DCIT 8(2), MUMBAI V. PRINCE SWR SYSTEM P.LTD, MUMBAI

ITA 3240/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55535 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-10-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 26-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALEXANDER CHANDY
• Assessee Lawyers: MRUGAKSHI K JOSHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A.NO.3240/MUM/2010 A.Y 2008-09 DY. COMMISSIONER OF I.T. 8(2), MUMBAI. VS. M/S PRINCE SWR SYSTEM PVT. LTD., MAROL, MIDC, ANDHERI (E), MUMBAI 400 072. PAN: AAACP 6281 I (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ALEXANDER CHANDY. SR. DR. RESPONDENT BY : MS.MRUGAKSHI K. JOSHI. DATE OF HEARING: 04-10-2011 DATE OF PRONOUNCEMENT: 14-10-2011 O R D E R PER T.R.SOOD, AM: IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING PENALTY LEVIED OF RS.3,39, 265/- US./221(1) R.W.S. 140A(3) FOR DELAY IN PAYMENT OF S.A. TAX WIT HOUT APPRECIATING THE FACTS OF THE CASE. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT ASS ESSEE FILED RETURN DECLARING AN INCOME OF RS.4,28,59,122/- AND AFTER T AKING CREDIT FOR TDS AND ADVANCE THE BALANCE AMOUNT OF RS.67,85,306/- WA S FOUND TO BE PAYABLE SELF ASSESSMENT TAX. HOWEVER, THIS AMOUNT W AS NOT PAID AND ASSESSEE WAS TREATED AS AN ASSESSEE IN DEFAULT AS PER THE PROVISIONS OF SEC.140A(3). A SHOW CAUSE NOTICE FOR LEVY OF PEN ALTY U/S.221(1) WAS ISSUED. IN RESPONSE TO THE NOTICE, ASSESSEE PAID THE ENTIRE TAX. ITA NO.3240 OF 2010 2 O NOTED THAT SINCE ASSESSEE HAS PAID THE TAX LATE, THEREFORE, PENALTY @ 5% OF THE TAX PAYABLE AMOUNTING TO RS.3,39,265/- WA S LEVIED. 3. BEFORE THE LD. CIT(A) IT WAS MAINLY SUBMITTED TH AT DELAY IN PAYMENT WAS MAINLY DUE TO SHORTAGE OF FUNDS. THE RE AL ESTATE INDUSTRY SUFFERED HEAVY LOSSES AND LOW SALES AND THE COMPANY S CUSTOMERS WERE ONLY BUILDERS WHICH CREATED TREMENDOUS SHORTAG E OF FUNDS. IN VIEW OF THIS SHORTAGE OF FUNDS, THE SELF ASSESSMENT TAX COULD NOT BE PAID. IN FACT, ASSESSEE COULD BORROW SOME MONEY FRO M THE BANK AS AN ADDITIONAL ADHOC FACILITY FROM WHICH SUCH TAX WAS P AID. COPY OF THE BANK STATEMENT WAS ALSO FURNISHED. COPY OF THE LETT ER FROM THE BANK REJECTING THE BUYERS CREDIT FOR ARRANGEMENT OF IMM EDIATE FUNDS WAS ALSO FILED. IT WAS ALSO SUBMITTED THAT IT IS NOT CO RRECT THAT ASSESSEE HAD NOT RESPONDED TO THE SHOW CAUSE NOTICE OF THE AO. R ELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS, A) ADDL. CIT VS. FREE WHEELS INDIA LTD. 137 ITR 378 (D EL) B) CIT VS. MYSORE FERTILISER CO. 145 ITR 91 (MAD) C) CIT VS. CHEMBARA PEAK ESTATES LTD. 183 ITR 471 (KER ) & D) CIT VS. JAIPUR ELECTRO P. LTD. 183 ITR 476 (RAJ) FOR THE PROPOSITION THAT PAUCITY OF FUNDS IS A GOOD REASON FOR EXPLAINING THE INABILITY TO PAY THE TAX. THE LD. CIT(A) ON THE BASIS OF THE ABOVE SUBMISSIONS OBSERVED THAT THERE WAS ONLY A DELAY OF 59 DAYS FOR PAYMENT OF SELF ASSESSMENT TAX WHICH HAS BEEN EXPLA INED DUE TO FINANCIAL DIFFICULTY. THEREFORE, THERE WAS NO WILLF UL INTENT TO DELAY THE PAYMENT. ACCORDINGLY, THE PENALTY WAS DELETED. ITA NO.3240 OF 2010 3 4. BEFORE US, LD. DR SUBMITTED THAT DETAILS OF BANK STATEMENT ETC. WERE NOT FILED BEFORE THE AO. THEREFORE, DELETION O F PENALTY WAS NOT JUSTIFIED. 5. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE S TRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y, WE ARE OF THE OPINION THAT THE LD. CIT(A) HAS CORRECTLY ADJUDICAT ED THE ISSUE. THERE IS A DELAY OF ONLY 59 DAYS FOR PAYMENT OF TAXES AND IM MEDIATELY AFTER THE ISSUE OF NOTICE TAXES WERE PAID, WHICH CLEARLY SHOW S BONA FIDE OF THE ASSESSEE. MOREOVER, IN THE DECISIONS RELIED ON BEFO RE THE LD. CIT(A) IT HAS BEEN CLEARLY HELD THAT INSUFFICIENCY OF FUNDS I S A GOOD REASON FOR EXPLAINING THE INABILITY TO PAY THE TAX. THEREFORE, IN OUR VIEW, LD. CIT(A) HAS CORRECTLY DELETED THE PENALTY AND WE CON FIRM HIS ORDER. 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 4/10/2011. SD/- SD/- (VIJAY PAL RAO) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 14/10/2011. P/-* ITA NO.3240 OF 2010 4