M/s Lakshmi Energy & Foods Ltd., Chandigarh V. ACIT, Chandigarh

ITA 348/CHANDI/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90211 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Keywords: Bonafide belief; Period of limitation; Condonation of delay
• Section: 143(3); 153A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 348/CHD/2013 ASSESSMENT YEAR : 2010-11 M/S LAKSHMI ENERGY & FOODS LTD., VS THE I TO, SCO 18-19, SECTOR 9D, CENTRAL CIRCLE-I, CHANDIGARH. CHANDIGARH. PAN: AAACL3147J & C.O. NO. 23/CHD/2014 IN ITA NO. 348/CHD/2013 ASSESSMENT YEAR : 2010-11 THE DCIT, VS M/S LAKSHMI EN ERGY CENTRAL CIRCLE-I & FOODS LTD., CHANDIGARH. SCO 18-19, SECTOR 9D, CHANDIGARH. PAN: AAACL3147J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUDHIR SEHGAL DEPARTMENT BY : DR. AMARVEER SINGH DATE OF HEARING : 22.06.2015 DATE OF PRONOUNCEMENT : 30.06.2015 O R D E R PER BHAVNESH SAINI,JM THE APPEAL OF THE ASSESSEE AS WELL AS CROSS OBJECTI ON BY REVENUE DEPARTMENT ARE DIRECTED AGAINST THE ORDE R OF LD. CIT(APPEALS) (CENTRAL) GURGAON DATED 24.01.2013. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER FOUND THAT ASSESSMENT TAX AMOUNTING TO RS. 2 8,14,66,981/- IN RESPECT OF THE RETURN FILED BY THE ASSESSEE ON 14.10.2010 FOR ASSESSMENT YEAR UNDER APPEAL I.E. 2010- 11 WAS NOT PAID BY THE ASSESSEE. THE ASSESSING OFF ICER DISCUSSED THE DETAILS OF NON PAYMENT OF TAXES IN TH E IMPUGNED PENALTY ORDER UNDER SECTION 221(1) OF INCO ME TAX ACT AND FOUND THAT ASSESSEE CHOSEN NOT TO PAY ASSES SMENT TAX ON ONE PRETEXT OR OTHER. THE ASSESSEE WAS GIVE N SHOW CAUSE NOTICE WHY PENALTY OF 20% OF THE ASSESSMENT T AX I.E. RS. 8.14 CR SHOULD NOT BE LEVIED UNDER SECTION 221( 1) OF THE INCOME TAX ACT. THE ASSESSING OFFICER VIDE ORDER UN DER SECTION 221(1) OF THE ACT LEVIED PENALTY OF RS. 1.6 2 CR I.E. 20% OF RS. 8.14 CR UNDER SECTION 221(1) OF THE ACT FOR THE FAILURE OF THE ASSESSEE TO PAY ASSESSMENT TAX FOR A SSESSMENT YEAR UNDER APPEAL. 3. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE LD. CIT(APPEALS) AND EXPLAINED THAT ASSESSING OFFICER H AD NOT ACCEDED TO THE REQUEST OF THE ASSESSEE FOR ADJUSTME NT OF REFUND FOR ASSESSMENT YEAR 2007-08 AGAINST THE DEMA ND DUE FOR THE ASSESSMENT YEAR UNDER APPEAL. THE SUBMISSI ONS OF THE ASSESSEE ARE REPRODUCED IN THE IMPUGNED ORDER I N WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT ASSESSEE HAS PA ID THE AMOUNT OF RS. 1 CR BY WAY OF TWO EQUAL INSTALLMENTS OF RS. 50 LACS EACH ON 24.02.2011 AND 25.02.2011. THE REFU ND OF RS.6.99 CR IN RESPECT OF ASSESSMENT YEAR 2007-08 WA S REQUESTED TO BE ADJUSTED AGAINST SELF ASSESSMENT FO R IMPUGNED ASSESSMENT YEAR VIDE LETTER DATED 11.03.20 11. FURTHER, THE BALANCE OF RS. 14,67,981/- HAD BEEN DE POSITED. 