Biltube Industries Limited, Pune V. DCIT, Circle 1(1), Pune

ITA 409/PUN/2013

• Counselvise Citation: 40924514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 08-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.333/PN/2013 (A.Y: 2010-11) DY. CIT, CIRCLE 1(1), PUNE APPELLANT VS. BILTUBE INDUSTRIES LIMITED 1102, 11 TH FLOOR, SAI CAPITAL BUILDING, SENAPATI BAPAT ROAD, PUNE - 411016 PAN: AAHCS9883K RESPONDENT ITA NO.409/PN/2013 (A.Y: 2010-11) BILTUBE INDUSTRIES LIMITED 1102, 11 TH FLOOR, SAI CAPITAL BUILDING, SENAPATI BAPAT ROAD, PUNE - 411016 PAN: AAHCS9883K APPELLANT VS. DY. CIT, CIRCLE 1(1), PUNE RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE DEPARTMENT BY : SHRI S.P. WALIMBE DATE OF HEARING : 18.03.2014 DATE OF ORDER : 20.03.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH THESE CROSS APPEALS ARISING FROM THE COMMON O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE. SO T HESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 2 2. IN ITA NO.333/PN/2013, THE REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AN D CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX(A PPEALS) GROSSLY ERRED IN RESTRICTING THE PENALTY U/S 221(1) LEVIED ON THE ASSESSEE TO RS 5 LAKHS INSTEAD OF CONFIRMING THE PENALTY OF RS. 10 LAKHS. 3. THE LEARNED COMMISSIONER OF INCOME-TAX(A PPEALS) GROSSLY ERRED IN ALLOWING RELIEF TO THE ASSESSEE E VEN AFTER ACKNOWLEDGING THAT THE ASSESSEE'S SALES AS WE LL AS PROFITABILITY HAD INCREASED MANIFOLD TIMES, THE ASS ESSEE ALSO HAD FUNDS AVAILABLE WITH IT, AND IT HAD NO REASONABLE CAUSE FOR NOT PAYING THE SELF-ASSESSMENT TAX IN TIME. 4. THE LEARNED COMMISSIONER OF INCOME-TAX(A PPEALS) GROSSLY ERRED IN REDUCING THE PENALTY U/S.221 WITHO UT ASSIGNING ANY VALID REASON. 5. THE LEARNED COMMISSIONER OF INCOME-TAX(A PPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT BY FILI NG THE RETURN OF INCOME WITHIN THE PRESCRIBED DATE WITHOUT PAYING SELF-ASSESSMENT TAX, THE ASS ESSEE HAD CIRCUMVENTED LEVY OF INTEREST U/S 234A WHICH WOULD HAVE BEEN MORE THAN THE PENALTY LEVIED U/S 221. HEN CE THE PENALTY OF RS. 10 LAKHS SHOULD HAVE BEEN CONFIRMED. 6. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF THE HEARING, THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING TH E COURSE OF THE APPELLATE PROCEEDINGS BEFORE THE HON' BLE TRIBUNAL. 3 3. IN ITA NO.409/PN/2013, THE ASSESSEE HAS FILED TH E APPEAL ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT (APPEALS)-I, PUNE ERRED IN LAW AND ON FACTS IN PARTLY SUSTAINING THE PENALTY U/S 221(1) OF THE ITA, 1961 AS LEVIED BY THE DCIT, CIRCLE 1(1), PUNE, TO THE TUNE OF RS. 500,000/- 2. THE LEARNED CIT (APPEALS)-I, PUNE ERRED IN LAW AND ON FACTS IN NOT APPRECIATING APPELLANT'S COMPLIANT BEHAVIOR IN PAST AND GENUINE HARDSHIP FACED BY IN A.Y. 2010-11. 3. THE APPELLANT CRAVES, LEAVE TO ADD / MODIFY / DELET E ALL OR ANY OF THE GROUNDS OF APPEAL. 4. THE ASSESSING OFFICER HAD LEVIED THE PENALTY OF 10,00,000/- U/S. 221(1). THE FACTS OF THE CASE ARE THAT AS PER ITS OWN RETURN OF INCOME FOR A.Y. 2010-11, THE ASSESSEE DETERMINED SE LF ASSESSMENT TAX LIABILITY OF 3,21,79,024/-. THE ASSESSEE HAS SUBMITTED DETAILED REASONS FOR NONPAYMENT OF THE BALANCE SELF ASSESSME NT TAX VIDE LETTER DATED 28.02.2011, HAVING PAID 75,60,000/- TILL THAT DATE. THE REASONS BEING AS UNDER: A) MAJOR COST OVERRUN OF ITS NEW UNIT AT KODOLI IN KOLHAPUR DISTRICT, THE COST ESCALATION GOING UP FROM RS.165 CRORE TO RS.235 CRORES. THE APPELLANT HAD TO MEET ADDITIONA L COST FROM ITS AVAILABLE SHORT TERM FUNDS, SINCE BANKS WERE WI LLING TO SANCTION ADDITIONAL LOANS ONLY AFTER START OF COMME RCIAL PRODUCTION. B) MISHAP OCCURRING AT ITS FRENCH SUBSIDIARY COMPAN Y, WHICH LED TO THIS PLANT BEING ON HOLD FOR ABOUT 100 DAYS. C) FUNDS BLOCKED UP IN CENVAT AND VAT AUDIT, WHICH ONCE PRODUCTION STARTED, COULD GET RELEASED AND SAVE WOR KING CAPITAL. 5. CONSIDERING THE SUBMISSIONS, THE ASSESSING OFFIC ER HELD THAT UTILIZATION OF FUNDS FOR BUSINESS EXPANSION OR BUSI NESS ACTIVITY IS SECONDARY TO THE NEED FOR PROMPT PAYMENT OF TAXES A ND THESE ARE NOT GOOD OR ADEQUATE REASONS FOR NON-PAYMENT OF SAT. H E LEVIED THE PENALTY OF 10,00,000/- U/S.221 OF IT ACT. THE MATTER WAS CAR RIED 4 BEFORE FIRST APPELLATE AUTHORITY, WHEREIN THE VARIO US CONTENTIONS WERE RAISED ON BEHALF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) HAD RESTRICTED THE PENALTY OF 5,00,000/-. THE REVENUE HAS AGITATED BEFORE US AGAINST THE RESTRICTION OF PENAL TY. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUP PORTED THE ORDER OF CIT(A). 6. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT ASSESSEE HAS DEFAULTED ON ITS OWN LIABILITY OF PAYMENT OF SAT, BASED ON ITS OWN COMPUTATION AND RE TURN OF INCOME. THE REASONS ADDUCED BY THE ASSESSEE WERE A LSO NOT DISPUTED BY ASSESSING OFFICER. WHILE APPRECIATING THE FACT THAT MANAGEMENT OF THE COMPANY IS IN THE HANDS OF FIRST GENERATION, ENTREPRENEURS, WHO HAVE EMBARKED IN A MISSION TO BE GLOBAL LEADERS IN THE HIGHLY COMPETITIVE INDUSTRY OF PAPER PRODUCT WHICH REVEALED BY THE INVESTMENT IN A FRENCH SUBSIDIARY COMPANY (A PPROXIMATELY 40 CRORES) IN CURRENT FINANCIAL YEAR AND AT THE SAM E TIME, THE ASSESSEE WAS ALSO DUTY BOUND TO COMPLY WITH THE PAY MENT OF DUE TAXES AS PER LAW. IT IS NOT IN DISPUTE THAT THE SA LE BY ASSESSEE HAS INCREASED MANIFOLDS FROM 36 CRORES IN A.Y. 2007-08 TO 103 CRORES IN A.Y. 2010-11. SIMILARLY PROFITABILITY INCREASED FROM 4.32 CRORES IN A.Y. 2007-08 TO 17.02 CRORES IN A.Y. 2010-11. T HE ASSESSEE HAD MADE SUBSTANTIAL INVESTMENT IN FIXED ASSETS AROUND 52 CRORES AND OTHER INVESTMENTS, WHEREAS, BORROWINGS FROM BANKS A ND INSTITUTIONAL LENDERS HAS ACTUALLY DECLINED SUBSTANTIALLY. THE C IT(A) HAVING DISCUSSED VARIOUS LEGAL PROPOSITIONS, HAS OBSERVED THAT UNLESS THERE ARE GOOD AND BONAFIDE REASONS, PENALTY U/S.221 CAN BE LEVIED FOR FAILURE TO PAY SELF ASSESSMENT TAX. IN THIS CASE, THE ASSESSEE HAD FUNDS AVAILABLE BUT THEY HAVE BEEN UTILIZED FOR INV ESTMENT IN FIXED ASSETS AND FOREIGN ACQUISITIONS AS DISCUSSED ABOVE. THERE COULD BE CERTAIN UNFORESEEN INCIDENTS OCCURRED OVER WHICH, T HE ASSESSEE SHOULD HAVE PRACTICAL CONTROL, SUCH, COST-OVERRUNS AT ITS NEWLY SET UP UNIT AT KODOLI AND THE ACCIDENT AT THE PLANT LOCATE D AT FRANCE. SO, 5 AGREEING THE PENALTY IN PRINCIPLE U/S.221, THE CIT( A) RESTRICTED THE SAME DUE TO THE PRACTICAL CIRCUMSTANCES AS DISCUSSE D ABOVE, TO THE TUNE OF 5,00,000/-. THIS REASONED FACTUAL FINDING OF CIT( A), WHEREBY, HE HAS RESTRICTED THE PENALTY TO THE TUNE OF 5,00,000/- NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. IN THE RESULT, BOTH THE APPEALS OF REVENUE AND A SSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF MARCH, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 20 TH MARCH, 2014 GCVSR COPY TO:- 1. DEPARTMENT 2. ASSESSEE 3. THE CIT(A)-KOLHAPUR 4. THE CIT-KOLHAPUR 5. THE DR, B BENCH, I.T.A.T., PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE