M/s. Kapsons Industries Limited, Jalandhar V. The Income-tax Officer, Jalandhar

ITA 262/ASR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63524 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K VATTA
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.262, 263 & 264 (ASR)/2012 ASSESSMENT YEARS:2006-07, 2007-08 & 2008-09 PAN :AAACK9887G M/S. KAPSONS INDUSTRIES LIMITED VS. THE INCOME TAX OFFICER, G.T.ROAD, JALANDHAR. (TDS)-1, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.S.K.VATTA, CA RESPONDENT BY:SH.TARSEM LAL, DR DATE OF HEARING:03/10/2012 DATE OF PRONOUNCEMENT:08/10/2012 ORDER PER BENCH ; THESE THREE APPEALS OF THE ASSESSEE ARISE FROM THE COMMON ORDER OF THE CIT(A), JALANDHAR, DATED 23.03.2012 FOR THE ASS ESSMENT YEARS 2006-07, 2007-08 & 2008-09 RESPECTIVELY. 2. THE ASSESSEE HAS RAISED FOLLOWING COMMON GROUNDS OF APPEAL AS UNDER IN ALL THE APPEALS: 1. THAT THE LD. CIT(A) HAVE ERRED BOTH ON FACTS AN D IN LAW TO HAVE ITA NOS 262 TO 264(ASR)/2012 2 SUSTAINED IMPOSITION OF PENALTY U/S 221(1) OF THE I NCOME TAX ACT AS HE HAS FAILED TO CONSIDER AND APPRECIATE THE FOLLOW ING IN RIGHT PERSPECTIVE AND MISDIRECTED HIMSELF, AS SHALL BE EV IDENT FROM THE FOLLOWINGS: I) THAT SECTION 221(2) SPECIFICALLY PROVIDED THAT AS A RESULT OF FINAL ORDER THE AMOUNT OF TAX, WITH RESPECT TO T HE DEFAULT IN THE PAYMENT OF WHICH THE PENALTY WAS LEV IED, HAS BEEN WHOLLY REDUCED, THE PENALTY SHALL BE CANCE LLED AND THE AMOUNT OF PENALTY PAID SHALL BE REFUNDED; A ND II) WHEREAS THERE WAS NO DEFAULT IN PAYMENT OF TAXES AS THE DEDUCTEE ASSESSEES HAD PAID ENTIRE TAXES DUE ON THE IR INCOME ON WHICH FACT THE RELIEF HAS BEEN ALLOWED BY CIT(APPEALS) HIMSELF VIDE HIS ORDERS DATED 20.06.20 09. III) THAT SECTION 221(2) ENVISAGED THE PAYMENT OF TAXES AND NOT INTEREST; IV) THAT THE WORD TAX HAS BEEN DEFINED U/S 2(43) OF THE ACT AND THE WORD INTEREST HAS BEEN SEPARATELY BEEN DE FINED U/S 2(28) OF THE ACT AND SUCH INTEREST INCLUDES THE CLAIM OR OTHER SIMILAR RIGHTFUL OBLIGATION; V) THAT THE LEGISLATOR INTENT IN THE WORDING OF SECTIO N 221(2) WHERE THE EXPRESSION AMOUNT OF TAX ALONE PERSE HA S BEEN USED AND NOT THE WORDS INTEREST OR OUTSTAN DING DEMAND AND IN VIEW OF THE FACT THAT PAYMENT OF TAX HAS BEEN WHOLLY REDUCED BY THE FINAL ORDER, THEREFORE, THE AMOUNT OF PENALTY SO IMPOSED SHOULD HAVE BEEN CANCELLED BY VIRTUE OF THE SPECIFIC PROVISION OF TH E SECTION 221(2) ITSELF. VI) THAT INTEREST U/S 201(1)/201(IA) WAS A CONSEQUENTIA L TO THE TDS TAX IF ANY, BECOMING DUE AND AS THE ASSESSE E HAD CHALLENGED THE VERY DEMAND OF TAX DEDUCTED AT SOURC E ON THE PREMISE THAT THE DEDUCTEE ASSESSEES HAVE HAD TH E ENTIRE TAX DUE WHICH INCLUDES THE INCOME FROM ASSES SEE COMPANY FOLLOWING THE DECISION OF THE APEX COURT I N THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD. VIDE APP EAL (WRIT) 3765 OF 2007 VIDE THE ORDER DATED 16.08.2007 AND SPECIFIC PROVISIONS OF CBDT CIRCULAR ITO 2752001/95 IT(3) DATED 29.1.1997 AND WORTHY CIT(A) HAVING ALLOWED THE TOTAL RELIEF IN RESPECT OF SAID TAX MAD E DUE FROM THE ASSESSEE, THEREFORE, IN VIEW OF THE PROVIS IONS OF ITA NOS 262 TO 264(ASR)/2012 3 SECTION 221(2) OF THE ACT, THE ORDERS TO SUSTAIN PE NALTY U/S 221(1) WAS BAD IN LAW. 2. THAT THE WORTHY CIT(A) HAVE FAILED TO CONSIDER T HE SPECIFIC PROVISION AND STIPULATION AND INTENT OF LA W U/S 221(2) OF THE ACT AND AS SUCH HIS ORDERS ARE CONTRARY TO T HE VERY SPIRIT OF SECTION 221(2) OF THE ACT AND PERVERSE IN LAW. 3. THAT THE ASSESSEE CRAVES AND PRAYS TO ADD, MODIF Y, DELETE ANY GROUNDS OF APPEAL DURING THE COURSE OF APPELLAT E PROCEEDINGS. 3. THE BRIEF FACTS IN ALL THE APPEALS OF THE ASSESS EE ARE THAT AN INSPECTION U/S 133A OF THE ACT WAS CARRIED OUT AT THE OFFICE O F THE ASSESSEE COMPANY ON 24.02.2009 TO VERIFY THE COMPLIANCE OF THE ASSESSEE COMPANY WITH THE PROVISIONS OF THE TDS. DURING THE COURSE OF INSPECT ION, IT WAS FOUND THAT THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE U/S 1 94A OUT OF THE PAYMENT OF INTEREST TO CERTAIN PERSONS. THE ASSESSEE WAS, CONS EQUENTLY, HELD TO BE AN ASSESSEE IN DEFAULT AND THE AO PASSED ORDERS ON 19/ 03/2009 RAISING DEMANDS U/S 201(1)/201(IA) OF THE ACT. THESE NOTICES OF DEM AND WERE SERVED ON THE ASSESSEE ON 20.3.2009. HOWEVER, THE ASSESSEE COMPAN Y DID NOT PAY THE TAX DEMANDED BY THE DUE DATE OF 20.04.2009. HENCE, THE AO ISSUED NOTICES TO THE ASSESSEE COMPANY ON 28.04.2009 ASKING IT TO SHO W CAUSE AS TO WHY PENALTY U/S 221(1) OF THE ACT SHOULD NOT BE IMPOSED UPON IT FOR NON-PAYMENT OF THE TAX DEMANDED. THE ASSESSEE COMPANY SUBMITTED IN ITS REPLY DATED 8/5/2009 THAT NO PAYMENT OF TAX WAS OUTSTANDING AG AINST IT SINCE THE SAID TAX ITA NOS 262 TO 264(ASR)/2012 4 HAD ALREADY BEEN PAID BY THE DEDUCTEE ASSESSES AND THAT, THEREFORE, THE DEMAND COULD NOT BE ENFORCED UPON THE DEDUCTOR. IT WAS CONTENDED THAT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF HINDUSTAN COCA-COLA BEVERAGES PRIVATE LIMITED VS. CIT, THE D EMAND COULD NOT BE RECOVERED FROM THE ASSESSEE COMPANY. IT WAS ALSO SU BMITTED THAT THE ASSESSEE HAD FILED APPEALS BEFORE THE LD. CIT(A) WH ICH WERE PENDING. THE AO WAS NOT SATISFIED WITH THE SUBMISSIONS AND NOTIC ED THAT THE ARGUMENTS OF THE ASSESSEE COMPANY WERE BASED ON THE ASSUMPTION T HAT THE DEDUCTEE COMPANIES HAD ALREADY PAID THE TAX NOW DEMANDED FRO M THE ASSESSEE AND THAT THIS FACT WAS ALREADY ON RECORD, WHEREAS IT WA S NOT SO AT THE TIME OF INSPECTION OR DURING THE SUBSEQUENT PROCEEDINGS BE FORE THE ITO(TDS). THE AO NOTED THAT THIS CLAIM HAD NOT BEEN MADE EVEN IN THE STATEMENT OF PR RECORDED OR IN THE SUBSEQUENT PROCEEDINGS IN HIS OF FICE. THE CONTENTION OF THE ASSESSEE COMPANY AT THAT STAGE HAD BEEN THAT IT WAS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE U/S 194A IN RESPECT OF THE PAYMENTS OF INTEREST UNDER CONSIDERATION. HE REJECTED, THEREFORE, THE CO NTENTION THAT THE FACT OF THE DEMAND HAVING BEEN PAID BY THE DEDUCTEES WAS ALREAD Y ON RECORD. THE AO HELD THAT AT THE STAGE OF THE REPLY DATED 8/5/2009 ALSO, THE CLAIM THAT THE DEDUCTEES HAD PAID THE TAX WAS NOT SUBSTANTIATED WI TH ANY EVIDENCE. HENCE, THE AO REJECTED THE SUBMISSIONS OF THE ASSESSEE COM PANY AND IMPOSED A ITA NOS 262 TO 264(ASR)/2012 5 PENALTY OF RS.5000/- IN RESPECT OF THE DEFAULT FOR EACH OF THE ASSESSMENT YEARS. 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER VIDE PARAS 5, 6 & 7 OF HIS ORDER. 5. THE LD. COUNSEL FOR THE ASSESSEE, SH. S.K. VATTA , CA, RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND ARGUED T HAT THERE WAS NO DEFAULT IN PAYMENT OF TAX AND PENALTY U/S 271(1)(C) WAS NOT EXIGIBLE. THE LD. CIT(A) HAS ALLOWED THE RELIEF IN THE QUANTUM PROCEE DINGS. 6. THE LD. DR, SH. TARSEM LAL, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE RE IS NO DISPUTE TO THE FACT IN ALL THE APPEALS OF THE ASSESSEE, THE ASSESS EE HAD NOT DEDUCTED TAX AT SOURCE FROM THE INTEREST PAID BY IT TO THE COMPANY AND TO NBFCS. THE ASSESSEE HAD NOT CLAIMED DURING THE COURSE OF INSP ECTION CARRIED ON BY THE AO ON 24.02.2009 AND THE PASSING OF THE ORDER U/S 2 01(1)/201(IA) ON 19.03.2009 THAT TAX HAD ALREADY BEEN PAID BY THE DE DUCTEES. THE AMOUNT PAYABLE BY THE ASSESSEE HAD BECOME DUE TO BE PAID ON 20.04.2009, BUT NO PETITION FOR STAY ON THE RECOVERY OF THE DEMANDS HA D BEEN FILED BEFORE THE AO WITHIN THIS PERIOD. THEREFORE, THE ASSESSEE WAS DEEMED TO BE DEFAULT OF ITA NOS 262 TO 264(ASR)/2012 6 THE DEMAND SO RAISED. IT WAS ONLY WHEN THE AO ISSUE D A NOTICE FOR LEVY OF PENALTY FOR NON-PAYMENT OF THE DEMAND THE ASSESSEE CLAIMED THAT THE TAX HAD ALREADY BEEN PAID BY THE DEDUCTEES. HOWEVER, NO EVIDENCE IN THIS REGARD WAS FURNISHED BEFORE THE A.O. NO CASE OF FINANCIAL HARDSHIP IN PAYING THE DEMAND HAS BEEN RAISED BY THE ASSESSEE. WITHOUT SH OWING WITH EVIDENCE THAT THE DEDUCTEES HAD ALREADY PAID THE TAX, THE LD . CIT(A) HAD RIGHTLY CONFIRMED THE ACTION OF THE AO. THE INTEREST IS ALS O PAYABLE BY THE ASSESSEE UNDER SECTION 201(IA) WHICH WOULD BE PAYABLE BY THE ASSESSEE EVEN AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF HINDUSTAN COCA- COLA BEVERAGES LTD. VS. CIT REPORTED IN 293 ITR 226 (SC) BECAUSE THERE HAS BEEN A DELAY IN PAYMENT OF TAXES EVEN BY THE DEDUCT EE. THE ASSESSEE HAS NOT DENIED THE LIABILITY TO PAY INTEREST ON ACCOUNT OF DELAYED DEPOSITS OF TAX BY THE PAYEES. SUCH INTEREST WORKS OUT TO RS.42,927/- FOR THE ASSESSMENT YEAR 2006-07, RS.32,664/- FOR THE ASSESSMENT YEAR 2007-0 8, RS.36,196 FOR THE ASSESSMENT YEAR 2008-09. THEREFORE ARGUMENTS MADE B Y THE LD. COUNSEL FOR THE ASSESSEE THAT NO PENALTY IS IMPOSABLE AND MERE PAYMENT OF TAX AFTER THE DUE DATE WILL NOT ABSOLVE THE DEFAULT FOR WHICH TH E PENALTY IS IMPOSED. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. THUS, ALL THE GROUNDS IN ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. ITA NOS 262 TO 264(ASR)/2012 7 8. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE IN ITA NOS.262 TO 264(ASR)/2012 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH OCTOBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8TH OCTOBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. KAPSONS INDUSTRIES LTD; JALANDHAR . 2. THE ITO (TDS)-1, JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JLR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.