3 HOWEVER, THE DEPARTMENT HAD ADJUSTED THE REFUND AGA INST ASSESSMENT YEAR 2006-07 WITHOUT INTIMATING THE ASSE SSEE. THEREFORE, ASSESSEE WAS UNDER BONAFIDE BELIEF THAT NO ASSESSMENT TAX WOULD BE PAYABLE BECAUSE THE REFUND WOULD BE ADJUSTED IN ASSESSMENT YEAR UNDER APPEAL. THE A SSESSEE IN SUPPORT OF SUBMISSIONS, RELIED UPON SEVERAL DECI SIONS. IT WAS SUBMITTED THAT THE REFUND SHOULD BE ADJUSTED AT THE INSTANCE OF THE ASSESSEE ONLY. THEREFORE, ASSESSEE COULD NOT BE SAID TO BE IN ARREARS OF TAX OR IN DEFAULT. THE ASSESSEE FURTHER SUBMITTED THAT ASSESSMENT TAX COULD NOT BE PAID ON TIME BECAUSE OF THE FOLLOWING COMPELLING REASONS : I) THE FINANCIAL POSITION WAS EXTREMELY DIFFICULT A S THE DEBTS INCLUDING THE EXPORT PROCEEDINGS HAD NOT BEEN RECEIVED. II) DIP IN THE SALE FIGURE RECORDED IN THE AUDITED BALANCE SHEET. III) THE BANK ACCOUNTS OF THE ASSESSEE COMPANY HAD BEEN HEAVILY OVER DRAWN AND NO FURTHER LIMIT WAS AVAILABLE. IV) DOWNWARD RATING ISSUED BY CRISIL ON REVIEW OF THE ASSESSEE'S FINANCIAL AFFAIRS. 4. THE ASSESSEE ALSO RELIED UPON DECISION OF THE KE RALA HIGH COURT IN THE CASE OF CIT VS CHAMBARA PEAK ESTA TES 183 ITR 471 IN WHICH IT WAS HELD THAT ASSESSEE PROV ED NON PAYMENT OF TAX STATING PAUCITY OF FUNDS AND FINANCI AL STRINGENCY DUE TO UNAVOIDABLE FINANCIAL POSITION. THEREFORE, PENALTY WAS CANCELLED. THE ASSESSEE ALSO RELIED UP ON DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF CIT VS 4 INDO AMERICAN ELECTRICALS LTD. 155 ITR 63 IN WHICH FINANCIAL STRINGENCY WAS ALSO CONSIDERED GOOD REASON FOR CANC ELING THE PENALTY. THE LD. CIT(APPEALS), HOWEVER, DID NO T ACCEPT CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL OF ASSESSEE. HIS FINDINGS IN THE APPELLATE ORDER IN P ARA 4 AND 4.1 IS REPRODUCED AS UNDER : 4. I HAVE CONSIDERED THE ASSESSEE'S SUBMISSION AND THE IMPUGNED ORDER. THE ASSESSEE HAS CHALLENGED THE ADJUSTMENT OF REFUND FOR ASSESSMENT YEAR 2007-08 AGAINST THE DEMAND FOR AY 2010-11. IT IS AN UNDISPUTED FACT THAT SELF ASSESSMENT TAX TO THE TUN E OF RS. 8,14,66,981/- WAS PAYABLE BY THE ASSESSEE FOR ASSESSMENT YEAR 2010-11. AS PER THE PROVISIONS OF T HE ACT, THE ASSESSEE IS CONSIDERED TO BE IN DEFAULT FO R FAILURE TO PAY THE WHOLE OR A PART OF SELF ASSESSME NT TAX PAYABLE UNDER SECTION 140A(I) AND THEREBY RENDERING ITSELF LIABLE FOR PENALTY UNDER SECTION 2 21(I). THE CIRCUMSTANCES VIZ. DEMAND IN DISPUTE IN APPEAL ETC. UNDER WHICH AN ASSESSEE MAY NOT BE DEEMED TO BE IN DEFAULT DOES NOT COME TO THE AID OF THE ASSES SEE. THE SELF ASSESSMENT TAX WAS PAYABLE AS PER THE DETERMINED TOTAL INCOME FOR THE YEAR WORKED OUT BY THE ASSESSEE HIMSELF. NO DOUBT SECTION 245 REQUIRES THE PREVIOUS INTIMATION IN WRITING OF THE PROPOSED ACTION TO SET OFF THE REFUND AGAINST THE SUM PAYABL E UNDER INCOME TAX ACT. HOWEVER, I FIND THAT THE A.O. HAD CLEARLY EXPLAINED THE POSITION AND THE CIRCUMSTANCES UNDER WHICH THE ADJUSTMENT WAS BEING MADE. PARA 5 OF THE IMPUGNED ORDER IS REPRODUCED BELOW : 5. VIDE THIS OFFICE LETTER DATED 15.03.2011, IT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE THAT IT HAD CLAIMED LOSS OF RS. 18,21,20,035/- IN ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07. THIS LOSS WAS DISALLOWED BY THE ASSESSING OFFICER IN THE ORDER DATED 30.12.2008 PASSED UNDER SECTION 143(3) R.W.S. 153A OF THE IT ACT 1961 AGAINST WHICH THE ASSESSEE FILED AN APPEAL. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE VIDE ITS ORDER DATED 27.10.2009. HON'BLE ITAT REMANDED THE CASE BACK TO THE ASSESSING OFFICER. MEANWHILE THE ASSESSEE ADDED BACK THIS AMOUNT TO ITS INCOME FOR THE ASSESSMENT YEAR 2007-08. THE CASES FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 WERE TAKEN UP FOR 5 SCRUTINY UNDER SECTION 153A R.W.S. 143(3) AND ALSO IN PURSUANCE OF ORDER OF HON'BLE ITAT. IT WAS FOUND THAT RS. 18,21,20,035/- REPRESENTED INCOME FOR THE ASSESSMENT YEAR 2006-07. THUS ADDITION WAS MADE FOR THE ASSESSMENT YEAR 2006-07 AND THE REFUND AROSE FOR THE ASSESSMENT YEAR 2007-08. IT WAS ADJUSTABLE AGAINST THE DEMAND OF ASSESSMENT YEAR 2006-07 AND NOT FROM THE SELF-ASSESSMENT TAX. IT WAS FURTHER INTIMATED TO THE ASSESSEE BY THIS LETTER THAT REFUND OF RS. 6,99,35,00/- DETERMINED FOR THE ASSESSMENT YEAR 2007-08 HAD BEEN ADJUSTED AGAINST THE DEMAND OF ASSESSMENT YEAR 2006- 07 WHICH WAS OUTSTANDING AT RS. 10,68,68,165/-. THE ASSESSEE WAS THEREFORE, REQUESTED TO PAY THE OUTSTANDING AMOUNT IMMEDIATELY. THUS IT IS APPARENT THAT THE ASSESSING OFFICER HAD DULY CONSIDERED ASSESSEE'S REQUEST AND HAS ALSO EXPLAINED ITS POSITION. 4.1 THE ASSESSEE DURING THE APPEAL PROCEEDINGS HAS PUT FORTH FINANCIAL CONSTRAINTS AS REASONS WHY THE TAX COULD NOT BE PAID ON TIME. THESE REASONS WERE NOT PLACED BEFORE THE ASSESSING OFFICER FOR HIS CONSIDERATION. BE THAT AS IT MAY, AS RIGHTLY STATED IN THE IMPUGNED ORDER, THE RECOVERY OF SELF-ASSESSMENT TAX IS NOT A CONSEQUENCE OF ANY ORDER PASSED BY THE DEPARTMENT BUT WAS A CONSEQUENCE TO THE RETURN FILE D VOLUNTARILY UNDER SECTION 139(1). IT IS CLEAR FROM SECTION 140A THAT IT IS THE DUTY OF THE ASSESSEE TO SELF ASSESS HIS INCOME AND PAY THE TAX SO CALCULATED TOGETHER WITH INTEREST AS PAYABLE UNDER THE PROVISI ONS OF THE ACT. SUB SECTION (3) OF SECTION 140A FURTHER PROVIDES THAT IF THE ASSESSEE FAILS TO PAY THE WHOL E OR ANY PART OF SUCH TAX OR INTEREST OR BOTH, THEN HE W ILL BE DEEMED TO BE AN ASSESSEE IN DEFAULT. CONSEQUENTLY, THE ASSESSEE WILL RENDER HIMSELF LIAB LE FOR DEFAULT AS PER PRO VISIONS OF THE ACT. THUS IT WAS INCUMBENT UPON THE ASSESSEE TO HAVE PAID THE SELF ASSESSMENT TAX AT THE TIME OF FILING THE RETURN, OR ATLEAST WHEN CALLED UPON TO DO SO BY THE ASSESSING OFFICER, WHICH HAS NOT BEEN DONE. HENCE, I AM INCLI NED TO CONFIRM THE PENALTY LEVIED UNDER SECTION 221(1) BY THE ASSESSING OFFICER. 5. THE ASSESSEE CHALLENGED THE LEVY OF PENALTY UNDE R SECTION 221(1) OF THE ACT. THE REVENUE FILED THE C ROSS OBJECTION CHALLENGING THAT SINCE THE ASSESSEE DID N OT PAY 6 SELF ASSESSMENT TAX ON THE RETURNED INCOME, THEREFO RE, LD. CIT(APPEALS) HAS ERRED IN ADMITTING THE APPEAL IN CONTRAVENTION OF PROVISIONS OF SECTION 249(4)(A) OF THE ACT. 6. THE CROSS OBJECTION IS FILED BY THE REVENUE DEPA RTMENT IN THE OFFICE OF THE TRIBUNAL ON 29.05.2014. THE R EVENUE IN THE CROSS OBJECTION ITSELF REQUESTED FOR CONDONATIO N OF DELAY OF 426 DAYS IN FILING THE CROSS OBJECTION BY THE RE VENUE DEPARTMENT. IT IS STATED IN THE CROSS OBJECTION TH AT DELAY OF 426 DAYS MAY BE CONDONED IN FILING THE CROSS OBJ ECTION AS LEGAL POINT IS INVOLVED IN THE MATTER AND FURTHE R THIS MATTER WAS NOTICED ONLY WHEN THE APPEAL OF THE ASSE SSEE WAS TAKEN UP FOR HEARING BY THE TRIBUNAL. SAME WAS CONVEYED BY THE CIT (ITAT)-II, CHANDIGARH TO CIT (C ENTRAL) GURGAON VIDE LETTER DATED 28.03.2014 AND CONSEQUENT LY SAME WAS CONVEYED TO THE ASSESSING OFFICER. PROPOS AL WAS SENT TO THE ADDL. CIT, RANGE CENTRAL, CHANDIGARH ON 01.05.2014 FOR FURTHER DIRECTION AND IN THE MEANTIM E CERTIFIED COPY OF FORM NO. 36 WAS TAKEN. FURTHER A PPROVAL OF CIT( CENTRAL) GURGAON WAS SOUGHT WHICH WAS CONVEYED VIDE LETTER DATED 07.05.2014 AND THEREAFTER CROSS OBJECT ION BY DEPARTMENT WAS FILED ON 27.05.2014. 7. THE LD. DR THEREFORE, CONTENDED THAT REVENUE DEPARTMENT HAS SUFFICIENT CAUSE FOR NOT FILING THE CROSS OBJECTION WITHIN THE PERIOD OF 30 DAYS FROM THE REC EIPT OF THE NOTICE, THEREFORE, DELAY MAY BE CONDONED IN FIL ING THE CROSS OBJECTION. THE LD. DR SUBMITTED THAT LD. CIT (APPEALS) 7 SHOULD NOT HAVE ENTERTAINED THE APPEAL UNLESS THE S ELF ASSESSMENT TAXES ON RETURNED INCOME HAVE BEEN DEPOS ITED. 8. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT REVENUE DEPARTMENT HAS NOT EXPLAINED ANY SUFFICIENT CAUSE FOR NOT FILING THE CROSS OBJECTION WITHIN THE PERIOD OF 30 DAYS FROM THE RECEIPT OF THE NOTICE IN APPEAL OF THE ASSESSEE. THEREFORE, CROSS OBJECTION IS TIME B ARRED. HE HAS RELIED UPON DECISION OF THE KERALA HIGH COURT I N THE CASE OF SILVER STAR ENGINEERS VS ITO 266 ITR 376 IN WHICH IT WAS HELD AS UNDER: HELD, DISMISSING THE APPEAL, THAT IT WAS TRUE THAT THERE WAS A DELAY OF ONLY SIX DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. HOWEVER, BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE HAD NOT CHOSEN TO PRODUCE ANY DOCUMENTS TO SHOW THAT THE PROFIT IN THE BUSINESS WAS LESS THAN 5 PER CENT. NEITHER THE ASSESSEE NOR ANY AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE APPELLATE AUTHORITY THOUGH THE HEARING OF THE APPEAL WAS ADJOURNED ON MANY OCCASIONS. THE TRIBUNAL AFTER CONSIDERING ALL THE ASPECTS TOOK THE VIEW THAT THE ASSESSEE HAD NOT SATISFACTORILY EXPLAINED THE REASON FOR THE DELAY OF SIX DAYS. THE TRIBUNAL WAS JUSTIFIED IN ITS REFUSAL TO CONDONE THE DELAY. 9. HE HAS ALSO SUBMITTED THAT HON'BLE SUPREME COURT HAD DISMISSED THE SPECIAL WRIT PETITION AGAINST THIS JU DGEMENT REPORTED IN 266 ITR (STATUTES) 2. 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS. SECTIO N 253(4) OF THE INCOME TAX ACT PROVIDES THAT, THE ASSESSING OFFICER ON RECEIPT OF THE NOTICE THAT APPEAL AGAINST THE OR DER OF THE LD. CIT(APPEALS) HAS BEEN PREFERRED BY OTHER PARTY, MAY 8 NOTWITHSTANDING THAT HE MAY NOT HAVE APPEALED AGAIN ST SUCH ORDER OR OTHER PART THEREOF WITHIN 30 DAYS OF THE R ECEIPT OF THE NOTICE, FILE A MEMORANDUM OF CROSS OBJECTION. SUB SECTION (5) OF SECTION 253 OF THE INCOME TAX ACT PR OVIDES THAT APPELLATE TRIBUNAL MAY ADMIT AN APPEAL OR PERM IT FILING OF THE MEMORANDUM OF CROSS OBJECTION AFTER THE EXPI RY OF RELEVANT PERIOD IF IT IS SATISFIED THAT THERE WAS S UFFICIENT CAUSE FOR NOT PRESENTING IT WITHIN THAT PERIOD. TH E APPEAL OF THE ASSESSEE IN ITA 348/2013 AGAINST THE PENALTY ORDER UNDER SECTION 221(1) WAS TAKEN UP FOR HEARING BY TH E APPELLATE TRIBUNAL ON 04.07.2013. ON THIS DATE, SH RI SUDHIR SEHGAL APPEARED FOR THE ASSESSEE AND SHRI MA NJIT SINGH, DR APPEARED FOR THE REVENUE DEPARTMENT. THE APPEAL OF THE ASSESSEE WAS ADJOURNED TIME TO TIME O N SEVERAL DATES. THEREFORE, IT IS CLEAR THAT ASSESSI NG OFFICER RECEIVED THE NOTICE OF APPEAL OF THE ASSESSEE BECAU SE THE DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF T HE ASSESSING OFFICER AND THE REVENUE DEPARTMENT BEFORE THE TRIBUNAL. IN THE REQUEST FOR CONDONATION OF DELAY ALSO, THE REVENUE SOUGHT FOR CONDONATION OF DELAY OF 426 DAYS . THEREFORE, IT STANDS ADMITTED THAT THERE WAS A DELA Y IN FILING OF THE CROSS OBJECTION BY THE REVENUE DEPARTMENT. IT IS FOR THE FIRST TIME ON 28.03.2014 THE CIT (ITAT) CHANDIG ARH CONVEYED THE ISSUE RAISED IN THE CROSS OBJECTION TO THE CIT (CENTRAL) GURGAON AND THEREAFTER SAME PROCEEDINGS W ERE TAKEN UP BY THE ASSESSING OFFICER AND CIT (CENTRAL) ALSO APPROVED FILING OF THE CO VIDE LETTER DATED 07.05.2 014 AND ONLY THEREAFTER, THE CO WAS FILED IN THE OFFICE OF THE 9 TRIBUNAL ON 29.05.2014. THESE FACTS CLEARLY DISCLO SED THAT PRIOR TO 28.03.2014, NO STEPS HAD BEEN TAKEN BY THE REVENUE DEPARTMENT FOR FILING THE CO IN THE MATTER DESPITE REVENUE WAS AWARE OF THE FILING OF THE APPEAL OF AS SESSEE ATLEAST ON 04.07.2013 WHEN SHRI MANJIT SINGH, DR AP PEARED FOR THE ASSESSING OFFICER AND THE REVENUE DEPARTMEN T BEFORE THE TRIBUNAL IN APPEAL OF THE ASSESSEE. 11. THE HON'BLE SUPREME COURT IN THE CASE OF OFFICE OF THE CHIEF POST MASTER GENERAL & ORS VS LIVING MEDIA IND IA LTD. & ANOTHER 348 ITR 7 HELD AS UNDER : HELD, DISMISSING THE APPLICATIONS, THE DEPARTMENT HAD ITSELF MENTIONED IN ITS AFFIDAVIT AND WAS AWARE OF THE DATE OF THE JUDGMENT OF THE DIVISION BENCH O F' THE HIGH COURT AS SEPTEMBER 11, 2009. EVEN, ACCORDING TO THE DEPONENT, ITS COUNSEL HAD APPLIED FOR THE CERTIFIED COPY OF THE JUDGMENT ONLY ON JANUARY 8,2010, AND THE COPY WAS RECEIVED BY THE DEPARTMENT ON THE VERY SAME DAY. THERE WAS NO EXPLANATION FOR NOT APPLYING FOR CERTIFIED COPY OF THE JUDGEMENT ON SEPTEMBER 11, 2009, OR AT LEAST WITHIN A REASONABLE TIME. THE FACT RETAINS THAT THE CERTIF IED COPY WAS APPLIED FOR ONLY ON JANUARY 8, 2010, I.E. AFTER A PERIOD OF NEARLY FOUR MONTHS. NEITHER THE DEPARTMENT NOR THE PERSON IN-CHARGE HAD FILED AN EXPLANATION FOR NOT APPLYING FOR THE CERTIFIED COPY WITHIN THE PRESCRIBED PERIOD. THE OTHER DATES MENTIONED IN THE AFFIDAVIT CLEARLY SHOWED THAT THER E WAS DELAY AT EVERY STAGE AND THERE WAS NO EXPLANATION AS TO WHY SUCH DELAY HAD OCCASIONED. THE DEPARTMENT OR THE PERSON CONCERNED HAD NOT EVINCED DILIGENCE IN PROSECUTING THE MATTER TO THE COURT BY TAKING APPROPRIATE STEPS. THE PERSONS CONCERNED WERE WELL AWARE OR CONVERSANT WITH THE ISSUES INVOLVED INCLUDING THE PRESCRIBED PERIOD