DCIT, New Delhi V. M/s Harsha Associates (p) Ltd., Delhi

ITA 3824/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2423 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 24-12-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 08-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAYANT KUMAR
• Keywords: Opportunity of being heard; Set aside
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : C NEW DELHI) BEFORE SHRI C.L. SETHI, J UDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER I.T.A. NO.3324/DEL./2009 (ASSESSMENT YEAR : 2003-04) DCIT, CIRCLE 12(1), VS. M/S HARSHA ASSOCIATES (P ) LTD., NEW DELHI. 117, HARGOVIND ENCLAVE, VIKAS MARG EXTN. NEW DELHI. (PAN AAACH0568D) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI JAYANT KUMAR, DR ORDER PER K.D. RANJAN, AM THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 2003 -04 ARISES OUT OF ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XII, NEW D ELHI. THE GROUNDS OF APPEAL RAISED ARE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE CIT(A) IS WRONG, PERVERSE, ILLEGAL AND AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) IN DELETING THE PENALTY LEVIED U/S 221(1), IGNORING TH E FACT THAT THE ITAT HAS ISSUED DIRECTIONS TO THE AO FOR FRESH DECISION ON A CCOUNT OF ADDITIONS MADE U/S 68 AND THE SAME IS STILL PENDING WITH THE AO. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S 221(1) OF THE ACT, IGNORING THE FACT THAT THE QUANTUM APPEAL OF THE ASSESSEE HAS NOT ATTAINED FIN ALITY AS PART APPEAL IN THE MATTER IS PENDING BEFORE THE HONBLE HIGH COURT. 2. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT T HE ASSESSMENT U/S 143(3) OF THE I.T. ACT WAS COMPLETED ON 8.3.2006 AT AN INCOME OF RS.1, 17,35,100/- CREATING A DEMAND OF RS.58,94,936/-. SINCE THE ASSESSEE HAD NOT PAID TH E DEMAND IN TIME, THE AO ISSUED SHOW CAUSE NOTICE U/S 221(1) OF THE ACT ON 24.8.2006 REQ UIRING THE ASSESSEE TO SHOW CAUSE AS TO I.T.A. NO.3824/DEL./2009 (A.Y. : 2003-04) 2 WHY PENALTY U/S 221(1) SHOULD NOT BE LEVIED FOR NO N-PAYMENT OF TAX DEMAND. IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE HAD FIL ED AN APPEAL BEFORE THE CIT(A) AND, THEREFORE, REQUESTED THE AO TO STAY THE DEMAND TILL THE DECISION OF APPEAL. THIS CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND THE ASSESSEE WAS ASKED TO DEPOSIT AN AMOUNT OF RS.20 LAKH BY 18.5.2006 AND AL SO TO INTIMATE THE DETAILED PAYMENT PLAN IN RESPECT OF BALANCE AMOUNT SO AS TO CLEAR TH E DEMAND OUTSTANDING AGAINST THE ASSESSEE. SINCE THE ASSESSEE HAD NOT MADE PAYMENT WITHIN THE STATUTORY TIME, A PENALTY OF RS.5,89,492/- BEING 10% OF THE DEMAND OUTSTANDING W AS IMPOSED U/S 221(1) OF THE ACT. 3. ON APPEAL, IT WAS SUBMITTED THAT ON APPEAL, LD.C IT(A) ALLOWED PARTIAL RELIEF AND THE BALANCE DEMAND WAS REDUCED TO NIL BY THE ITAT B Y SETTING ASIDE THE ORDER OF AO. THEREFORE, THERE WAS NO DEMAND PENDING AGAINST THE ASSESSEE AND HENCE PENALTY U/S 221 WILL NOT BE IMPOSABLE. ON ABOVE SUBMISSIONS, THE CIT(A) NOTED THAT AS ON THE DATE WHEN PENALTY WAS LEVIED, THE ASSESSEE WAS IN DEFAULT, BU T UP TO THE LEVEL OF ITAT, RELIEF HAS BEEN ALLOWED. SHE FURTHER NOTED THAT IN VIEW OF PR OVISIONS OF SECTION 221(2), WHERE AS A RESULT OF ANY FINAL ORDER, THE AMOUNT OF TAX WITH R ESPECT TO THE DEFAULT IN THE PAYMENT OF WHICH PENALTY WAS LEVIED, HAS BEEN WHOLLY REDUCED, THE PENALTY LEVIED SHALL BE CANCELLED AND AN AMOUNT OF PENALTY PAID SHALL BE REFUNDED. ACCORDINGLY, THE CIT(A) CANCELLED THE PENALTY IMPOSED U/S 221(2) OF THE ACT. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE CASE WAS CALLED FOR HEARING. KEEPING IN VIEW OF THE ISSUE INVOLVED, THE MATTER I S DECIDED AFTER HEARING LD.SR.DR. 4. WE HAVE HEARD THE LD.SR.DR AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT THE TAX PAYABLE AS ON THE DATE OF PENALTY IMPOSED U/S 221(1) WAS OUTSTANDING AGAINST THE ASSESSEE IN RESPECT OF ADDI TIONS MADE U/S 68 OF THE ACT. IT IS SEEN FROM THE ORDER OF THE ITAT PASSED IN ITA NO.3571/DE L./07 DATED 12.9.2008 FOR AY 2003-04 THAT THE AO MADE ADDITION OF RS.21.04 LAKH OUT OF ADDITIONAL CAPITAL OF RS.71.21 LAKH AND RS.95,52,730/- OUT OF TOTAL ADVANCES OF RS .2,27,16,813/- U/S 68 OF THE ACT. ON APPEAL, THE CIT(A) DELETED THE ADDITION OF RS.20.04 LAKH AND THE ADDITION OF RS.95,52,730/- WAS CONFIRMED. THE ASSESSEE AS WELL AS THE AO PREFERRED THE APPEAL BEFORE THE ITAT. THE ITAT IN THEIR ORDER DATED 12. 7.2008 RESTORED THE MATTER IN ASSESSEES APPEAL TO THE FILE OF THE AO WITH THE DI RECTIONS TO PROVIDE ADEQUATE OPPORTUNITY I.T.A. NO.3824/DEL./2009 (A.Y. : 2003-04) 3 TO THE ASSESSEE AND APPEAL FILED BY THE REVENUE WAS DISMISSED FOR THE REASONS MENTIONED IN THEIR ORDER. IN NUTSHELL AFTER THE ORDER OF THE ITAT, THERE WAS NO OUTSTANDING DEMAND PENDING AGAINST THE ASSESSEE. SUB-SECTION (2) OF S ECTION 221 SAYS THAT WHERE AS A RESULT OF ANY FINAL ORDER, THE AMOUNT OF TAX WITH RESPECT TO THE DEFAULT IN PAYMENT OF WHICH PENALTY WAS LEVIED, HAS BEEN WHOLLY REDUCED, THE PENALTY SH ALL BE CANCELLED AND THE AMOUNT OF PENALTY PAID SHALL BE REFUNDED. SINCE AFTER THE OR DER OF THE TRIBUNAL, THE TAX DEMAND HAS BEEN WHOLLY REDUCED, THE PROVISIONS OF SUB-SECTION (2) OF SECTION 221 SHALL BE PRESSED INTO OPERATION. SINCE THE ITAT HAS SET ASIDE THE M ATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION AND WE ARE NOT AWARE OF THE ADDITIONS MADE AFRESH BY THE AO AND SINCE THE PROCEEDINGS ARE IN CONTINUATION, WE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO EXAMINE THE LEVY OF PE NALTY IN VIEW OF THE ADDITIONS FINALLY DELETED UP TO THE LEVEL OF ITAT AS ALSO FURTHER REL IEF ALLOWED BY THE AO IN THE FRESH ASSESSMENT AS PER DIRECTION OF THE ITAT. THE CIT(A ) WILL DECIDE THE ISSUE ON MERIT AFTER AFFORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. 6. ORDER PRONOUNCED IN OPEN COURT AFTER THE HEARING OF THE APPEAL ON 24.12.2009 ITSELF. SD/- SD/- (C.L. SETHI) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, DEC. 24, 2009. SKB COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT I.T.A. 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