RAJESHRI REALTORS, MUMBAI V. ITO 25(3)(3), MUMBAI

ITA 5141/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2975 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 14-09-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 16-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: JIGNESH R SHAH
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, J M AND SRI RA JESH KUMAR , AM ITA NO . 5141 /MUM/201 3 (A.Y: 2012 - 13 ) M/S. RAJESHRI REALTORS, C/O. M/S. BHARAT K. PATEL & CO., 402, RISHIKESH APT., S. V. ROAD, OPP. N.L. HIGH SCH OOL, MALAD (W), MUMBAI 400 064 PAN: AAHFR2341E VS. THE INCOME TAX OFFICER - 25(3)(3), C - 11, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, MUMBAI 400 051 APPELLANT .. RESPONDENT APPELLANT BY .. SHRI JIGNESH R. SHAH, AR RESPONDENT BY .. MR. SURABHI SHARMA, D R DATE OF HEARING .. 14 - 09 - 2016 DATE OF PRONOUNCEMENT .. 14 - 09 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF ORDER OF CIT ( A) - 35 , MUMBAI IN AP PEAL NO. CIT(A) - 35/ITO.25(3)(3)/ITA.206/2012 - 13 DATED 03 - 05 - 2013 . IN THIS CASE, PENALTY UNDER DISPUTE WAS LEVIED U/S 221(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) BY THE ITO - 25(3 ) ( 3), MUMBAI VIDE HIS ORDER DATED 09 - 01 - 2013 FOR ASSESSMENT YEAR 2012 - 13. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAIN ST THE ORDER OF THE CIT ( A) CONFIR MING THE LEVY OF PENALTY U/S. 22 1(1 ) OF THE ACT BY THE AO. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING TWO GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMM. OF INCOME TAX (AP PEALS) - 35, MUMBAI ERRED IN UPHOLDING THE PENALTY LEVIED U/S 221(1) BY THE LD. ITO 25(3) (3) AMOUNTING TO RS.10,15,488/ - IGNORING THE FINANCIAL DIFFICULTIES & CRISIS FACED BY THE APPELLANT. 2. WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL, YOUR APPELLA NT EARNESTLY REQUEST YOUR HONOUR TO CONSIDER THE ADDITIONAL GROUNDS OF APPEAL IN TERMS OF LEVYING MINIMUM PENALTY AS AGAINST MAXIMUM PENALTY BEING 100% OF TAX IN ARREARS LEVIED BY THE LD. ITO & UPHELD BY THE LD. CIT (A) - 35 CONSIDERING THE FACTS THAT THE AP PELLANT HAS PAID TAX IN ARREARS IN FULL. ITA NO. 5141 /MUM/20 1 3 2 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSEE HAS NOT PAID SELF ASSESSMENT TAX PAYABLE FOR ASSESSME NT YEAR 2012 - 13 AMOUNTING TO RS.12,15,488/ - . THEREAFTER THE AO ISSUED SHOW - CAUSE NOTICE DATED 19 - 11 - 2013 AS TO WHY PENALTY U/S 221 (1) OF THE ACT SHOULD NOT BE LEVIED FOR DEFAULT IN PAYMENT OF SELF ASSESSMENT TAX. THE ASSESSEE STATED THAT IT HAS PAID FULL AMOUNT OF SELF ASSESSMENT TAX ALONG WITH INTEREST UNDER THE ACT WITHIN SEVEN MONTHS AND AS SUCH THERE IS NO LOSS TO THE REVENUE . THE ASSESSEE EXPLAINED THAT SELF ASSESSMENT TAX WAS DUE ON 3 0 - 09 - 2012 AND THE SAME WAS PAID ON THE FOLLOWING DATES: - DATE AMO UNT (RS.) 01.12.2012 2,00,000 05.03.2013 2,00,000 13.03.2013 3,00,000 15.04.2013 5,15,488 TOTAL RS. 12,15,488 THE ASSESSEE SUBMITTED THAT IT IS A SHORT AND NEGLIGIBLE DELAY OF SEVEN MONTHS IN PAYING THE SELF ASSESSMENT TAX, WHICH WAS NOT DELIBERATE OR WILLFUL, BUT WAS DUE TO THE STRINGENT FINANCIAL CRISIS THE ASSESSEE WAS FACING. THE ASSESSEE CLAIMED THAT IT IS NOT HABITUAL DEFAULTER BECAUSE IN ALL THE EARLIER YEARS OR SUBSEQUENT YEARS THERE IS NO SUCH DELAY ON THE PART OF THE ASSESSEE. THEREFORE, IT PRAYED THAT THE AO SHOULD NOT HAVE IMPOSED PENALTY. THE AO WAS NOT CONVINCED WITH THE REPLY OF THE ASSESSEE FOR THE REASONS RECORDED IN PARA - 3 OF THE PENALTY ORDER DATED 09 - 01 - 2013 AS UNDER: - 3. IN RESPONSE TO THE ABOVE, VIDE LETTER DATED 03 - 12 - 2012, THE ASSESSEE REPRESENTATIVE CONTENDED THAT DUE TO FINANCIAL DIFFICULTIES, THE ASSESSEE HAS PARTLY PAID THE S. A. TAX AMOUNT OF RS.2,00,000/ - . HOWEVER, THE ASSESSEES CONTENTION CANNOT BE ACCEPTED AS THE SAME IS WITHOUT ANY SUBSTANCE AND BASIS. AT THE OUTSET, THE ASSESSEE HAS NOT FURNISHED THE RELEVANT BOOKS OF ACCOUNT AND FINANCIAL STATEMENTS IN SUPPORT OF ITS CLAIM OF FINANCIAL DIFFICULTIES. MOREOVER, DURING THE PERIOD FROM THE DATE ON WHICH THE TAX BECAME PAYABLE AND UP TO TILL DATE, THE ASSES SEE HAS BEEN CONDUCTING ITS BUSINESS ON REGULAR BASIS, WHICH IS NOT POSSIBLE WITHOUT PAYING THE CREDITORS REGULARLY. THEREFORE, IT IS EVIDENT THAT THE ASSESSEE HAS BEEN AVOIDING PAYMENT OF TAX WITHOUT ANY VALID REASON. SINCE, THE ASSESSEE IS DEEMED TO BE AN ASSESSEE IN DEFAULT WITHIN THE MEANING OF SECTION 140A (3) OF THE I. T. ACT . I AM OF THE VIEW THAT ASSESSEES CASE IS A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTI ON 221 (1) OF THE I. T. ACT, A CASUAL REPLY DURING THE ITA NO. 5141 /MUM/20 1 3 3 COURSE OF PENALTY PROCEEDINGS SH OW THAT THE ASSESSEE COULD NOT ESTABLISH ANY PROBLEM WITH IT FOR PAYMENT OF SELF ASSESSMENT TAX AND FIR THIS REASON MAXIMUM PENALTY I.E. EQUAL TO THE AMOUNT OF TAX IN ARREAR IS IMPOSED. BEFORE THE CIT (A), THE ASSESSEE CLAIMED T HAT IT HAS FILED RELEVANT FINANCIAL STATEMENTS IN SUPPORT OF ITS FINANCIAL DIFFICULTIES BUT THE AO HAS NOT APPRECIATED THE GENUINE FINANCIAL DIFFICULTIES FACED BY THE ASSESSEE, BEFORE THE CIT (A), THE ASSESSEE FILED BANK SUMMARY AND CLAIMED THAT NO REVENUE WAS ARISING OUT OF THE PR OJECT CARRIED ON BY THE ASSESSEE AND MOREOVER, THE FUNDS GENERATED ARE OUT OF THE LOANS TAKEN FROM ITS SISTER CONCERNS FOR INEVITABLE / EMERGENCY PAYMENTS. BUT, THE CIT (A) HAS NOT GONE INTO THE ALLEGEDLY ENCLOSED BANK SUMMARY. HE ALSO CONFIRMED THE PENALT Y LEVIED BY THE AO BY OBSERVING IN PARA 5.3.2 OF HIS ORDER AS UNDER: - 5.3.2 THE APPELLANT HAS EXPLAINED THAT THE SELF ASSESSMENT TAX WAS LATER ON PAID BY THE APPELLANT VIDE THE DETAILS SHOWN IN THE CHART AS REFERRED ABOVE IN THE EARLIER PARA. SUBJECT TO VERIFICATION OF T HE CONTENTION OF THE APPELLANT, IT IS ALSO SEEN THAT THE PAYMENT WAS NOT MADE IN TIME AND IS SUPPOSED TO HAVE PAID, EXCEPT THE INITIAL PART PAYMENT, ONLY AFTER THE PENALTY WAS IMPOSED BY THE AO. THE REASONS FOR FAILURE REGARDING FINAN CIAL HARDSHIPS ARE ALSO NOT SUBSTANTIATED WITH THE DOCUMENTARY EVIDENCES AND FINANCIAL WORKING OF THE APPELLANTS FINANCIAL POSITION. AGGRIEVED, THE ASSESSEE CAME IN SECOND APPEAL BEFORE THE TRIBUNAL. 4 . NOW BEFORE US, T HE LEARNED COUNSEL FOR THE ASSE SSEE STATED THAT COMPLETE FINANCIAL STATEMENTS WERE FILED BEFORE THE AO VIDE LETTER DATED 24 - 01 - 2013, WHICH IS ENCLOSED IN ASSESSEES PAPER BOOK AT PAGE 4. WE FIND FROM THE ABOVE LETTER WHICH IS CONTAINING ONLY RETURN OF INCOME, ACKNOWLEDGMENT OF RETURN OF INCOME, COMPUTATION OF TOTAL INCOME, TAX AUDIT REPORT AND PROFIT & LOSS ACCOUNT AND BALANCE SHEET ALONG WITH SCHEDULES. BUT, FROM THE ORDER OF THE AO , IT IS CLEAR THAT THE ASSESSEE HAS NOT FURNISHED THE BOOKS OF ACCOUNT AND OTHER FINANCIAL STATEMENTS TO S UPPORT ITS FINANCIAL DIFFICULTIES. EVEN THIS FACT IS RECORDED BY THE CIT (A) THAT THE DOCUMENTARY EVIDENCES AND FINANCIAL WORKING OF THE ASSESSEES FINANCIAL POSITION WERE NOT SUBMITTED. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE CO ORDINATE BENCH OF ITAT, HYDERABAD IN THE CASE OF DCIT VS SHEETAL REFINERIES LTD. (2014) 50 TAXMANN.COM 84 (HYD. TRIB.) AND IN ITA NO. 5141 /MUM/20 1 3 4 THE CASE OF AGI O PHARMACEUTICALS LTD. VS ACIT (2013) 39 TAXMANN.COM 124 (MUM. TRIB.). WE HAVE GONE THROUGH THE CASE LAWS AND FIND THAT THERE IS NO DISPUTE OVER THE PROPOSITION SET OUT IN THESE TWO ORDERS OF THE TRIBUNAL, BUT IN THE PRESENT CASE, ADMITTEDLY THE FINANCIAL STATEMENTS AND BOOKS OF ACCOUNT WERE NOT PRODUCED BEFORE THE AO TO JUSTIFY THE FINANCIAL HARDSHIP OF THE ASSESSEE. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT I N CASE, THE ASSESSEE IS ABLE TO JUSTIFY FINANCIAL HARDSHIP FOR NON - PAYMENT OF SELF ASSESSMENT TAX TO BE EXHIBITED BY FILING FINANCIAL DIFFICULTIES , PENALTY SHOULD NOT BE LEVIED. IN TERMS OF THE ABOVE, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD BE ALLOWED ONE MORE OPPORTUNITY TO FILE FINANCIAL STATEMENTS AND RELEVANT DOCUMENTS TO PROVE THAT THE ASSESSEE IS REALLY UNDER FINANCIAL CRISIS AND WAS UNABLE TO PAY SELF ASSESSMENT TAX DUE TO SUFFICIENT C AUSE . IN CASE, THE ASSESSEE IS ABLE TO PROVE THAT IT WAS REALLY FACING FINANCIAL DIFFICULTIES, ASSESSEES CASE FALLS UNDER THE PROVISO AND DEFAULT WAS FOR GOOD AND SUFFICIENT REASON AND NO PENALTY SHOULD BE LEVIED. IN TERMS OF THE ABOVE, WE RESTORE THE MAT TER BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD AND AFTER ALLOWING OPPORTUNITY TO FILE FINANCIAL STATEMENTS AND OTHER DETAILS TO PROVE ITS FINANCIAL DIFFICULTIES. RESULTANTLY, ASSESSEES APPEAL STA NDS ALLOWED FOR STATISTICAL PURPOSES. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 - 09 - 2016 . SD/ - ( RA JESH KUMAR ) ACCONTANT MEMBER MUMBAI, DATED: 14 - 09 - 2016 LAKSHMIKANTA DEKA/SR.PS SD/ - ( MAHAVIR SINGH ) JUDICIAL MEMBER ITA NO. 5141 /MUM/20 1 3 5 BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI SR.NO. PARTICULARS DAT E INITIALS MEMBER CONCERNED 1 DICTATION GIVEN ON 14/09/16 LK DEKA JM 2 DRAFT PLACED BEFORE AUTHOR 16/09/16 3 DRAFT PROPOSED/PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR.PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO THE BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//