Assistant Commissioner Of Income Tax, Circle- 4(1)(2), Bangalore V. M/s. Metric Stream Infotech (India) Private Limited, Bengaluru

ITA 2478/BANG/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6545 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-03-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 03-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI J
• Assessee Lawyers: P C KHINCHA
• Keywords: Reasonable cause; Condonation of delay; Set aside; Liquidation
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI. B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2478/BANG/2019 ASSESSMENT YEAR : 2012-13 THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-4(1)(2), BENGALURU. VS. M/S METRIC STREAM INFOTECH (INDIA) PVT. LTD., AMR TECH PARK 4B, NOS.23 & 24, HONGASANDRA VILLAGE, BEGUR HOBLI, BENGALURU-560 068. PAN - AACCM 4991 K APPELLANT RESPONDENT REVENUE BY : SMT. R PREMI, JCIT-DR ASSESSEE BY : SHRI P.C KHINCHA, C.A DATE OF HEARING : 25-03-2021 DATE OF PRONOUNCEMENT : 16-04-2021 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAINST OR DER DATED 27/09/2019 PASSED BY LEARNT CIT (A),-4, BANGA LORE FOR ASSESSMENT YEAR 2012-13 ON FOLLOWING GROUNDS OF APP EAL: 1. THAT THE CIT(A) HAS ERRED IN ALLOWING THE APPEA L OF THE ASSESSEE IN SO FAR AS ISSUE OF PENALTY U/S 271F IS CONCERNED. 2. THAT THE CIT(A) HAS ERRED IN NOT APPRECIATING TH E FACT THAT EVEN THOUGH THE ASSESSEE HAD SUFFICIENT CASH AND BANK BA LANCE, IT HAD IGNORED TO PAY THE TAX DUES. PAGE 2 OF 7 ITA NO.2478/BANG/2019 3. THAT THE CIT(A) HAS ERRED IN NOT APPRECIATING TH E FACT THAT THE ASSESSEE HAS NOT EXHIBITED REASONABLE CAUSE TO EXPL AIN THE DELAY IN FILING THE RETURNS. 4. THAT THE CIT(A) HAS ERRED IN NOT APPRECIATING TH E FACT THAT PROVISIONS OF SECTION 271F HAS BEEN INTRODUCED ONLY AS A MEASU RE TO ENSURE TIMELY FILING OF RETURNS BY TAXPAYER SO AS TO ENABLE THE A O TO CARRY OUT NECESSARY FURTHER ACTION WITH RESPECT TO THE RETURN S AS PRESCRIBED UNDER THE ACT AND IT DOES NOT PROVIDE FOR THE NON LEVY OF PENALTY U/S 271F ON ACCOUNT OF FINANCIAL HARDSHIP. 5. THAT THE CIT(A) HAS ERRED IN NOT APPRECIATING TH E FACT THAT THE ASSESSING OFFICER HAS DEALT WITH EVERY ASPECT OF TH E ASSESSEE'S CLAIM AND ARRIVED AT THE RIGHTFUL CONCLUSION TO LEVY PENA LTY U/S 271F. 2. AT THE OUTSET THE LD. DR SUBMITTED THAT THERE IS A DELAY IN FILING THE PRESENT APPEAL BY ONE DAY. SHE PLACED RE LIANCE ON THERE CAN DONATION APPLICATION DATED 03/12/2019. THE LD.S R.DR REITERATED THE REASON AS MENTIONED IN THE APPLICATI ON FOR CONDONATION OF DELAY THAT THE ORDER UNDER 253 (2) W AS PASSED BY THE LD.PR.COMMISSIONER ON 02/12/2019 AND THE SAME W AS RECEIVED IN THE OFFICE AT 5 PM AND HENCE THERE IS A DELAY OF ONE- DAY IN FILING THE PRESENT APPEAL. 3. THE LD.AR DID NOT OBJECT FOR THE DELAY TO BE CON DONED. ACCORDINGLY THE CUT DELAY OF ONE-DAY IS CONDONED IN FILING THE PRESENT APPEAL BY REVENUE BEFORE THIS TRIBUNAL . 4. THE LD.SR.DR SUBMITTED THAT PRESENT APPEAL ARISE S OUT OF ORDER PASSED UNDER SECTION 271F OF THE ACT FOR FAIL URE OF ASSESSEE TO FURNISH THE RETURN OF INCOME BY THE END OF THE R ELEVANT ASSESSMENT YEAR IN CONSIDERATION. SHE SUBMITTED THA T ASSESSEE HAS NOT RESPONDED TO THE NOTICE UNDER SECTION 271F ISSUED BY THE LD.AO AND AS PER SECTION 271F SUM OF RS. 5000/- HAS BEEN LEVIED AS PENALTY FOR NON-FURNISHING OF RETURN OF I NCOME BY THE END OF THE ASSESSMENT YEAR. PAGE 3 OF 7 ITA NO.2478/BANG/2019 5. ON AN APPEAL BEFORE LD.CIT(A), THE ORDER OF LD.A O IMPOSING PENALTY UNDER SECTION 271F OF THE ACT WAS CONFIRMED . 6. ASSESSEE PREFERRED APPEAL BEFORE THIS TRIBUNAL WHEREIN THIS TRIBUNAL SET ASIDE THE ORDER OF LD.CIT(A) AND REMAND THE QU ESTION OF EXISTENCE OF REASONABLE CAUSE UNDER SECTION 273B OF THE ACT FOR FRESH CONSIDERATION BY THE LD.AO IN THE LIGHT OF AD DITIONAL EVIDENCE FILED BEFORE THE TRIBUNAL . 7. IN THE REMAND PROCEEDINGS THE LD.AO ISSUED FRESH NOTICE GIVING AN OPPORTUNITY TO ASSESSEE. ASSESSEE FILED V ARIOUS DETAILS LIKE BANK STATEMENT FINANCIAL STATEMENTS ETC. LD.AO HOWEVER OBSERVED THAT ASSESSEE HAD SUFFICIENT BACK BALANCE IN THE BANK TO PAY THE INCOME TAX DUES HOWEVER THE SAME WAS IGNORE D. 8. THE LD.AO ONCE AGAIN CONFIRMED THE PENALTY OF RS . 5000/- FOR VIOLATION OF SECTION 271F OF THE ACT. 9. AGGRIEVED BY THE ORDER OF LD.AO, ASSESSEE PREFER RED APPEAL BEFORE THE LD.CIT(A). 10. THE LD.CIT(A) RELYING ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS KTC TIRES INDIA LTD. , REPORTED IN (2014) 50 TAXMANN.COM 232 AND DECISION OF HONBLE HYDRABAD HIGH COURT IN CASE OF LEO EDIBLES AND FATS LTD. VS TRO REPORTED IN (2018) 99 TAXMANN.COM 226 ALLOWED THE CLAIM OF ASSESSEE AND DELETED THE PENALTY LEVIED UNDER SECTION 271F OF THE ACT. 11. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS IN APPEAL BEFORE US NOW. 12. THE LD.SR.DR SUBMITTED THAT THERE IS A DELAY OF 1 MONTH AND 58 DAYS IN FILING THE RETURN OF INCOME FOR THE YEAR UNDER PAGE 4 OF 7 ITA NO.2478/BANG/2019 CONSIDERATION. SHE PLACED RELIANCE ON THE ACCOUNT S TATEMENTS IN SUPPORT OF THE CLAIM THAT ASSESSEE HAD SUFFICIENT B ALANCE IN ORDER TO PAY THE TAXES DUE FOR THE RELEVANT YEAR. 13. ON THE CONTRARY, LD.AR PLACED RELIANCE ON THE O BSERVATIONS OF LD.CIT(A). 14. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 15. WE NOTE THAT THE LD.CIT(A) WHILE CONSIDERING TH IS ISSUE HAS VERIFIED THE BANK STATEMENTS OF ASSESSEE IN THE PRE CEDING AS WELL A SUBSEQUENT FINANCIAL YEARS. IT IS ALSO BEEN VERIF IED BY HIM AS TO WHETHER ASSESSEE HAS UTILISED THE MONEY FOR ANY OTH ER PURPOSE OTHER THAN MEETING THE URGENCIES IS OR OTHER THAN F OR SURVIVAL OF BUSINESS ITSELF. WE NOTE THAT LD.CIT(A) RELIED ON D ECISION OF HONBLE SUPREME COURT IN CASE OF KTC TIRES INDIA LTD. (SUPRA) AND OBSERVED AS UNDER: HONBLE APEX COURT IN THE CASE OF CIT VS. KTC TYR ES (INDIA) LTD [2O14] 50 TAXMANN.COM 232 (SC), HAS HELD THAT CAPITAL GAIN S PAYABLE BY COMPANY ON SALE OF ASSETS BY COURT NOT LIQUIDATION EXPENSES, CANNOT HE PAID IN PRIORITY OVER DUES OF WORKMEN SECURED CREDI TORS. ALSO, THE HONBLE HIGH COURT OF ANDHRA PRADESH AND TELANGANA IN THE C ASE OF LEO EDIBLES & FATS LTD VS. TAX RECOVERY OFFICER (CENTRAL), HYDE RABAD [2018] 99 TAXMANN.COM 226 HAS HELD THAT INCOME-TAX DEPARTMENT CANNOT CLAIM ANY PRIOR(Y PAYMENT FROM LIQUIDATION ESTATE MERELY BECA USE IT HAD ISSUED ATTACHMENT EIDER PRIOR TO INITIATION OF LIQUIDATION PROCEEDINGS UNDER INSOLVENCY AND BANKRUPTCY CODE. 6.3 FROM THE ABOVE DISCUSSION MADE UNDER THE ACT, I T IS CLEAR THAT PREFERENCE SHOULD BE GIVEN IN THE MANNER AS THE COM PANY HAS ACTUALLY DONE. IT IS SEEN FROM THE ANALYSIS THE BANK A/C THE COMPANY WAS IN FINANCIAL DIFFICULTIES AND WAS TRYING TO GET A LOAN FROM CITI BANK BANK MEETING THE EXPENSE. HOWEVER CITI BANK REFUSED TO E XTEND THE LOAN. IN THIS CASE THE APPELLANT COMPANY WAS WAITING FOR FUN DS FROM THE PRINCIPAL. AND THE PRINCIPLE WAS ABLE TO RAISE FUND ONLY AFTER 31 03.2013 BY ISSUE OF SERIES 3 PREFERRED STOCK. IT IS ALSO SE EN THAT UPON RAISING THE FUND FROM ISSUE OF STOCK THE PRINCIPAL REMITTED THE MONEY TO THE PAGE 5 OF 7 ITA NO.2478/BANG/2019 SUBSIDIARY AND OUT OF WHICH THE TAXES WERE PAID IMM EDIATELY AND IT RETURNS WERE FURNISHED. IT IS ALSO SEEN FROM THE B ANK A/C'S STATEMENT THAT THE MONEY RECEIVED FROM THE PRINCIPLE IS IMMED IATELY APPROPRIATED BY THE SUBSIDIARY DEPENDING ON THE NEEDS AND URGENC IES OF THE BUSINESS. 6.4 IN THE ABOVE CIRCUMSTANCES IT IS SEEN FROM THE SUBMISSION MADE, MATERIAL EVIDENCE PROVIDED AND DISCUSSION MADE THAT THE COMPANY HAD NO INTENTION OF NOT FILING THE RETURN OR PAYING THE TAXES DUE IN LIME. IT IS THUS EVIDENCE THAT THE COMPANY HAS A REASONABLE CAU SE FOR NOT PAYING THE TAXES DUE IN TIME AND FOR NON-FILING OF RETURN IN TIME WHICH WAS SUBSEQUENTLY COMPLIED WITH DELAY AND QUALIFIES FOR TAKING A LENIENT VIEW AND HAS A REASONABLE CAUSE FOR NON LEVY OF PENALTY U/S 271 F OF RS. 5000/-. 6.5 THEREFORE RESPECTFULLY FOLLOWING THE HON'BLE SU PREME COURT'S FINDINGS IN THE CASE ELL VS. KTC TYRES (INDIA) LTD 120141 50 TAXMANN.COM 2.32 (SC) AND THE HON'BLE HYDERABAD HCS DECISION IN THE CASE OF LEO EDIBLES & FATS LTD VS. TAX RECOVERY OFFICER (CENTRAL), HYDE RABAD [2018] 99 TAXMANN.COM 226 THE APPEAL OF THE APPELLANT IS ALLO WED. 16. THERE IS A CATEGORICAL FINDING RETURNED BY LD.C IT(A) THAT ASSESSEE WAS UNABLE TO GET LOAN FROM CITIBANK FOR M EETING THE EXPENSES AND CITIBANK ALSO REFUSED TO EXTEND THE LO AN. SUBSEQUENTLY ASSESSEE WAS WAITING FOR FUNDS FROM TH E PRINCIPLE WHICH WAS RECEIVED ONLY AFTER 31/03/2013 BY ISSUE O F SERIES OF 3 PREFERRED STOCK. IT HAS BEEN OBSERVED BY LD.CIT(A) THAT THE FUNDS HAVE BEEN RAISED BY ASSESSEE FROM ISSUE OF STOCK BY THE PRINCIPLE TO THE SUBSIDIARY, OUT OF WHICH THE TAXES WERE PAID IMMEDIATELY AND IT RETURNS WERE FURNISHED. 17. WE OBSERVE THAT LD.CIT(A) HAS CONSIDERED THE FI NANCIAL DIFFICULTIES FACED BY ASSESSEE IN A VERY PRACTICAL MANNER THEREBY DELETING THE PENALTY OF RS.5000/- LEVIED UNDER SECT ION 271F OF THE ACT. THIS VIEW IS ALSO SUPPORTED BY THE RATIO OF HONBLE SUPREME COURT IN CASE OF CIT VS KTC TIRES INDIA PVT LTD. (SUPRA) . UNDER SUCH CIRCUMSTANCES THE VIEW TAKEN BY LD.CIT(A) DO N OT CALL FOR ANY INTERFERENCE AND THE SAME IS UPHELD. PAGE 6 OF 7 ITA NO.2478/BANG/2019 ACCORDINGLY THE GROUNDS RAISED BY REVENUE STANDS DI SMISSED. IN THE RESULT APPEAL FILED BY REVENUE STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH APRIL, 2021 SD/- SD/- (B.R BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 16 TH APRIL, 2021. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE