AMI K. PAREKH., MUMBAI V. ACIT 12(1), MUMBAI

ITA 2475/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88092 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 19-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 29-03-2011
• Court: TRIBUNAL
• Department Lawyers: MRS S PADMAJA
• Keywords: Reasonable cause
• Section: 234B

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . , . , BEFORE SHRI D. MANMOHAN , VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, AM ./I.T.A. NO. 2475/M/2011 (AY:2006 - 2007) MRS. AMI K. PAREKH, BLACKIE HOUSE, 3 RD FLOOR, 101 - 105, W.H. MARG, FORT, MUMBAI 400 001. VS. ACIT 12(1), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. ./ PAN : AAIPP 2842 F ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI NEELKANTH KHANDELWAL / RESPONDENT BY : MRS. S. PADMAJA / DATE OF HEARING : 1.1.2015 / DATE OF PRONOUNCEMENT : 30 .1.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 29.3.2011 IS AGAINST THE ORDER OF THE CIT (A) - 23, MUMBAI DATED 2.2.2011 FOR THE ASSESSMENT YEAR 2006 - 2007. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN LEVYING A PENALTY OF RS.51,03,025/ - UNDER SECTION 221 R.W.S 140A(3) OF THE ACT. THE APPELLANT CONTENDS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) OUGHT NOT TO HAVE UPHELD THE IMPUGNED PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 221 OF THE ACT. 2. WITHOUT PREJUDICE TO OUR CONTENTION IN GROUND OF APPEAL NO.1, CIT (A) ERRED IN UPHOLDING THE LE VY OF PENALTY ON THE BASIS OF INCOME TAX, INCLUDING SURCHARGE, EDUCATION CESS AND INTEREST UNDER SECTION 234A, 234B AND 234C. THE APPELLANT CONTENTS THAT SURCHARGE, EDUCATION CESS AND INTEREST UNDER SECTIONS 234A, 234B AND 234C, CANNOT BE CONSIDERED IN LEV YING THE PENALTY AS THE SAME IS NOT PART OF TAX WITHIN THE MEANING OF SECTION 2(43) OF THE ACT. 3. WITHOUT PREJUDICE TO OUR CONTENTION IN GROUND OF APPEALS NO.1, THE CIT (A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN NOT CONSIDERING THE PA YMENTS OF TAX MADE AFTER FILING OF THE RETURN OF INCOME, IN LEVYING THE IMPUGNED PENALTY. 2 THE APPELLANT CONTENDS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) OUGHT TO HAVE HELD TO REDUCE THE PAYMENTS FROM TAX BEFORE LEVY ING THE IMPUGNED PENALTY. 4. THE APPELLANT CONTENTS THAT THE IMPUGNED ORDER OF THE CIT (A) IN UPHOLDING THE IMPUGNED LEVY OF PENALTY IS BAD IN LAW AND REQUIRES TO BE QUASHED. 2. ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 2,11,32,800/ - . DESPITE THE STATUTORY OBLIGATION TO PAY SELF ASSESSMENT TAX OF RS. 1,02,06,050/ - , ASSESSEE DEFAULTED IN PAYING THE SAME TILL THE DATE OF FILING THE RETURN OF INCOME. ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE U/S 221(1) RE AD WITH SECTION 140A(3) OF THE ACT. THERE WAS NO RESPONSE FROM THE ASSESSEE. THEREFORE, ASSESSING OFFICER PROCEEDED TO IMPOSE THE PENALTY OF RS. 51,03,025/ - U/S 221(1) OF THE ACT ON THE WHOLE OF RS. 1,02,06050/ - I.E., @ 50% OF THE SELF ASSESSMENT TAX. B EFORE THE CIT (A), ASSESSEE RAISED GROUNDS ABOUT THE IMPOSITION OF THE SAID PENALTY ON WHOLE OF THE SUM OF RS. 1,02,06,050/ - WITHOUT RESTRIC TING THE PENALTY TO THE TAX POR TION. IN FACT, THE SAID SUM OF RS. 1,02,06,050/ - INCLUDES TAX, SURCHARGE, INTEREST E TC. CIT (A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER VIDE HIS ORDER DATED 2.2.2011. BEFORE THE CIT (A), ASSESSEE SUBMITTED THAT THE FINANCIAL DIFFICULTIES WERE MENTIONED AS THE REASONS FOR NOT PAYING THE ADMITTED TAXES. CIT (A) HELD THAT THE ASSESSE ES EXPLANATION COULD NOT BE CONSIDERED AS GOOD AND SUFFICIENT REASON. FURTHER, ON THE SUBMISSION FOR EXCLUDING SURCHARGE, INTEREST ETC FROM THE SELF ASSESSMENT TAX OF RS. 1,02,06,050/ - , CIT (A) HELD THAT THE SAME IS NOT ACCEPTABLE IN VIEW OF EXPLANATIO N TO SECTION 140A OF THE ACT. PARA 7 OF THE IMPUGNED ORDER IS RELEVANT. THUS, THE APPEAL OF THE ASSESSEE IS DISMISSED. AGGRIEVED WITH THE SAME, THE ASSESSEE RAISED THE ABOVE MENTIONED GROUNDS BEFORE US. 3. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 4 OF THE IMPUGNED ORDER AND MENTIONED THAT AN IDENTICAL DEFAULTS WERE NOTICED IN THE CASES OF MRS. MAMTA K PAREKH AND RUPAM J PAREKH AND PENALTY U/S 221(I) OF THE ACT WAS LEVIED. THESE PERSONS ALSO TOOK LOANS FROM BANK OF PUNJAB IN 2001 AND THE SAID LOAN WAS GIVEN AS ADVANCE TO CLASSIC CREDIT LTD FOR PURCHASE OF SHARES. BUT SAID CLASSIC CREDIT LTD BEC A ME INSOLVENT AND WENT INTO LIQUIDATION. THUS, THESE PERSONS COULD NOT GET EITHER SHARES OR R ETURN OF THE ADVANCES . BANK APPROACHED THE DEBT RECOVERY TRIBUNAL FOR RECOVERY OF LOANS FROM THESE PERSONS AND ASSESSEE . TO COMPLY WITH THE TERMS OF CONSENT REACHED 3 AMONG THE PERSON, ASSESSEE MADE THE PAYMENTS TO THE BANKS TO THE TUNE OF RS. 2,08,50,060/ - BY DECEMBER 2005. THUS, THE ASSESSEE WAS UNDER FINANCIAL STRESS AND THEREFORE, SHE SHOULD NOT PAY SELF ASSESSMENT TAX. THE SAME CONSTITUTES SUFFICIENT CAUSE FOR NOT LEVYING PENALTY U/S 221(1) OF THE ACT. 4. IN THIS REGARD, LD COUNSEL MENTIONED THAT THE ABOVE NARRATED FACTS WERE EXAMINED BY THE TRIBUNAL IN CASE OF RUPAM J PAREKH VIDE ITA NO.2134/M/ 2010, DATED 25.3.2011 AND HELD THAT IT IS A CASE OF SUFFICIENT REASONS. IN FACT, HE MENTIONED THAT THE SAID ORDER OF THE TRIBUNAL WAS RELIED BY THE TRIBUNA L WHICH ADJUDICATED THE ISSUE RELATING TO MAINTAINABILITY OF THE APPEAL OF THE ASSESSEE (ITA NO.2132/M/2010), WHEN ASSESSEE FAILED TO PAY THE ADMITTED TAX U/S 249(4) OF THE ACT. FURTHER, LD