YEAR 2011-12, THE APPELLATE PROCEEDINGS BEFORE THE LEARN ED CIT(A) HAD ARISEN FROM THE PENALTY ORDER DATED 23 RD SEPTEMBER, 2014 PASSED BY LEARNED ASSESSING OFFICER ( HEREINAFTER CALLED THE AO) U/S 271(1 )(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). ITA 2282/MUM/2016 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (HER EINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- THE APPELLANT OBJECTS TO THE ORDER DATED 12.01.2016 RECEIVED ON 29.02.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) -2 (HEREINAFTER REFERRED TO AS 'CIT(A) MUMBAI), IN AN APPEAL AGAINST AN ORDER U/S 271(L)(C) OF THE INCOME TAX ACT, 1961('THE ACT') ON THE FOLLOWING GROUND OF APPEAL. 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PE NALTY UNDER SECTION 271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FURNISHED FULL AND ACCURATE PARTICULARS OF ITS INCOME. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE PENAL TY WITHOUT LOOKING INTO THE FACTS THAT THE EXPENSES CLAIMED BY THE AP PELLANT WERE GENUINE EXPENSES AND SAME IS ACCEPTED BY THE LEARNE D AO. THE AO HAS LEVIED PENALTY IN RESPECT OF THE SAID AMOUNT MERELY BE CAUSE SAID CLAIM OF THE APPELLANT WAS DISALLOWED U/S 40(A)(IA) OF THE ACT AS THE APPELLANT FAILED TO PAY THE TDS DEDUCTED TO THE CREDIT OF THE CEN TRAL GOVERNMENT. 3. THE FINDING OF LEARNED AO THAT APPELLANT HAS NOT DI SCLOSED THAT TDS HAS NOT PAID IS WRONG AND WITHOUT LOOKING INTO THE FACTS THAT SAME IS REPORTED IN ANNEXURE-D OF TAX AUDIT REPORT U/S 44A B. 4. THE CIT(A) HAS CONFIRMED THE PENALTY WITHOUT LO OKING INTO THE FACT THAT APPELLANT WAS IN FINANCIAL DIFFICULTIES AND HENCE COULD NOT DEPOSIT THE TAX DEDUCTED AT SOURCE INTO THE GOVERNMEN T ACCOUNT. 5. WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) & AO HAS ERRED IN NOT CONSIDERING THE ALTERNATE PLEA THAT IN APPELLANT C ASE, THE TAX SOUGHT TO BE EVADED WAS NIL AS THE APPELLANT HAS NOT CLAIMED C ARRY FORWARD OF LOSS DUE TO BELATED RETURN. 6. THE APPELLANT COULD NOT ATTEND THE BEARINGS OF CIT (A) FIXED ON 09/02/2016 DUE TO ILL HEALTH OF AUTHORISED REPRES ENTATIVE, CONSEQUENTLY HE COULD NOT REPRESENT HIS CASE BEFORE LEARNED CIT(A), THEREFORE THE APPELLANT PRAYS FOR NATURAL J USTICE AND REQUEST FOR ONE MORE OPPORTUNITY OF BEING HEARD BE GRANTED. GENERAL GROUND: 7. THE APPELLANT ; THEREFORE PRAYS THAT THE ORDER OF TH E CIT(A) BE SET ASIDE AND GRANT THE RELIEF FROM PENALTY. ITA 2282/MUM/2016 3 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS MANUFACTURERS OF VITAMIN PRODUCTS, PROTEIN CONCENTRATE, SOYA LECI THIN POWDER AND GRANULES. THE A.O. HAD FRAMED AN ASSESSMENT U/S 143(3) OF 196 1 ACT VIDE ORDERS DATED 27-03-2014 WHEREBY ADDITIONS WERE, INTER-ALIA, MADE TO THE TUNE OF RS. 2,09,30,565/- ON ACCOUNT OF TAX DEDUCTED AT SOURCE BUT NOT PAID TO THE CREDIT OF CENTRAL GOVERNMENT, U/S 40(A)(IA) OF THE ACT. T HE DETAIL OF TDS DEDUCTED BUT NOT PAID TO THE CREDIT OF CENTRAL GOVERNMENT, W ITH DISALLOWANCE MADE BY THE AO ARE AS UNDER:- S NO. PARTICULARS TDS AMOUNT OPENING TDS AMOUNT CURRENT YEAR ADDITIONS ON PART OF NON- PAYMENT OF TDS. 1 TDS ON INTEREST PAYABLE 20,765/- 2,07,650/- 2 TDS ON CONTRACTOR (CAPITAL ADDITION ITEM ON A/C OF FIXED ASSETS) 3,20,229/- 5,89,723/- 1,31,08,255/- 3 TDS ON SALARY 1,06,036/- 10,60,360/- 4 TDS ON CONTRACTOR 1,31,086/ - 65,54,300/ - TOTAL 2,09,30,56 5/ - THE A.O. WHILE PASSING THE ASSESSMENT ORDER DATED 2 7-03-2014 U/S 143(3) OF 1961 ACT HAD MADE DISALLOWANCE OF RS. 2,09,30,565/- AS PER PROVISIONS OF SECTION 40(A)(IA) OF 1961 ACT FOR NON-DEPOSIT OF TA X DEDUCTED AT SOURCE WITH CENTRAL GOVERNMENT . THE AO ALSO INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S 271(1)(C) OF THE ACT FOR FILING INACCU RATE PARTICULARS OF INCOME. ACCORDINGLY SHOW CAUSE NOTICE WAS ALSO ISSUED TO TH E ASSESSEE ASKING FOR THE EXPLANATIONS. THE ASSESSEE SUBMITTED THAT THE ADDI TIONS HAVE BEEN MADE IN THE ASSESSMENT ORDER FOR NON-DEPOSIT OF TDS WITH GO VERNMENT ALTHOUGH THE ITA 2282/MUM/2016 4 SAID TAXES WERE DULY DEDUCTED AT SOURCE BY THE ASS ESSEE AS PER PROVISIONS OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSEE DEDUCT ED THE TAX AT SOURCE WITHIN THE PRESCRIBED TIME AS STIPULATED IN SECTION 40(A)( IA) OF THE ACT, HOWEVER, COULD NOT DEPOSIT THE TDS AMOUNT ON TIME WITH GOVER NMENT DUE TO FINANCIAL CRISIS. IT WAS SUBMITTED THAT THE ASSESSEE HAD FIL ED BELATED RETURN OF INCOME U/S 139(5) OF THE ACT WITH A LOSS OF RS. 3,82,13,26 2/- WHICH WAS NOT ALLOWED TO BE CARRY FORWARD TO BE SET OFF AGAINST FUTURE YE AR PROFITS IN ACCORDANCE WITH PROVISIONS OF 1961 ACT. THE A.O. REJECTED THE CONT ENTIONS OF THE ASSESSEE AND OBSERVED THAT NON-PAYMENT OF TDS TO THE CREDIT OF C ENTRAL GOVERNMENT IS NOT REFLECTED BY THE ASSESSEE IN THE COMPUTATION OF INC OME FILED BY THE ASSESSEE WITH THE REVENUE AS WELL IN THE AUDIT REPORT U/S 4 4AB OF 1961 ACT . IT WAS ALSO OBSERVED BY THE AO THAT THE ASSESSEE WRONGLY C LAIMED THAT TAX DEDUCTED AT SOURCE WAS PAID TO THE CREDIT OF CENTRAL GOVERNM ENT WITHIN THE PRESCRIBED TIME AS PER SECTION 40(A)(IA) OF THE ACT. THE A.O. OBSERVED THAT THE ASSESSEE HAD DEDUCTED THE TAX AT SOURCE BUT DID NOT DEPOSIT THE TAX TO THE CREDIT OF CENTRAL GOVERNMENT AND ASSESSEE WAS USING THE GOVER NMENTS FUNDS FOR ITS BUSINESS PURPOSES, HENCE, THE AO LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT BEING 100% OF THE TAX SOUGHT TO HAVE BEEN CONCEALED TO THE TUNE OF RS. 62,79,110/-, VIDE PENALTY ORDERS DATED 23-09-2014 P ASSED BY THE AO U/S 271(1)(C) OF 1961 ACT. 4. AGGRIEVED BY THE PENALTY ORDER DATED 23-09-2014 PASSED BY THE A.O. U/S 271(1)(C) OF 1961 ACT, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), NONE APPEARED ON BEH ALF OF THE ASSESSEE DESPITE ISSUE OF NOTICES BY LEARNED CIT(A) FIXING THE APPEA L FOR HEARING FROM TIME TO TIME NOR THE ASSESSEE FILED ANY WRITTEN SUBMISSIONS BEFORE LEARNED CIT(A). THE LD. CIT(A) AFTER CONSIDERING THE MATERIAL AVAIL ABLE ON RECORD, CONFIRMED THE PENALTY OF RS. 62,79,110/- LEVIED BY THE A.O. U /S 271(1)(C) OF 1961 ACT IN AN EX-PARTE PROCEEDINGS BY HOLDING THAT THE ASSESSE E CONSCIOUSLY AND INTENTIONALLY FURNISHED INACCURATE PARTICULARS OF I NCOME AND ALSO EVADED THE ITA 2282/MUM/2016 5 DEPOSIT OF TAX DEDUCTED AT SOURCE TO THE CREDIT OF CENTRAL GOVERNMENT, VIDE APPELLATE ORDER DATED 12-01-2016. 5. AGGRIEVED BY THE APPELLATE ORDER DATED 12-01-20 16 PASSED BY THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. 6. BEFORE THE TRIBUNAL ALSO, NONE APPEARED ON BEHAL F OF THE ASSESSEE, HENCE, WE PROCEED TO DECIDE THE APPEAL ON MERITS BA SED ON THE MATERIAL AVAILABLE ON RECORD AFTER HEARING THE LD. D.R.. THE LEARNED DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW 7. WE HAVE CONSIDERED THE MATERIAL ON RECORD INCLUD ING ORDERS OF THE AUTHORITIES BELOW AND HEARD THE ARGUMENTS OF LEARNE D DR. WE HAVE OBSERVED THAT THE A.O. LEVIED THE PENALTY U/S 271(1)(C) OF T HE ACT TO THE TUNE OF RS. 62,79,110/- VIDE HIS ORDER DATED 23 RD SEPTEMBER, 2014 PASSED U/S 271(1)(C) OF 1961 ACT , WHICH WAS LATER CONFIRMED BY THE LD. CIT(A) IN HIS EX-PARTE APPELLATE ORDER DATED 12-01-2016. BEFORE THE LD. C IT(A), NONE APPEARED DURING APPELLATE PROCEEDINGS DESPITE SERVICE OF NOT ICES BY LEARNED CIT(A). THE PENALTY WAS LEVIED BY THE AO U/S 271(1)(C) OF 1961 ACT DUE TO NON-DEPOSIT OF TAX DEDUCTED AT SOURCE WITH THE CENTRAL GOVERNMENT AND ALSO NON DISCLOSURE OF PARTICULARS OF NON-DEPOSIT OF TAX DEDUCTED AT SO URCE WITH CENTRAL GOVERNMENT IN THE COMPUTATION OF INCOME FILED WITH THE REVENUE IN THE RETURN OF INCOME FILED AS WELL IN TAX-AUDIT REPORT U/S 44AB OF 1961 ACT. THE ASSESSEE HAS CLAIMED THAT IT HAD DEDUCTED THE TAX A T SOURCE BUT FAILED TO PAY THE SAME IN THE GOVERNMENTS ACCOUNT DUE TO FINANCI AL DIFFICULTIES FACED BY THE ASSESSEE. IN THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE DID NOT MAKE ANY APPEARANCE AND THE AVERMENT OF THE ASSESSEE AS CONTAINED IN GROUND NO. 6 FILED WITH THE TRIBUNAL WAS THAT BE CAUSE OF THE ILLNESS OF ITS AUTHORIZED REPRESENTATIVE , THE ASSESSEE COULD NOT MAKE REPRESENTATION BEFORE THE LD. CIT(A) AND IT IS PRAYED THAT ONE MORE OPPOR TUNITY BE PROVIDED TO THE ITA 2282/MUM/2016 6 ASSESSEE TO PRESENT ITS CASE ON MERITS. KEEPING IN VIEW OF THE FACTUAL MATRIX OF THE CASE AND IN THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED VIEW THAT THE MATTER NEEDS TO BE SET ASIDE AND RESTORED BACK TO THE FILE OF THE LD. CIT(A) FOR DE-NOVO ADJUDICATION OF THE ISSUE ON MERITS BY LEARNED CIT(A) . THE LD. CIT(A) IS DIRECTED TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO REPRESENT THE CASE BEFORE HIM AND THE LD. CIT(A) SHALL ADJUDI CATE THE ISSUE DE-NOVO ON MERITS AFTER CONSIDERING THE SUBMISSIONS/EXPLANATIO NS OF THE ASSESSEE IN THE LIGHT OF EVIDENCES FILED BY THE ASSESSEE. THE ASSES SEE IS DIRECTED TO PRODUCE ALL NECESSARY AND RELEVANT EVIDENCES AND EXPLANATIONS B EFORE THE LD. CIT(A) TO SUBSTANTIATE ITS CLAIM IN ITS DEFENSE WHICH SHALL B E ADMITTED BY THE LD. CIT(A) IN THE INTEREST OF JUSTICE. NEEDLESS TO SAY THAT PR OPER AND ADEQUATE OPPORTUNITY OF BEING HEARD SHALL BE PROVIDED BY THE LD. CIT(A) TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. IN CASE THE ASSESSEE DO NOT CO-OPERATE IN DE-NOVO PROC EEDINGS BEFORE LEARNED CIT(A), THEN THE LEARNED CIT(A) WILL BE FREE TO ADJ UDICATE THE ISSUES ON MERITS BASED ON MATERIAL ON RECORD IN ACCORDANCE WITH PROV ISIONS OF LAW . WE ORDER ACCORDINGLY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN I TA NO. 2282/MUM/2016 FOR ASSESSMENT YEAR 2011-12 IS ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH APRIL, 2017. # $% &' 20-04-2017 ( ) SD/- SD/- (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 20-04-2017 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 2282/MUM/2016 7 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI C BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI