DCIT, Ludhiana V. M/s Stelco Strips Ltd., Ludhiana

ITA 33/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5427 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-04-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 11-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS.SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.33 /CHD/2011 (ASSESSMENT YEAR : 2008-09) THE D.C.I.T., VS. M/S STELCO STRIPS LTD. CENTRAL CIRCLE II, C-122, PHASE V, LUDHIANA. LUDHIANA. PAN: AACCS5084K (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. SARITA KUMARI, DR RESPONDENT BY : SHRI ASHWANI KUMAR O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (A), DATED 15.10.2010 RE LATING TO ASSESSMENT YEAR 2008-09 AGAINST THE ORDER PASSED U/ S 221 R.W.S. 140A(3) OF THE INCOME-TAX ACT. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER : 1. THE LD. CIT (A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE AO TO RESTRICT T HE PENALTY U/S 221(1) R..W.S. 140A(3) OF THE ACT ON TH E AMOUNT OF TAX WHICH REMAINED OUTSTANDING AFTER DEDUCTING THE TAX PAID AFTER FILING OF RETURN, FAIL ING TO APPRECIATE THAT AS PER SECTION 140A OF THE ACT, 2 THE ASSESSEE WAS REQUIRED TO PAY THE TAX AND INTEREST DUE BEFORE FILING OF RETURN AND THEREFORE THE PENALTY WAS RIGHTLY LEVIED BY THE AO. 2. THE LD. CIT (A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE AO TO RESTRICT T HE PENALTY LEVIED U/S 221(1) R.W.S. 140A(3) ON THE AMOUNT OF TAX WHICH REMAINED OUTSTANDING AFTER DEDUCTING THE TAX PAID AFTER FILING OF RETURN, WITH OUT CONSIDERING THE EXPLANATION TO SECTION 221(1) WHICH SPECIFICALLY PROVIDES THAT AN ASSESSEE SHALL NOT CEASE TO BE LIABLE TO PAY ANY PENALTY UNDER THIS SU B- SECTION MERELY BY REASON OF THE FACT THAT BEFORE TH E LEVY OF PENALTY HE HAS PAID THE TAX. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FILED RETURN OF INCOME SHOWING INCOME AT RS.4.61 CRORES, ON WHICH T AX OF RS.1,73,73,502/- WAS PAYABLE. THE ASSESSEE DID NO T PAY ANY ADVANCE TAX AND TDS OF RS.5,11,216/- WAS DEDUCTED. BALANCE SUM OF RS.1.68 CRORES WAS SHOWN AS TAX PAYABLE ON THE DATE OF FILI NG OF THE RETURN OF INCOME, WHICH WAS NOT PAID BY THE ASSESSEE. THE AS SESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY IT SHOULD NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT FOR NON-DEPOSIT OF THE TAX IN VIEW OF THE PROVISIONS OF SECTION 140A(3) OF THE ACT. 4. THE REPLY OF THE ASSESSEE BEFORE THE ASSESSING O FFICER WAS AS UNDER : 4. THE ASSESSEE FILED A REPLY ON 08.10.09, WHEREIN IT STATED THAT THE ASSESSEE HAS MADE THE FOLLOWING PAY MENTS: RS.5,00,000/- 10-10-08 RS.5,00,000/- 10-10-08 RS.5,00,000/- 10-10-08 RS.5,00,000/- 10-10-08 3 RS.4,70,000/- 10-10-08 RS.25,00,000/- 08-10-09 RS.35,50,000/- 08-10-09 IT WAS SUBMITTED THAT THE COMPANY IS FACING FINANCIAL HARDSHIP DUE TO NON-AVAILABILITY OF FUNDS . 5. THE ASSESSING OFFICER HELD AS UNDER : 5. THE ASSESSEE WAS GIVEN ANOTHER OPPORTUNITY VIDE THIS OFFICE LETTER DATED 19-10-09 TO EXPLAIN WHETHE R THE BALANCE TAX AND INTEREST OF RS.60,50,000/- HAS BEEN PAID BY HIM OR NOT. IT WAS ALSO ASKED TO EXPLAIN AS TO WHY NOT IT SHOULD BE DEEMED TO BE AN ASSESSEE IN DEFAULT AN D THE PENALTY U/S 221 R.W.S. 140A(3) BE NOT IMPOSED. NO REPLY TO THIS LETTER HAS BEEN FILED. 6. IN VIEW OF THE ABOVE FACTS, THE ASSESSEE HAS NOT MADE THE PAYMENTS OF BALANCE TAX AND INTEREST PAYAB LE AS SELF ASSESSMENT TAX BEFORE FILING OF THE RETURN. T HE REPLY OF THE ASSESSEE IS NOT SATISFACTORY AS THE TAX AND INTEREST DETERMINED IS AS PER RETURN FILED BY IT AND ON ITS INCOME EARNED IN REGULAR BUSINESS AT RS.4,61,77,200/-. THEREFORE, THERE APPEARS NO FINANCIAL HARDSHIP TO T HE ASSESSEE COMPANY. THE ASSESSEE HAS NOT EVEN PAID ADVANCE TAX, WHICH SHOWS MALAFIDE INTENTION OF THE ASSESSEE. EVEN UPTO TODAY, THE ASSESSEE HAS NOT PA ID THE COMPLETE SELF ASSESSMENT TAX PAYABLE U/S 140A. THEREFORE, THE ASSESSEE IS DEEMED TO BE AN ASSESSEE IN DEFAULT IN VIEW OF PROVISIONS OF SUB SECTION (3) OF SECTION 140A OF THE INCOME TAX ACT AND IT IS LIABLE FOR PEN ALTY U/S 221 R.W.S. 140A(3) OF THE INCOME TAX ACT, WHICH IS IMPOSED AT RS.16,86,230/- (10% OF THE TAX AND INTER EST IN DEFAULT AT RS.1,68,62,290/- AS ON THE DATE OF FILIN G THE RETURN). PENALTY IMPOSED RS.18,86,230/- (RS. SIXTEEN LACS EI GHTY SIX THOUSAND TWO HUNDRED THIRTY ONLY). 4 6. THE CIT(A) REDUCED THE PENALTY LEVIED UNDER SECT ION 221 ON THE TAXES PAID BY THE ASSESSEE AFTER THE FILING OF RETU RN OF INCOME HOLDING AS UNDER : 2.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR. AS PER PENALTY ORDER THE ASSESSEE FILED A RETURN OF INCOME THROUGH E-FILING ON 30.09.08 FOR THE A.Y. 2008-09. A COPY OF ITR-V WAS FILED BY THE ASSESSEE ON 08.10.08. IT WAS FOUND FROM THE RETURN THAT TAX AND INTEREST PAYABLE HAS BEEN WORKED OUT AT RS.1,73,73,502/- ON TOTAL INCOME OF RS.4,61,77,200/-. THE ASSESSEE DID NOT PAY ANY ADV ANCE TAX, TDS OF RS.5,11,216/- HAS BEEN SHOWN AS DEDUCTE D. THUS, RS.1,68,62,290/- HAS BEEN SHOWN AS TAX PAYABL E ON THE DATE OF FILING THE RETURN. IN VIEW OF THE ABOV E ASSESSING OFFICER ISSUED NOTICE U/S 221 R.W.S. 140A (3) ASKING THE ASSESSEE TO EXPLAIN AS TO WHY ASSESSEE S HOULD NOT BE DEEMED IN DEFAULT AND PENALTY U/S 221 BE NOT IMPOSED. HOWEVER, NO SATISFACTORY REPLY WAS FILED. ASSESSING OFFICER THEREFORE LEVIED PENALTY OF RS.16,86,230/- BEING 10% OF THE TAX AND INTEREST IN DEFAULT RS.1,68,62,290/-. AR HAS HOWEVER CONTENDED THAT ASSESSEE COMPANY HAS ALREADY DEPOSITED THE AMOUNT O F RS.85,20,000/- ON DIFFERENT DATES AS MENTIONED IN T HE WRITTEN SUBMISSION REPRODUCED ABOVE AND ALSO IN THE PENALTY ORDER. AR HAS ALSO STATED THAT ASSESSEE CO MPANY IS HAVING OVER DRAFT FACILITY AND FACING ACUTE SHOR TAGE OF FUNDS. THE ASSESSEE COMPANY WAS NOT ABLE TO DISCHA RGE THE LIABILITY OF WAGES WITHIN THE STIPULATED PERIOD . IN BRIEF AR HAS STATED THAT TAXES COULD NOT BE PAID DU E TO SHORTAGE OF FUNDS. HOWEVER, ARS AFORESAID CONTENT IONS ARE NOT TENABLE. ASSESSEE COMPANY HAS SHOWN RETURN ED INCOME OF RS.4,61,77,200 ON WHICH EXCEPT TDS OF RS.5,11,216/- SHOWN TO HAVE BEEN DEDUCTED, REMAININ G TAX OF RS.1,68,62,290/- WAS NOT PAID WHILE FILING THE R ETURN OF INCOME. THE TAX IS PAYABLE ON THE INCOME EARNED. ASSESSEE HAS EARNED THE INCOME AND THEREFORE WAS NO T REQUIRED TO BORROW FUNDS FOR PAYING OF TAXES. IN O THER WORDS WITH THE EARNING OF INCOME IT CAN BE SAID THA T THE 5 ASSESSEE HAD FUNDS FROM WHICH SHARE OF TAX SHOULD H AVE BEEN PAID. HOWEVER, ASSESSEE COMPANY FAILED TO DO SO. THE CONTENTION OF SHORTAGE OF FUNDS AND OVERDRAFT F ACILITY BEING USED IN MY OPINION IS NOT RELEVANT OF THE ACT THE ISSUE UNDER CONSIDERATION. IN VIEW OF THE ABOVE IT IS HELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING THE PENALTY U/S 221 R.W.S. 140A(3). HOWEVER SINCE THE ASSESSEE HAS ALREADY PAID AN AMOUNT OF RS.85,20,000 /- ASSESSING OFFICER IS DIRECTED TO RESTRICT THE PENAL TY U/S 221 ON THE REMAINING AMOUNT OF TAX NOT PAID BY THE ASSESSEE. 7. SMT.SARITA KUMARI APPEARED FOR THE REVENUE AND S HRI ASHWANI KUMAR APPEARED ON BEHALF OF THE ASSESSEE AND PUT F ORWARD THEIR CONTENTIONS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IN THE PRESENT CASE HAD DEFAULTED FOR THE PAYMENT ON SELF ASSESSMENT TAX UNDER SECTION 140A OF THE ACT AMOUNT ING TO RS.1,68,62,290/-. THE ASSESSEE, HOWEVER, AFTER FI LING THE RETURN OF INCOME PAID A SUM OF RS.85,20,000/- AND THE BALANCE SUM OF RS.60,50,000/- HAS NOT BEEN PAID UP-TO-DATE, AS AD MITTED BY THE LEARNED A.R. FOR THE ASSESSEE. 9. THE REASONS FOR NON-PAYMENT OF THE SAID TAX WAS THE ACUTE SHORTAGE OF FUNDS BEING FACED BY THE ASSESSEE COMPANY, WHERE IN THE ASSESSEE HAD DRAWN OVERDRAFT FACILITIES TO THE EXTENT OF RS.24.8 1 CRORES AS ON 20.9.2008. EVEN THE ASSESSEE COMPANY WAS NOT ABLE TO DISCHARGE THE LIABILITIES OF WAGES WITHIN THE STIPULATED PERIOD. THE UNIT OF THE ASSESSEE COMPANY WAS NOT FUNCTIONING PROPERLY DUE T O NON-AVAILABILITY OF FUNDS. IN THE ABOVE-SAID SCENARIO THERE WAS DEF AULT ON THE PART OF THE ASSESSEE FOR PAYMENT OF THE TAX DUE ON THE RETURNED INCOME. 6 10. UNDER THE PROVISIONS OF SECTION 221, READ WITH SECTION 140A(3) IT IS STIPULATED THAT WHETHER THE ASSESSEE HAS DEFAULT ED FOR THE PAYMENT OF TAXES, THEN, IN ADDITION TO THE TAX ARREARS, THE A SSESSEE SHALL BE SUBJECT TO LEVY OF PENALTY IN THIS REGARD. HOWEVER, WHERE THE ASSESSEE PROVES TO THE SATISFACTION OF THE ASSESSING OFFICER THAT T HE DEFAULT WAS FOR GOOD AND SUFFICIENT REASON, NO PENALTY IS LEVIABLE UNDER THE SAID SECTION. IN THE FACTS OF THE PRESENT CASE BEFORE US WE FIND MER IT IN THE PLEA OF THE ASSESSEE THAT BECAUSE OF THE CIRCUMSTANCES ENUMERAT ED ABOVE, THE ASSESSEE WAS NOT IN A POSITION TO PAY THE SAID TAXE S WITHIN TIME. HOWEVER, A SUM OF RS.85,20,000/- HAS BEEN DEPOSITED BY THE ASSESSEE AGAINST THE ARREARS OF PAYMENT, BUT BALANCE SUM OF RS.60,50,000/- HAS NOT BEEN PAID UP-TO-DATE. FOR SUCH DEFAULT, THE A SSESSEE IS LIABLE TO LEVY OF PENALTY UNDER SECTION 221(1) OF THE ACT. W E UPHOLD THE ORDER OF THE CIT(A) IN THIS REGARD THAT WHILE LEVYING THE PE NALTY IN THE PRESENT CASE UNDER SECTION 221 READ WITH SECTION 140A(3) OF THE ACT, THE PENALTY BE RESTRICTED ON THE BALANCE ARREARS NOT PAID BY TH E ASSESSEE AND NO PENALTY IS CHARGEABLE ON THE AMOUNT OF RS.85,20,000 /- PAID BY THE ASSESSEE. WE CONFIRM THE ORDER OF THE CIT(A) AND D ISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF APRIL, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH APRIL, 2011 RATI COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 7