COUNSEL FOR THE ASSESSEE FILED ANOTHER ORDER OF THE TRIBUNAL VIDE ITA NO.2476/M/2011 (AY 2006 - 2007) DATED 27.11.2014 IN THE CASE OF MRS. RUPAM J. PAREKH IN CONNECTION WITH THE PENALTY U/S 221 R.W.S 140A(3) AND THE ACT. HE BROUGHT OUR ATTENTION TO SAID ORDER OF THE TRIBUN AL AND MENTIONED THAT THE AFORE MENTIONED ISSUES W ERE ADJUDICATED IN THAT APPEAL AND THE TRIBUNAL DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE S . PARA 7 OF THE SAID ORDER OF THE TRIBUNAL DATED 27.11.2014 IS RELEVANT FOR THE PROPOSITION WHEN THE TRIBUNAL HAS ACCEPTED A REASONABLE CAUSE FOR NOT PAYING THE TAX DUE WHILE FILING THE RETURN OF INCOME AND ON THE SAME SET OF FACTS THE ASSESSING OFFICER CANNOT TAKE A DIFFERENT VIEW WHEN IT COMES TO INVOKING OF THE PROVISO TO SECTION 221 OF THE ACT I.E., LEVY OF PENALTY U/S 221 OF THE ACT. HE ALSO SUBMITTED THAT FACTS RELATING TO BOTH THE CASES I.E., RUPAM J PAREKH (SUPRA) AND ASSESSEES OWN CASE, WHICH IS AN ACCEPTED POSITION BY THE TRIBUNAL IN ITS ORDER (SUPRA) DATED 13.10.2011 VIDE THE CONTENTS OF PARA 2 ARE COMPARABLE . 5 . ON THE OTHER HAND, LD DR HEAVILY RELIE D ON THE ORDERS OF THE REVENUE AUTHORITIES. 6 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDERS OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE AS WELL AS IN THE CASE OF RUPAM J PAREKH (SUPRA). TO ST ART WITH , THE CONTENTS OF PARA 2 OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.2132/M/2010, DATED 13.10.2011 , ARE RELEVANT QUA THE IDENTICAL NATURE OF THE FACTS AS WELL AS THE REASONABLE CAUSE ISSUES DISCUSSED IN PARA 4 AND THE SAME REA DS AS UNDER: 4 2. ..ACT IS A CURABLE DEFECT WHICH IS SUPPORTED BY A SUFFICIENT CAUSE. LEARNED COUNSEL PLACED BEFORE US A COPY OF THE ORDER OF THE ITAT, D BENCH, MUMBAI IN THE CASE OF MRS. RUPAM J PAREKH VIDE ITA NO. 2134/MUM/2010 DATED 25 TH MARCH, 2011 WHEREIN UNDER IDENTICAL CIRCUMSTANCES, THE TRIBUNAL HELD THAT THE DELAY IN PAYMENT OF SELF - ASSESSMENT TAX WAS ON ACCOUNT OF SUFFICIENT CAUSE AND HENCE, APPEAL BEFORE THE CIT (A) DESERVED TO BE ADMITTED; ACCORDINGLY, THE MATTER WAS SET ASIDE TO THE FILE OF THE CIT (A). 3. LD DR HAS NOT DISPUTED THE FACTUAL MATRIX OF THE CASE. HE HOWEVER, SUBMITTED THAT THE ASSESSEE FILED ANOTHER APPEAL BEFORE THE CIT (A) AND HENCE, THERE IS NO N E ED TO ENTERTAIN THIS APPEAL BY THE APPELLATE TRIBUNAL. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. ON A CONSPECTUS OF THE MATTER, WE ARE OF THE OPINION THAT THE DELAY IN PAYMENT OF SELF - ASSESSMENT TAX IS SUPPORTED BY SUFFICIENT CAUSE. BY RESPECTFULLY FOLLOWING THE D ECIS I ON OF THE TRIBU NAL CITED (SUPRA), WE SET ASIDE THE ISSUE TO THE FILE OF THE CIT (A) WHO IS DIRECTED TO ADMIT THE APPEAL AND DECIDE THE GROUND RAISED BY THE ASSESSEE ON MERITS. 7 . WE HAVE ALSO PERUSED THE ORDER OF THE TRIBUNAL IN THE CASE OF RUPAM J. PAREKH ON THE ISSUE OF PENALTY (ITA NO.2476/M/2011, DATED 27.11.2014) WHEREIN PARA 7 WAS HIGHLIGHTED BY THE LD COUNSEL FOR THE ASSESSEE. ON PERUSAL, WE FIND THAT THE REASONABLE CAUSE WHICH WAS FOUND RELEVANT FOR THE PURPOSE OF SECTION 249(4)(A) HOLDS GOOD FOR THE MATTERS RELATING TO INVOKING OF THE PROVISO TO SECTION 221 OF THE ACT TOO. T HE SAID PARA 7 IS EXTRACTED AS FOLLOWS: 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDER S OF THE AUTHORITIES BELOW. PROVISO TO SECTION 221(1) SAYS THAT WHERE THE ASSESSEE PROVES TO THE SATIS FACTION OF THE ASSESSING OFFICER THAT THE DEFAULT WAS FOR GOOD AND SUFFICIENT REASONS, NO PENALTY SHALL BE LEVIED UNDER THIS SEC TION. A PERUSAL F THE ORDER OF THE TRIBUNAL IN ITA NO.2134/M/2010 SHOWS THAT THE TRIBUNAL HAS ACCEPTED THE REASONS OF THE ASSESSEE FOR NOT PAYING THE TAX DUE ON INCOME RETURNED DUE TO FINANCIAL DIFFICULTIES. ONCE THE TRIBUNAL HAS ACCEPTED THAT THE ASSESSEE HAD GOOD AND SUFFICI ENT REASONS IN QUANTUM APPEAL, ON SAME SET OF FACTS THE ASSESSING OFFICER CANNOT TAKE A DIFFERENT VIEW. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD CIT (A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY OF RS. 38,21,215/ - . 8 . IN THE CASE OF ASS ESSEE AS WELL AS RUPAM J PAREKH, THE FINANCIAL DIFFICULTY IS COMMON REASON FOR FAILURE TO PAY THE SELF ASSESSMENT TAX. THIS SITUATION AROSE TO THEM IN VIEW OF THE ORDER OF THE DEBTS RECOVERY TRIBUNAL AND THE CONSENT AGREEMENT BY WAY OF WHICH THESE PERSONS WERE TO PAY AROUND RS. 500 LAKHS TO THE BANK OF PUNJAB. THE SAID REASONS WERE ALREADY CONSIDERED AS GOOD AND SUFFICIENT REASON BY THE TRIBUNAL WHILE DEALING WITH THE MAINTAINABILITY OF THE APPEAL BEFORE THE CIT (A) IN CONNECTION WITH THE ASSESSEES FAILU RE TO PAY THE ADMITTED TAX AS REQUIRED U/S 249(4) OF THE ACT. UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE TRIBUNAL ALSO GRANTED RELIEF TO THE ASSESSEE IN MATTERS OF PENALTY LEVIED U/S 221 OF THE ACT IN CASE OF RUPAM J PAREKH (SUPRA) AGAINST THE ASSESSEE . THE SAME IS UNDER 5 ADJUDICATION RIGHT NOW. NO CONTRARY DECISIONS ARE BROUGHT TO OUR NOTICE BY THE REVENUE ON THE AFORESAID ISSUES. CONSIDERING THE DECISIONS ALREADY DELIVERED ON THIS ISSUE IN THE CASE OF RUPAM J PAREKH (SUPRA) WE ARE OF THE OPINION THAT T HE ISSUES RAISED BY THE ASSESSEE IN ITS PRESENT APPEAL STANDS COVERED. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNC ED IN THE OPEN COURT ON 3 0 T H JANUARY, 2015. S D / - S D / - (D. MANM OHAN) (D. KARUNAKARA RAO) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; 30/1/2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI