ITO (TDS) 2(3), MUMBAI V. MIDAS EVENTS P.LTD, MUMBAI

ITA 3171/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2371 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAJ KUMAR SONI
• Keywords: Reasonable cause
• Section: 273B; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI BEFORE SHRI JOGINDER SINGH , JM AND SHRI RAJESH KU MAR, AM I.T.A. NO. 3171/MUM/2014. (ASSESSMENT YEAR: 2009-10) ITO(TDS)-2(3) R NO. 708, 7 TH FLOOR, SMT. K.G. MITTAL AYURVEDIC HOSPITAL, BUILDING, CHARNI ROAD, MUMBAI : 400 002. VS. M/S MIDAS EVENTS PRIVATE LIMITED 1/22, SVP NAGAR, MHADA, VERSOVA, ANDHERI(WEST) MUMBAI 400 053. PAN/GIR NO.: AADCM8984F ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI VIJAJ KUMAR SONI RESPONDENT BY : NONE DATE OF HEARING : 28.10.2015 DATE OF PRONOUNCEMENT : 20.11.2015 O R D E R PER RAJESH KUMAR. THIS IS AN APPEAL BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)- 13, MUMBAI ( CIT(A) FOR SHORT) DATED 03.03.2014 FOR THE ASSESSMENT YEAR (A.Y.) 2009-10 T HE GROUNDS OF APPEALS RAISED BY THE ASSESSEE ARE AS UNDER:- (I) 'THE LD. CIT(A) HAS ERRED IN FACTS AND CIRCUMS TANCES OF THE CASE AND IN LAW IN DELETING THE PENALTY U/S.271C OF THE I.T. AC T, WITHOUT PROPERLY APPRECIATING THE FACTUAL & LEGAL MATRIX OF THE CASE , IN WHICH THE AO HAS CLEARLY BROUGHT OUT THAT THE ASSESSEE HAS FAILED T O 'DEDUCT TAXES' AND CONSEQUENTLY VIOLATED PROVISIONS OF CLAUSE (A) OF S ECTION 271C OF THE ACT'. 2 ITA NO.3171 /MUM/2014 ASSESSMENT YEAR:- 2009-10 (II) 'THE LD. CIT(A) HAS ERRED IN FACTS AND CIRCUM STANCES OF THE CASE AND IN LAW IN DELETING THE PENALTY U/S.271C OF THE I.T. AC T AND DELETED THE PENALTY ONLY ON BASIS OF PAYMENT OF TAX WITHOUT APP RECIATING THE FACT THAT ASSESSEE HAD FAILED TO 'DEDUCT' TAXES' AND CONSEQUE NTLY VIOLATED PROVISIONS OF CLAUSE (A) OF SECTION 271 C OF THE AC T'. (III) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE PENALTY WI THOUT GRANTING OPPORTUNITY TO THE AO TO REBUT THE FRESH EVIDENCE A DMITTED BY THE CIT(A) DURING THE COURSE OF APPEAL PROCEEDINGS IN VIOLATIO N OF THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962 '. 2. THE COMMON ISSUE RAISED IN THE GROUND NO. 1 & 2 RELATES TO THE DELETION OF PENALTY OF RS.15,42,553/- U/S. 271 C OF THE ACT BY THE LD CIT(A). 3. AT THE OUTSET WE WOULD LIKE TO STATE THAT ON T HE APPOINTED DATE OF HEARING NEITHER THE ASSESSEEE NOR ITS AUTHORIZED REPRESENTA TIVE APPEARED TO ATTEND THE HEARING DESPITE THE NOTICE THROUGH RPAD. THEREFORE THE APP EAL IS BEING DISPOSED OFF BY HEARING THE LR DR ON MERITS. 4. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY U/ S 133 A OF THE ACT WAS CONDUCTED ON THE ASSESSEE ON 25.02.2009 BY THE ITO(TDS)- 2(3) MUMBAI AND DURING THE COURSE OF SURVEY IT WAS FOUND THAT THE ASSESSEE WAS NOT DEDUCTING THE DEPOSITING TDS AS PER THE PROVISIONS OF THE ACT AND SHORT FALL WAS WORKED OUT AT RS. RS.15,42,553/- BY PASSING THE ORDER U/S 201(1)/201(IA) OF THE ACT VI DE ORDER DATED 18.11.2009 FOR THE FINANCIAL YEAR 2008-09. THE LD. ASSESSING OFFICER I NITIATED PENALTY PROCEEDINGS U/S 271C R.W.S. SEC 274 OF THE ACT AND IMPOSED A PE NALTY OF RS.15,42,553/- EQUAL TO THE AMOUNT OF DEFAULT OF TDS COMMITTED BY THE ASSES SEE AS HELD BY THE ASSESSING OFFICER VIDE ORDER DATED 18.11.2009 PASSED U/S 201( 1)/201(1A) OF THE ACT. IT IS PERTINENT TO NOTE THAT THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER DESPITE 3 ITA NO.3171 /MUM/2014 ASSESSMENT YEAR:- 2009-10 VARIOUS OPPORTUNITIES ALLOWED BY THE AO BEFORE IMP OSING PENALTY U/S 271C OF THE ACT. 5. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). THE LD. CIT (A) DELETED THE PENALTY U/S. 271C OF RS. 15,42,553/- ON THE GROUNDS THAT THE ASSESSEE HAD PA ID THE AMOUNT OF TDS OF RS.15,42,553 U/S 201(1) ALONG WITH THE INTEREST OF RS.2,30,469 U/S 201(1A) OF THE ACT BY CONSIDERING THE ASSESSEES EXPLANATION THAT IT WAS UNDER HUGE FINANCIAL STRAIN AND IMMEDIATELY UPON THE IMPROVEMENT OF FINANCIAL HEALT H OF THE ASSESSEE IT DULY PAID AND CLEARED ITS DEFAULT BY AND THE CIRCUMSTANCES U NDER WHICH THE DEFAULT HAD TAKEN PLACE WERE BEYOND THE CONTROL OF THE ASSESSEE CONST ITUTING REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT. 6. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS PASSING THOUGH THE VERY DIFFICULT TIMES AS FINANCE WERE ALMOST DEP LETED DUE TO THE ADVERSE CONDITIONS IN THE BUSINESS AND IT WAS ON THE VERGE OF CLOSING DOWN AND THEREFORE, THE TDS DEDUCTED COULD NOT BE DEPOSITED OR SHORT DEPOSITE D. THE LD. COUNSEL FURTHER SUBMITED THAT THE MOVEMENT THE FINANCIAL POSITION OF THE ASSESSEE IMPROVED IT IMMEDIATELY DEPOSITED THE AMOUNT OF OUTSTANDING TDS OF RS.15,42,553/- AND ALSO INTEREST THEREON OF RS.2,30,469/-. THE LD. COUNSE L THEREFORE, ARGUED THAT THE ASSESSEE HAS NO MONEY AND THE DEFAULT IN THE PAYMENT OF TD S HAD TAKEN PLACE PURELY FOR FOR THE REASONS WHICH WERE BEUOND THE CONTROL OF THE AS SESSEE I.E NON-AVAILABILITY OF THE FUNDS WITH THE ASSESSEE.HE, THEREFORE, SUBMITTED T HE ASSESSEE COULD NOT BE HELD TO HAVE KNOWING COMMITTED THE DEFAULT AS THE ATTENDING CIRCUMSTANCES WERE OUT OF CONTROL OF THE ASSESSEE AND THUS THERE EXISTED A R EASONABLE CAUSE AS PROVIDED IN SEC. 273B OF THE ACT AND THEREFORE PENALTY U/S 271C WAS NOT IMPOSABLE ON THE ASSESSEE AND CIT(A) HAD RIGHTLY DONE SO BY DELETING THE PENA LTY. THE PROVISIONS OF SECTION 4 ITA NO.3171 /MUM/2014 ASSESSMENT YEAR:- 2009-10 273B CLEARLY PROVIDED THAT NO PENALTY SHALL BE I MPOSED ON THE PERSON IF SUCH WAS PREVENTED BY REASONS AND CIRCUMSTANCES UNDER WHIC H FOR PERSON OF ORDINARY PRUDENCE WOULD HAVE ACTED IN THE SAME MANNER . THE LD DR ON THE OTHER HAND SUBMITTED THAT THE ORDER OF ASSESSING OFFICER KIND LY BE UPHELD AND THAT OF CIT(A) REVERSED IN VIEW OF THE FACT THAT THE ASSESSEE COM MITTED DEFAULT IN THE PAYMENT OF TDS UNDER THE ACT. 7.. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED MATERIALS ON RECORDS. WE FIND THAT THE ASSESSEE HAD COMMITTED DEFAULT BY SHORT DEDUCTION AND DEPOSIT OF TDS AS OBSERVED BY THE ASSESSING OFFICER, DURING T HE COURSE OF SURVEY OF THE EXTENT OF RS. 15,42,553/- WHICH WAS SUBSEQUENTLY DEPOSITE D ALONG WITH THE INTEREST BY THE ASSESSEE. WE NOTE THAT THE LD. CIT(A) DELETED THE P ENALTY ON THE GROUND THAT THE ASSESSEE HAS DEPOSITED THE DUE AMOUNT TDS ALONG WIT H INTEREST AND ALSO HELD THAT THE PAUCITY OF FUNDS WITH THE ASSESSEE WAS THE MAIN AND REASONABLE CAUSE FOR SUCH FAILURE. WE HAVE CONSIDERED THE VARIOUS CIRCUMSTANCES UNDER WHICH THE ASSESSEE COMMITTED DEFAULT IN THE PAYMENT OF TDS WAS A VIRTUAL CLOSER OF BUSINESS OF THE ASSESSEE DUE TO FINANCIAL STRAIN WHICH WAS THE MAIN REASON FOR NO N DEPOSIT IN TDS WITH THE GOVERNMENT EXCHEQUER. WE ALSO NOTE THAT TDS WAS DEP OSITED IMMEDIATELY BY THE ASSESSEE IMMEDIATELY UPON IMPROVEMENT IN THE FINAN CIAL POSITION OF THE ASSESSEE ALONG WITH THE INTEREST. UNDER THESE CIRCUMSTANCES , WE ARE OF THE OPINION THAT THE ORDER OF CIT (A) DOES NOT REQUIRE ANY INTERFERENCE AND THEREFORE DESERVES TO BE UPHELD BY DISMISSING THE APPEAL OF THE REVENUE. 5 ITA NO.3171 /MUM/2014 ASSESSMENT YEAR:- 2009-10 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON NOV.20 TH , 2015 SD/- SD/- ( JOGINDER SINGH) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; !' DATED : 20.11.2015 PS;- POOJA K. # COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &'$% / THE RESPONDENT 3. ( ( ) * + / THE CIT(A) 4. ( ( ) / CIT - CONCERNED 5. , -.&'/0 1 ( 2/0 1 / DR, ITAT, MUMBAI 6. .345 # GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) !, / ITAT, MUMBAI