A.C.I.T.Circle-1, Nagpur V. M/s VASTU VISHWA DEVELOPERS P.LTD., Nagpur

ITA 317/NAG/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1802 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 18-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Reasonable cause

Judgement Text

1 ITA NO. 317/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 3 17 /NAG/2013 ASSESSMENT YEAR : 2010 - 11. ASSTT. COMMISSIONER OF INCOME - TAX, M/S VASTU VIS H WA DEVELOPERS CIRCLE - 1, NAGPUR. V/S. PVT. LTD., 201, 202, 203, GANESH CH AMBER DHANTOLI, NAGPUR. PAN AACCV 3324M APPELLANT. RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI MUKESH AGRAWAL. DATE OF HEARING : 8 - 07 - 2015 DATE OF PRONOUNCEMENT : 14 TH AUGUST, 2015 O R D E R PER SHAMIM YAHYA, A.M. . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 17 - 05 - 2013 AND PERTAINS TO ASSESSMENT YEAR 2010 - 11. THE GROUNDS OF APPEAL READ AS UNDER : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETI NG THE PENALTY LEVIED U/S 221 OF THE ACT AMOUNTING TO ` .22,01,890/ - ON THE GROUND THAT THERE WERE NO GOOD AND SUFFICIENT REASONS TO IMPOSE THE PENALTY U/S 221 OF THE I.T. ACT, 1961. 2 ITA NO. 317/NAG/2013 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE DECISION OF CI T(A) IS CONTRARY TO THE PROVISIONS OF SECTION 221 OF THE I.T. ACT, 1961. 3. THE CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE SELF ASSESSMENT TAX WAS PAID BY THE ASSESSEE AFTER ISSUE OF NOTICE U/S 221 DT. 2.02.2011. 2. IN THIS CASE THE ASSES SEE HAS FILED ITS RETURN OF INCOME ON 15 - 10 - 2010. THERE WAS A SELF ASSESSMENT TAX PAYABLE OF ` .22,01,890/ - AS PER THE RETURN OF INCOME FILED. THE ASSESSING OFFICER HAS ISSUED SHOW CAUSE NOTICE DATED 02 - 02 - 2011 TO THE ASSESSEE FOR NON - PAYMENT OF SELF ASSES SMENT TAX TREATING THE APPELLANT AS ASSESSEE IN DEFAULT. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION TILL THE DATE OF PENALTY ORDER. THOUGH THE ASSESSEE HAS PAID THE ENTIRE SELF - ASSESSMENT TAX OF ` .22,01,890 ON 15 - 04 - 2011, THE ASSESSING OFFICER HAS LEVIED THE PENALTY ON 20 - 04 - 2011 AS THE ASSESSEE HAS NOT RESPONDED TO SHOW CAUSE NOTICES AND THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD NO GOOD AND SUFFICIENT REASONS IN NON - PAYMENT OF SELF - ASSESSMENT TAX ON OR BEFORE 15 - 10 - 2010. 3. BEFORE THE LEARNED CIT(APPEALS) THE ASSESSEE CONTENDED THAT THE CHARTERED ACCOUNTANT WHO WAS HIS CONSULTANT HAD NOT GIVEN PROPER ADVISE. THE ASSESSEE WAS COMPLETELY RELYING ON THE ADVISE OF THE CONSULTANT. IT WAS SUBMITTED THAT IN T HE PAST THE ASSESSEE HAD NEVER DELAYED THE PAYMENT OF TAXES. IT WAS FURTHER SUBMITTED THAT FINANCIAL CONDITION OF THE ASSESSEE WAS VERY WEAK DUE TO FAILURE OF M IHAN PROJECT AND NO SIGNIFICAN T SALES WERE ACTUALLY E FFECTED AFTER MARCH, 2009. THAT THE ASSES SING OFFICER LEVIED THE PENALTY ON 20 - 04 - 2011 WITHOUT CONSIDERING THE FACT THAT THE SELF ASSESSMENT TAX OF ` .22,01,890 / - WAS PAID ON 15 - 04 - 2011 I.E. BEFORE THE DATE OF PENALTY ORDER. 3 ITA NO. 317/NAG/2013 4. CONSIDERING THE ABOVE, LEARNED CIT(APPEALS) WAS OF THE OPINION THAT THE ASSESSEE HAD A GOOD REASONABLE CAUSE. HE ACCEPTED THAT HIS EARSTWHILE REPRESENTATIVE HAD NOT COOPERATED. HE NOTED THAT IN THE PAST THE ASSESSEE HAD NEVER DEFAULTED. HE CONSIDERED THE FACT THAT WHEN THE NOTICE WAS GIVEN TO THE ASSESSEE ABOUT THE PENA LTY HE MADE EFFORTS TO CLEAR THE SELF ASSESSMENT TAX LIABILITY AT THE EARLIEST POSSIBLE OCCASION EVEN THOUGH THERE WERE FINANCIAL DIFFICULTIES. HENCE THE LEARNED CIT(APPEALS) DIRECTED THAT THE PENALTY OF ` .22,01,890 BE DELETED. 5. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE PENALTY IN THIS CASE HAS BEEN LEVIED FOR THE ASSESSEE BEING IN DEFAULT OF PAYMENT OF TAX UNDER SECTION 221 OF THE I.T. ACT. THE SAID SECTION AL SO PROVIDES THAT WHERE THE ASSESSEE PROVES TO THE SATISFACTION OF THE ASSESSING OFFICER THAT THE DEFAULT WAS FOR A GOOD AND SUFFICIENT REASON, NO PENALTY SHALL BE LEVIED UNDER THIS SECTION. NOW THE REASONABLE CAUSE SUBMITTED BY THE ASSESSEE IS THAT HE W AS RELYING ON THE ADVISE OF HIS CONSULTANT, A C.A. THE SAID C.A. DID NOT COOPERATE AND DID NOT GIVE THE NECESSARY ADVISE. THIS HA S BEEN SAID TO BE THE REASON FOR THE FAILURE OF THE ASSESSEE TO PAY THE TAX AS DEMANDED. IT HAS FURTHER BEEN SUBMITTED THAT WHE N THE ASSESSEE RECEIVED THE NOTICE IN THIS REGARD REGARDING THE PENALTY, IT IMMEDIATELY TOOK STEPS TO PAY THE TAX DEMAND. THIS WAS DONE PRIOR TO THE FRAMING OF PENALTY ORDER BY THE ASSESSING OFFICER. ON A QUERY FROM THE BENCH, LEARNED COUNSEL OF THE ASS ESSEE CLARIFIED THAT NO INTEREST HAS BEEN LEVIED BY THE ASSESSING OFFICER FOR THE DELAYED PAYMENT OF TAX IN THIS CASE. THE ASSESSING OFFICER HAS STRAIGHTAWAY LEVIED THE PENALTY. LEARNED COUNSEL HAS SUBMITTED THAT PENALTY LEVIED IS EXCESSIVE AND DISPROPORTI ONATE TO THE DEFAULT THAT THERE IS DELAY OF 5 - 6 MONTHS IN PAYMENT OF TAXES 4 ITA NO. 317/NAG/2013 FOR WHICH INTEREST AT THE RATE OF 12% WORKS OUT TO APPROXIMATELY ` .1,32,000/ - LEARNED COUNSEL HAD FURTHER RELIED UPON THE FOLLOWING CASE LAWS: I) HINDUSTAN STEEL LTD. V/S. STATE OF ORISSA (SC) 83 ITR 26 II) VIT V/S. INDO AAMERICAN ELECTRICALS LTD. (CAL) 155 ITR 63. III) RAMCHANDRA PESTICIDES V/S. CIT (KAR) 285 ITR 45. IV) ADDL. CIT V/S. SARVAYA TEXTILES LTD. (AP) 137 ITR 369. THE LEARNED COUNSEL IN THIS REGARD HAS PLEADED THAT TH E PENALTY IN THIS REGARD SHOULD HAVE BEEN RESTRICTED TO THE INTEREST INVOLVED. 7. UPON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT IN THIS CASE THE ASSESSING OFFICER HAS FAILED TO LEVY INTEREST W HICH IS MANDATORY AS HELD BY THE HONBLE APEX COURT IN THE CASE OF ANJUM M.H. GHASWALA GHASWALA 252 ITR 01 . HOWEVER, THE ASSESSING OFFICER HAS LEVIED PENALTY UNDER SECTION 221 OF THE I.T. ACT. IN OUR CONSIDERED OPINION, THOUGH ON FACTS AND CIRCUMSTANCES O F THE CASE, THE ASSESSEE DESERVES SOME PENALTY FOR THE FAILURE OF PAYMENT OF SELF ASSESSED TAX A S THE REASON ATTRIBUTED IS THE LACK OF ADVISE FROM THE CONSULTANT FOR WHICH THERE IS NO COGENT EVIDENCE ON RECORD. HOWEVER, WE FIND THAT THE QUANTUM OF PENALTY LEVIED BY THE ASSESSING OFFICER IS EQUAL TO THE TOTAL AMOUNT OF TAX DUE. THIS IN OUR OPINION IS DISPROPORTIONATE TO DEFAULT. WE NOTE THAT THE ASSESSEE HAS TAKEN EFFORTS TO CLEAR THE TAX DUE BEFORE THE FRAMING OF PENALTY ORDER. HOWEVER , WE ALSO NOTE THAT T HE ASSESSEE HAS NOT PAID THE INTEREST DUE ON DELAYED PAYMENT. SECTION 221 PROVIDES THAT IN CASE OF DEFAULT IN PAYMENT OF SUCH TAXES THE ASSESSEE SHALL BE LIABLE BY WAY OF PENALTY TO SUCH AMOUNT AS THE ASSESSING OFFICER MAY DIRECT AND IN THE CASE OF CONTINU ING DEFAULT, SUCH FURTHER AMOUNT OR AMOUNTS AS THE ASSESSING OFFICER MAY FROM TIME TO TIME DIRECT, SO, HOWEVER, THE TOTAL AMOUNT OF PENALTY DOES NOT EXCEED THE AMOUNT OF TAX IN ARREARS. 5 ITA NO. 317/NAG/2013 IN THIS CASE WE NOTE THAT THE SHOW CAUSE NOTICE WAS GIVEN TO THE ASSES SEE ON 02 - 02 - 2011. THE ASSESSEE PAID THE ENTIRE AMOUNT OF TAX DUE ON 15 - 04 - 2011. THE ASSESSING OFFICER HAS FRAMED THE PENALTY ORDER ON 20 - 04 - 2011. THE ASSESSING OFFICER HAS MADE NO APPLICATION OF MIND REGARDING THE QUANTUM OF PENALTY LEVIABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. HE HAS MECHANICALLY LEVIED THE PENALTY WHICH IS EQUAL TO THE ENTIRE AMOUNT OF TAX IN ARREARS WHICH IS MAXIMUM PERMISSIBLE IN THIS SECTION. IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE, INTEREST OF JUS TICE WILL BE SERVED IF THE PENALTY IN THIS REGARD IS RESTRICTED TO THE AMOUNT OF INTEREST THAT WAS PAYABLE BY THE ASSESSEE ON THE DELA Y MADE IN PAYMENT OF TAX. ACCORDINGLY WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO MAKE THE RECOMPUTATION AS PER OUR DIRECTION AS ABOVE. 8. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS ALLOWED FOR STATISTICAL PURP O SES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF AUGUST, 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMB ER. NAGPUR, DATED: 14 TH AUGUST, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. 6 ITA NO. 317/NAG/2013 TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR