DUFLON POLYMS P. LTD, MUMBAI V. DCIT 8(1), MUMBAI

ITA 2323/MUM/2012

• Counselvise Citation: 232319914 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 31-07-2013
• Assessment Year: 2010-2011
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHAN VYAS
• Assessee Lawyers: ALOK SAKSENA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI . . , ! , ' # BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 2323 / / 2012 A.Y. 2010-11 ITA NO. : 2323/MUM/2012 (ASSESSMENT YEAR: 2010-11) M/S. DUFLON POLYMERS PVT. LTD., 3, NEELDHARA PARTS., SHARDDHANAND EXTN. ROAD, VILE PARLE (E), MUMBAI -400 057 .: PAN: AAACD 1668 G VS DY. COMMISSIONER OF INCOME TAX 8(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ALOK SAKSENA RESPONDENT BY : SHRI KISHAN VYAS ! /DATE OF HEARING : 31-07-2013 '# ! / DATE OF PRONOUNCEMENT : 07-08-2013 ' O R D E R ! , : PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) 16, MUMBAI, DATED 14.02.2012. 2. THE SOLITARY ISSUE PERTAINS TO SUSTENANCE OF PENALTY U/S 221(1). 3. THE FACTS EMERGING FROM THE ORDERS OF THE REVENUE AUTHORITIES A RE (AS PRODUCED BY THE CIT(A)) ARE, 2.2.1 THE LD. AR OF THE APPELLANT SUBMITTED THAT T HE COMPANY HAS FILED INCOME TAX RETURN ON 14.10.2010 AND DETERMINED THE SELF ASSESSMENT TAX PAYABLE FOR A.Y. 2010-11 ON 14.10.2010. DUE TO SEVERE LIQUIDITY CRUNCH AFFECTING THE COMPANY, THE COMPANY WAS NOT I N A POSITION TO PAY THE TAX. THERE WAS A HUGE BACKLOG OF DEBTORS MA KING THE CASH FLOW M/S. DUFLON POLYME RS PVT. LTD. ITA NO. 2323/MUM/2012 2 IN A NEGATIVE POSITION. THE APPELLANT FURTHER SUBMI TTED THAT THE DEBTORS POSITION AND CASH/BANK POSITION ENCLOSED IN DETAILS , THE SUMMARY WAS AS FOLLOWS: (IN LACS) MONTH END DEBTORS AVAILABLE CREDIT LIMIT OCT, 2010 3830.07 39.28 NOV, 2010 3907.89 (31.97) DEC, 2010 3852.38 40.08 JAN, 2011 4029.15 17.01 THE PENDING LIABILITIES WHICH WERE DUE IN NOV 10 & DEC, 10 ARE : LC AMOUNT RS. 246.98 STAND BY LINE OF CREDIT TAKEN BY SBI(TERM LOAN DU E TO NOV, 10 RS. 121.14 SINCE THESE WERE IMMEDIATELY PAYABLE, THE TAX PAY MENT WAS DELAYED. THE COMPANY HAS PAID THE SA TAX LIABILITY AS FOLL OWS: DEBTORS PAID AMOUNT (IN LACS) 15.02.2011 27 28.02.2011 25 31.03.2011 24.91 76.91 2.2.2 THE APPELLANT FURTHER SUBMITTED THAT THE COMP ANY IS FACING LIQUIDITY CRISIS AND WAS NOT IN A POSITION TO PAY THE SA TAX OF RS. 76.91 LACS DURING THESE MONTHS AND THEREFORE THERE WAS A DELAY OF 4 MONTHS IN PAYMENT OF SELF ASSESSMENT TAX. THE APPELLANT FURTH ER SUBMITTED THAT THE SECTION ITSELF PROVIDES THAT IF THE DEFAULT IN PAYMENT OF TAX WAS FOR GOOD AND SUFFICIENT REASONS THEN NO PENALTY SHOULD BE LEVIED. THE APPELLANT FURTHER PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- CIT VS. CHEMBARA PEAK ESTATES LTD. [1989] 47 TAXMA N 166 (KER) CIT VS. BHIKAJI RAMCHANDRA [1990] 183 ITR 478 (BOM ) ITO VS. DEVSONS (P) LTD. [2008] 113 TTJ 615 (DELHI ) JCIT, SPECIAL RANGE 9 VS. VIRAL LAMINATES(P) LTD. [2006] 5 SOT 160 (AHD) 2.3 DECISION 2.3.1 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE APPELLANT COMPANY AS WELL AS CAREFULLY GONE THROUGH THE AVAILABLE DOCUME NTS ON RECORD. I FIND THAT THE APPELLANTS FINANCIAL POSITION AS REFLECTE D IN THE EARLIER YEARS BALANCE SHEET IS NOT ONLY SOUND BUT THERE IS NO SUF FICIENT CASH/BANK BALANCE AVAILABLE WITH THE APPELLANT. THE APPELLANT SUBMITTED THAT IT HAD A STANDBY LINE OF CREDIT TAKEN BY THE SBI WHICH WAS DUE ON NOV. 2010 AMOUNTING TO RS. 121.14 LACS THE PAYMENT OF WH ICH WAS REQUIRED TO BE MADE IMMEDIATELY DOES NOT TRANSPIRED ANY CONF IDENCE. THE APPELLANT HAD GOT SUFFICIENT FUNDS AND THE RETURN W AS FILED ON 14.10.2010, HE COULD HAVE PAID THE DUE TAX, HOWEVER THAT WAS NOT DONE RATHER THE APPELLANT WAS TRYING TO SETTLE ITS DUES PAYABLE TO SBI. THEREFORE, THERE IS NO LIQUIDITY CRUNCH AND THE APP ELLANT DELIBERATELY CHOOSES NOT TO PAY THE SELF ASSESSMENT TAX. UNDER T HE CIRCUMSTANCES, I AM OF THE VIEW THAT THE PENALTY U/S 221 HAS RIGHTLY BEEN LEVIED BY THE LD. AO. THE APPELLANT HAS RELIED ON SEVERAL CASE LA WS WHICH ARE DISTINGUISHABLE ON FACTS AS IN ALMOST IN ALL THE CA SES THERE WAS A GOOD AND SUFFICIENT CASE FOR NOT PAYING THE SELF ASSESSM ENT TAX WHICH IS NOT THE CASE. ACCORDINGLY, THE APPEAL OF THE APPELLANT STANDS DISMISSED. 3. IN THE RESULT, THE APPEAL IS DISMISSED. 4. THE CIT(A), THUS, DISMISSED THE APPEAL. M/S. DUFLON POLYME RS PVT. LTD. ITA NO. 2323/MUM/2012 3 5. AGGRIEVED, THE ASSESSEE IS NOW BEFORE THE ITAT. 6. BEFORE US, THE AR REITERATED THE SUBMISSIONS MADE BEFOR E THE REVENUE AUTHORITIES AND PLEADED THAT THE PENALTY BE DELETED. 7. WHEREAS, THE AR SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES AND PLEADED THAT THE ASSESSEE WAS LIABLE FOR PENALTY AS P ER LAW, BECAUSE, THE ASSESSEE COMMITTED THE DEFAULT AND THAT TH E ASSESSEE HAS NOT BEEN ABLE TO PROVE THE FINANCIAL DIFFICULTIES, AS BEING PLEAD ED BY THE ASSESSEE. HE, THEREFORE, PLEADED THAT THE REVENUE AUTHOR ITIES HAD CORRECTLY IMPOSED THE PENALTY U/S 221(1). 8. WE HAVE HEARD THE CONTENTIONS FROM BOTH THE SIDES. 9. FROM THE IMPUGNED ORDERS, WE FIND THAT THE REVENUE AU THORITIES ARE RELYING HEAVILY ON THE RESULTS OF THE COMPANY IN THE PRECEDING YEAR(S). WHAT WE ARE SOUGHT TO DETERMINE IS THE POSITION IN THE CURRENT YEAR. IN THE CURRENT YEAR, IT IS UNDISPUTED THAT THE ASS ESSEE APPROACHED THE AO WITH ITS PRAYER FOR EXTENSION OF TIME FO R DEPOSIT OF SELF ASSESSMENT TAX, WHICH STOOD AT RS. 76.91 LACS. THIS ALSO IS UNDISPUTED THAT TILL THE ISSUE OF SHOW CAUSE NOTICE, THE AS SESSEE HAD ALREADY DEPOSITED RS. 52 LACS (RS. 27 LAC + RS. 25 LAC) AND DEPOSITED THE REST BEFORE THE CLOSE OF THE FINANCIAL YEAR. BESIDES THIS FACT, IT IS ALSO UNDISPUTED THAT THE ASSESSEE GOT ENTANGLED IN BANK FACILITIES AVAILABLE TO HIM AND WAS MADE TO SQUARE UP RS. 246.98 LACS AND RS. 121.14 LACS. ALL THESE FACTS, ALONG WITH ALL THE FIGURES WERE BE FORE THE REVENUE AUTHORITIES. IT IS CERTAINLY NOT A CASE OF THE RE VENUE AUTHORITIES THAT THE ASSESSEE WAS A HABITUAL DEFAULTER OR IRRESPONSIB LE ASSESSEE, OR IN THE PRECEDING YEARS, THE ASSESSEE WAS TRYING TO PLAY HIDE & SEEK WITH THE DEPARTMENT OR ANY OTHER AUTHORITY OR A CONTINUED DEFAULT. M/S. DUFLON POLYME RS PVT. LTD. ITA NO. 2323/MUM/2012 4 10. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY JUSTIFICATIO N TO SUSTAIN THE PENALTY, BECAUSE, EVEN THE LEGISLATURE HAS U SED THE WORD MAY IN THE IMPUGNED SECTION. 11. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIR ECT THE AO TO DELETE THE PENALTY LEVIED AT RS. 7,99,160/- U/S 221(1) OF THE INCOME TAX ACT, 1961. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2013. SD/- SD/- ( . . ) ( ! ) (R.S. SYAL) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 7 TH AUGUST, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) ' '( ( ) - 16 MUMBAI / THE CIT (A)-16, MUMBAI. 4) ' '( 8 , MUMBAI / THE CIT8, MUMBAI, 5) *+, - , ' ! - , ./ / THE D.R. D BENCH, MUMBAI. 6) , 0 COPY TO GUARD FILE. '12 / BY ORDER / / TRUE COPY / / [ 3 / 4 5 ' ! - , ./ DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *784 . . * CHAVAN, SR. PS