OF LIMITATION FOR TAKING UP THE MATTER BY WAY OF FILIN G A SPECIAL LEAVE PETITION IN THE SUPREME COURT. IN THE ABSENCE OF PLAUSIBLE AND ACCEPTABLE EXPLANATION, TH E DELAY COULD NOT BE CONDONED MECHANICALLY MERELY BECAUSE THE GOVERNMENT OR A WING OF THE GOVERNMENT WAS A PARTY BEFORE THE COURT. THOUGH IN A MATTER OF CONDONATION OF DELAY WHEN THERE WAS NO GROSS NEGLIGENCE OR DELIBERATE INACTION LACK OF BONAFIDE, A LIBERAL CONCESSION HAD TO BE ADOPTED TO ADVANCE 10 SUBSTANTIAL JUSTICE, IN THE FACTS AND CIRCUMSTANCES , THE CLAIM ON ACCOUNT OF IMPERSONAL MACHINERY AND INHERITED BUREAUCRATIC METHODOLOGY OF MAKING SEVERA L NOTES COULD NOT BE ACCEPTED IN VIEW OF THE MODERN TECHNOLOGIES BEING USED ' AND AVAILABLE. CONSIDERIN G THE FACT THAT THERE WAS NO PROPER EXPLANATION OFFER ED BY THE DEPARTMENT FOR THE DELAY EXCEPT MENTIONING O F VARIOUS DATES, THE DEPARTMENT HAD FAILED TO GIVE ACCEPTABLE AND COGENT REASONS SUFFICIENT TO A DONE SUCH A HUGE DELAY. BY THE COURT : UNLESS GOVERNMENT BODIES, THEIR AGENCIES AND INSTRUMENTALITIES HAVE REASONABLE AND ACCEPTABLE EXPLANATION FOR THE DELAY AND THERE WAS BONAFIDE EFFORT, THERE IS NO NEED TO ACCEPT THE USU AL EXPLANATION THAT THE FILE WAS KEPT PENDING FOR SEVE RAL MONTHS OR YEARS DUE TO CONSIDERABLE DEGREE OF PROCEDURAL RED-TAPE IN THE PROCESS. GOVERNMENT DEPARTMENTS ARE UNDER A SPECIAL OBLIGATION TO ENSUR E THAT THEY PERFORM THEIR DUTIES WITH DILIGENCE AND COMMITMENT. CONDONATION OF DELAY IS AN EXCEPTION AN D SHOULD NOT BE USED AS AN ANTICIPATED BENEFIT FOR GOVERNMENT DEPARTMENTS. THE LAW SHELTERS EVERYONE UNDER THE SAME LIGHT AND SHOULD NOT BE SWIRLED FOR THE BENEFIT OF A FEW. THE LAW OF LIMITATION BINDS EVERY BODY INCLUDING THE GOVERNMENT. 12. FROM THE ABOVE IT IS CLEAR THAT REVENUE DEPARTM ENT HAS FAILED TO DISCLOSE ANY SUFFICIENT CAUSE FOR NOT FIL ING THE CROSS OBJECTION FROM 04.07.2013 TO 28.03.2014. IN THE ABSENCE OF ANY EXPLANATION FOR NON-ACTION IN THE MA TTER, IT IS DIFFICULT TO BELIEVE THAT REVENUE DEPARTMENT HAS ANY SUFFICIENT CAUSE FOR NOT PRESENTING THE CROSS OBJEC TION WITHIN THE PERIOD OF LIMITATION. THE CROSS OBJECTI ON OF THE REVENUE IS THUS DISMISSED BEING TIME BARRED. 13. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR L EVY OF THE PENALTY UNDER SECTION 221(1) OF THE ACT. THIS PROVISION PROVIDES FOR PENALTY PAYABLE WHEN TAX IN DEFAULT. WHEN AN ASSESSEE IS IN DEFAULT OR IS DEEMED TO BE IN DEFAUL T IN 11 MAKING PAYMENT OF TAX, HE SHALL, IN ADDITION TO THE AMOUNT OF ARREARS AND THE AMOUNT OF INTEREST PAYABLE UNDER SECTION 220(2), BE LIABLE BY WAY OF PENALTY, TO PAY SUCH AM OUNT AS THE ASSESSING OFFICER MAY DIRECT AND IN CASE OF DEF AULT, FURTHER AMOUNT OR AMOUNTS AS THE ASSESSING OFFICER MAY FROM TIME TO TIME DIRECT SO, HOWEVER THAT TOTAL AMO UNT OF PENALTY WOULD NOT EXCEED THE AMOUNT OF TAX IN ARREA RS. THE SECOND PROVISO TO THIS PROVISION PROVIDES THAT WHER E THE ASSESSEE PROVES TO THE SATISFACTION OF THE ASSESSIN G OFFICER THAT THE DEFAULT WAS FOR GOOD AND SUFFICIENT REASON S, NO PENALTY SHALL BE LEVIED UNDER THIS SECTION. 14. FROM THE FACTS OF THE CASE IN THE LIGHT OF THE FINDINGS OF THE AUTHORITIES BELOW, IT IS CLEAR THAT SELF ASSESS MENT TAX AMOUNTING TO RS. 8.14 CR IN RESPECT OF THE RETURN F ILED BY ASSESSEE FOR ASSESSMENT YEAR UNDER APPEAL WAS NOT P AID BY THE ASSESSEE. EVEN BEFORE US, IT IS NOT IN DISPUTE THAT ASSESSEE WAS IN DEFAULT OR WAS DEEMED TO BE IN DEFA ULT IN MAKING PAYMENT OF TAX. THE ONLY EXCEPTION PROVIDED UNDER SECTION 221(1) OF THE ACT IF ASSESSEE IS ABLE TO PR OVE TO THE SATISFACTION OF ASSESSING OFFICER THAT THE DEFAULT WAS FOR GOOD AND SUFFICIENT REASONS. THE SECTION 221(1) AL SO DID NOT PROVIDE ANY MINIMUM PENALTY IN THE MATTER AND IT IS THE DISCRETION OF THE ASSESSING OFFICER TO LEVY THE PAR TICULAR AMOUNT AS PENALTY, HOWEVER THE PENALTY AMOUNT WOULD NOT EXCEED THE AMOUNT OF TAX IN ARREARS. IN THE CASE OF THE PRESENT ASSESSEE, THE ASSESSING OFFICER HAS LEVIED PENALTY OF 20% OF THE ARREARS OF TAXES I.E. 8.41 CR AND LEVIED THE 12 PENALTY OF RS. 1.62 CR. THEREFORE, IT IS TO BE CON SIDERED WHETHER ASSESSEE HAS ANY GOOD AND SUFFICIENT REASON S FOR DEFAULT IN PAYMENT OF TAXES OR WHETHER ASSESSING OF FICER HAS CORRECTLY LEVIED THE PENALTY OF 20% OF THE ARREARS OF TAXES. 15. THE ASSESSEE PLEADED BEFORE THE AUTHORITIES BEL OW THAT ASSESSING OFFICER DID NOT ACCEPT THE REQUEST OF THE ASSESSEE FOR ADJUSTMENT OF REFUND FOR ASSESSMENT YEAR 2007-0 8 AGAINST THE DEMAND DUE FOR ASSESSMENT YEAR UNDER AP PEAL. THE ASSESSEE ALSO PLEADED THAT RS. 1 CRORE WAS PAID IN TWO INSTALLMENTS AND BALANCE OF RS. 14.67 LACS WAS ALSO PAID. THEREFORE, ASSESSEE PLEADED THAT DUE TO THIS BONAFI DE BELIEF, THE TAXES WERE NOT PAID. HOWEVER, THE LD. CIT(APPE ALS) HAS QUOTED FROM THE ORDER OF THE ASSESSING OFFICER THE REASONS WHY THE ADJUSTMENT OF TAXES FROM THE REFUND OF ASSE SSMENT YEAR 2007-08 WERE NOT GIVEN IN THE CASE OF THE ASSE SSEE. THE ASSESSEE FURTHER PLEADED THAT THERE WAS A FINAN CIAL DIFFICULTY IN PAYING THE TAXES. THE LD. COUNSEL FO R THE ASSESSEE REITERATED THE SAME SUBMISSIONS AND SUBMIT TED THAT FINANCIAL CONDITION OF THE ASSESSEE COMPANY WA S IN BAD SHAPE WHICH IS EVIDENT FROM THE PERUSAL OF THE BALA NCE SHEET FOR FINANCIAL YEAR 2010-11 AS SUBMITTED AND THE FUN DS HAD BEEN BLOCKED IN THE INVENTORY, BOOK DEBTS AND OTHER S AS PER COLUMN 3 OF THE BALANCE SHEET UNDER THE HEAD CURRE NT ASSET WHICH LED TO PAUCITY OF FUNDS AVAILABLE FOR PAYMENT OF SELF ASSESSMENT TAX. EVEN THE ASSESSEE HAD TO BORR OW MORE AND MORE FUNDS FROM THE BANKS AND OTHERS TO COPE UP WITH THE SITUATION AS THE SECURED AND UNSECURED LOANS WH ICH 13 WERE TO THE TUNE OF RS. 751.66 CR AS ON 31.03.2010 HAD GONE UPTO RS. 996.22 CR AS ON 31.03.2011, THEREBY INCREASING THE LIABILITY BY APPROXIMATELY 33%. IT WOULD PROVE PAUCITY OF THE FUNDS IN THE CASE OF THE ASSES SEE. 15(I) THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMI TTED THAT THESE CIRCUMSTANCES ULTIMATELY LED TO DIP IN THE CR EDIT RATING AS IS EVIDENT FROM PB-8 AND 9 OF THE PAPER B OOK WHICH HAD ALSO WORSENED FINANCIAL CONDITION OF THE ASSESSEE. DUE TO PAUCITY OF THE FUNDS AND STEEP FALL IN THE P ROFIT DURING THE FINANCIAL YEAR 2010-11, DURING WHICH SEL F ASSESSMENT TAX WAS TO BE PAID, DUE TO PAUCITY OF FU NDS THE TAXES COULD NOT BE PAID. THE PROFIT DURING FINANCI AL YEAR 2009-10 WAS RS.118.94 CR WHICH REDUCED TO RS.77.48 CR DURING FINANCIAL YEAR 2010-11. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT DUE TO ABOVE RE ASONS, THE SELF ASSESSMENT TAXES COULD NOT BE PAID ON RETU RNED INCOME. 16. ON GOING THROUGH THESE SUBMISSIONS OF THE ASS ESSEE AND COPY OF THE BALANCE SHEET FILED ON RECORD, IT M AY BE A CASE OF THAT THE LIABILITY OF THE ASSESSEE HAS INCR EASED AND THAT CREDIT RATING OF THE ASSESSEE HAS REDUCED BUT THERE WAS A PROFIT IN ASSESSMENT YEAR UNDER APPEAL AS WELL AS IN SUBSEQUENT ASSESSMENT YEAR 2011-12. MAY BE THE PRO FIT HAS REDUCED BUT IT IS NOT A CASE THAT ASSESSEE HAS NOT EARNED ANY PROFIT. THEREFORE, CONSIDERING THE MATERIAL ON RECORD, WE DO NOT FIND IT TO BE CASE OF GOOD AND SUFFICIENT REASONS FOR NOT PAYING THE TAXES AS PER LAW. THEREFORE, PEN ALTY SHALL 14 HAVE TO BE LEVIED IN THE FACTS AND CIRCUMSTANCES. HOWEVER, CONSIDERING THE FINANCIAL POSITION OF THE ASSESSEE HAS WORSENED AND THAT THE CREDIT RATING OF THE ASSESSEE HAS ALSO REDUCED AND ULTIMATELY WHEN SELF ASSESSMENT TAX WAS TO BE PAID IN SUBSEQUENT ASSESSMENT YEAR 2011-12, THERE W AS A FALL IN THE PROFIT. THEREFORE, CONSIDERING THE EXP LANATION GIVEN BY THE ASSESSEE, WE ARE OF THE VIEW THE ASSES SING OFFICER WAS NOT JUSTIFIED IN LEVYING THE PENALTY OF 20% OF THE ARREARS OF TAXES. IT IS ON VERY HIGH SIDE AND THE ASSESSING OFFICER SHOULD HAVE CONSIDERED THE FINANCIAL POSITI ON OF THE ASSESSEE BEFORE LEVYING THE PENALTY IN THE MATTER. THE LD. CIT(APPEALS) REJECTED THIS CONTENTION OF THE ASSESS EE BECAUSE THOSE REASONS WERE NOT PLACED BEFORE ASSESS ING OFFICER. HOWEVER, LD. CIT(APPEALS) FORGOT TO NOTE THAT HE HAS COTERMINOUS POWERS TO THAT OF THE ASSESSING OFFICER AND THE APPELLATE PROCEEDINGS ARE CONTINUATION OF THE ASSES SMENT PROCEEDINGS. THEREFORE, WHEN THOSE FACTS WERE PLEAD ED BEFORE LD. CIT(APPEALS), HE SHOULD HAVE CONSIDERED THE SAME IN PROPER PERSPECTIVE FOR DOING JUSTICE BETWEEN THE PARTIES. 17. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCU MSTANCES AS NOTED ABOVE, WE HOLD THAT 20% OF THE PENALTY OF OUTSTANDING DEMAND WAS EXCESSIVE, UNREASONABLE AND THEREFORE, WE MODIFY THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE PENALT Y UNDER SECTION 221(1) OF THE ACT BY RESTRICTING THE PENALT Y AT 7.5% OF THE OUTSTANDING SELF ASSESSMENT TAX OF RS. 8.14 CR AND THE ASSESSING OFFICER SHALL RE-WORK THE PENALTY AMO UNT 15 ACCORDINGLY. THE ORDERS OF AUTHORITIES BELOW LEVYI NG THE PENALTY AT 20% IS THUS, SET ASIDE AND MODIFIED TO T HE EXTENT OF 7.5%. 18. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSE E IS PARTLY ALLOWED. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND CROSS OBJECTION OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH JUNE,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH