Goyal Knitwears Pvt. Ltd., Ludhiana V. DCIT, CC-II, Ludhiana

ITA 29/CHANDI/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7499 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-05-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Opportunity of being heard; Reasonable cause
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.29/CHD/2018 (ASSESSMENT YEAR : 2009-10) GOYAL KNITWEARS PVT. LTD., VS. THE D.C.I.T., B-XXIX, 101-8A, SHERPUR CHOWK, CENTRAL CIRCLE-II, G.T. ROAD, LUDHIANA. LUDHIANA. PAN: AABCG0964F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARVEEN JINDAL, ADV. RESPONDENT BY : SHRI MANJIT SINGH, SR.DR DATE OF HEARING : 22.05.2018 DATE OF PRONOUNCEMENT : 11.07.2018 ORDER PER ANNAPURNA GUPTA, AM : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 5, LUDHIANA (HEREINAFTER REFERRED TO AS CIT(APPEALS )) DATED 4.10.2017 RELATING TO ASSESSMENT YEAR 2009-10. 2. THE SOLE ISSUE IN THE PRESENT APPEAL PERTAINS TO LEVY OF PENALTY U/S 221(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT),FOR NON-DEPOSIT OF SELF-ASSESSMENT TAX B EFORE FILING OF RETURN OF INCOME,. 3. BRIEFLY STATED, THE ASSESSEE HAD SHORT DEPOSITED TAX DUE ON THE INCOME RETURNED, BY RS.4,53,530/-, THE S AME REMAINING UNPAID EVEN UPTO FILING OF RETURN OF INCO ME. THE ASSESSING OFFICER THEREFORE TREATED THE ASSESSEE AS AN ASSESSEE IN DEFAULT AS PER THE PROVISIONS OF SECTIO N 140A(3) 2 OF THE ACT AND ACCORDINGLY, LEVIED PENALTY OF RS.4 ,53,530/- U/S 221(1) OF THE ACT. 4. THE SAME WAS UPHELD BY THE CIT(APPEALS) HOLDING THAT IN THE PRESENT CASE ALL THE CONDITIONS STIPULA TED UNDER THE ACT FOR LEVY OF PENALTY U/S 221 R.W.S 140 A(3) OF THE ACT, WERE FULFILLED. 5. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. 6. BEFORE US, THE LD. COUNSEL FOR ASSESSEE FIRST TO OK UP GROUND NO.4, WHICH READS AS UNDER: 4. THAT THE SHOW CAUSE NOTICE U/S 221(1) OF THE INCOME TAX ACT, 1961 STATED TO BE ISSUED ON 18/10/2013 FIXED FOR 06/11/2013 WAS NOT SERVED ON THE APPELLANT AND AS SUCH THE ASSESSEE WAS NOT GIVE N REASONABLE OPPORTUNITY OF BEING HEARD BEFORE THE LE VY OF PENALTY U/S 221(1) OF THE ACT AS THE DEFAULT IN DEPOSITING THE TAX U/S 140A OF THE ACT WAS DUE TO G OOD AND SUFFICIENT REASONS. 7. THE LD. COUNSEL FOR ASSESSEE STATED THAT IT HAD GOOD AND SUFFICIENT REASON FOR NOT DEPOSITING THE SELF ASSESSMENT TAX. IT WAS CONTENDED THAT THE ASSESSEE HAD INITIALLY INADVERTENTLY FAILED TO PAY THE SAME AND THE DEFAULT WENT UNDETECTED EVEN DURING ASSESSMENT PROCEEDINGS CONDUCTED U/S 143(3) OF THE ACT, WHEN ADDITION WAS MADE TO THE INCOME OF THE ASSESSEE AND DEMAND RAISED ON ACCOUNT OF THE SAME BY NOTICE U/S 156 OF THE ACT ON 23.12.2011. THE SAID DEMAND WAS DEPOS ITED ON 18.10.2012. EVEN THEN IT WAS POINTED OUT ,THE SELF ASSESSMENT TAX REMAINED UNDEPOSITED AND IT WAS ONLY 3 THEREAFTER WHEN PROCEEDINGS U/S 221 OF THE ACT WERE INITIATED AND ORDER PASSED LEVYING PENALTY ON 31.12 .2013 THAT THE ASSESSEE BECAME AWARE OF ITS FAULT AND DEP OSITED THE SELF ASSESSMENT TAX ON 17.2.2014. THE LD. COUN SEL FOR ASSESSEE CONTENDED THAT EVEN THE PENALTY ORDER WAS PASSED WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASS ESSEE BEING PASSED WITHIN TWO MONTHS OF ISSUE OF THE SHOW CAUSE NOTICE WHICH WAS ISSUED ON 6.11.2013 AND PENA LTY ORDER PASSED ON 31.12.2013. THEREFORE, AS SOON AS T HE ASSESSEE BECAME AWARE OF ITS DEFAULT ON RECEIPT OF PENALTY ORDER, THE SELF ASSESSMENT TAX WAS DEPOSITED. 8. THE LD. DR DID NOT CONTRADICT THE ABOVE FACTUAL CONTENTIONS OF THE ASSESSEE BUT STATED THAT IT WAS A FIT CASE FOR LEVY OF PENALTY U/S 221(1) OF THE ACT AS A LL CONDITIONS STATED THEREIN WERE FULFILLED IN THE PR ESENT CASE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE AGREE WITH THE LD.COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAD A REASONABLE CAUSE FOR NOT DEPOSITING THE SELF ASSESS MENT TAX WITH THE RETURN OF INCOME. THE EXPLANATION OF T HE ASSESSEE THAT IT WAS AN INADVERTENT OMISSION ON THE PART OF THE ASSESSEE IS A PLAUSIBLE AND REASONABLE ENOUG H EXPLANATION IN THE LIGHT OF THE FACTS DEMONSTRATED BY THE ASSESSEE AND WHICH HAVE NOT BEEN DISPUTED BY THE REVENUE. EVIDENTLY THE NON-PAYMENT OF SELF ASSESSME NT 4 TAX CONTINUED, REMAINING UNDETECTED EVEN AFTER SCRU TINY PROCEEDINGS U/S 143(3) WERE COMPLETED ON THE ASSESS EE AND WAS PAID IMMEDIATELY AFTER BEING DETECTED BY TH E REVENUE. IT IS DIFFICULT TO BELIEVE THAT THE ASSESS EE TOOK THE RISK ALL ALONG OF NOT PAYING THE TAXES EVEN WHE N SUBJECTED TO SCRUTINY BY THE DEPARTMENT, WHICH IS A HUGE RISK BY ANY STANDARDS SINCE THE CHANCES OF ESCAPING THE SCRUTINY AND NOT BEING DETECTED IS VERY SLIM, ALMOS T IMPOSSIBLE. THEREFORE THE EXPLANATION OF THE ASSESS EE THAT IT WAS AN INADVERTENT OMISSION, IS A PLAUSIBLE EXPLANATION, WHICH IS STRENGTHENED BY THE FACT THAT IMMEDIATELY ON DETECTION THE TAXES WERE PAID BY THE ASSESSEE. 10. IN VIEW OF THE ABOVE, SINCE THE DEFAULT OF NON DEPOSIT OF SELF ASSESSMENT TAX ,WAS AN INADVERTENT OMISSION ON THE PART OF THE ASSESSEE, THEY WERE GOOD AND SUFFIC IENT REASONS FOR THE DEFAULT. NO PENALTY U/S 221(1) OF T HE ACT WAS THEREFORE LEVIABLE AND THE SAME IS, DIRECTED TO BE DELETED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH JULY, 2018 *RATI* 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH