DINESH AMBALAL PATEL, VADODARA V. DCIT , Circle-1(1)(1), VADODARA

ITA 533/AHD/2022

AI Insights

The case involves Dinesh Ambalal Patel, the appellant, who contested a penalty imposed by the Deputy Commissioner of Income Tax (DCIT), Circle-1(1)(1), Vadodara, under Section 221(1) of the Income Tax Act, 1961, for non-payment of a tax demand. The original assessment for the year 2013-14 was revised, leading to a higher tax demand, which the assessee partially paid. Despite this, a penalty was levied for default in payment. The CIT(A) upheld the penalty, leading to the appeal before the Income Tax Appellate Tribunal. The Tribunal found procedural lapses and misapplication of the law by the lower authorities, leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129431 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-04-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 27-11-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 250

Judgement Text

ITA No.533/Ahd/2022 Assessment Year: 2013-14 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.533/Ahd/2022 Assessment Year: 2013-14 Dinesh Ambalal Patel, vs. DCIT, Circle – 1(1)(1), B-20, Pramukh Darshan Society, Vadodara. Opp. Shreeji Bunglows, Sunpharma Road, Vadodara – 390 020. [PAN – AQCPP 7812 R] (Appellant) (Respondent) Assessee by : Shri Sunil Talati, AR Revenue by : Shri Sanjay Kumar, Sr. DR Date of hearing : 05.04.2023 Date of pronouncement : 12.04.2023 O R D E R This appeal is filed by the Assessee against order dated 30.09.2022 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2013-14. 2. The Assessee has raised the following grounds of appeal :- “1. The order passed by the Learned CIT(A) is bad in law, contrary to legal pronouncements and same be quashed. The penalty levied is unwarranted and same be deleted now. 2. The Learned CIT(A) has erred in confirming the penalty of Rs.3,01,503/- without appreciating the facts duly submitted by appellant. The learned CIT(A) has wrongly mentioned in order u/s. 250 that the appellant has failed to assign any possible reply which explains reasonable cause for non-payment of statutory liability which is not the facts of the case and therefore not acceptable. 2.1 It is submitted that the appellant has already preferred an appeal against order passed u/s 143(3) before CIT(A), which was filed on 01.06.2016 and same is still pending before CIT(A). 2.2 The Learned CIT has not considered the adjournment request made by the appellant and had passed order u/s.250 of the act. 2./3 The Learned CIT has erred in appreciating the facts and reply submitted by the appellant during course of assessment proceedings and has also ITA No.533/Ahd/2022 Assessment Year: 2013-14 Page 2 of 3 not taken a note of the further the appeal preferred by the appellant against the order u/s.143(3) of the Act. 2.4 Further on receipt of the notice under section 221, the appellant has paid the 20% of the said demand along with letter for stay of demand on 12.03.2018 as per circular issued by CBDT on 31.07.2017 against the notice issued under section 221(1) of the act by AO Thus, the learned AO be directed to consider the same and delete the penalty levied since the appellant has not defaulted deliberately.”” 3. The assessee submitted original return of income for A.Y. 2013-14 on 31.07.2013 declaring total income at Rs.2,99,740/- which was subsequently revised at income of Rs.28,12,940/- on 28.06.2014. Order under Section 143(3) of the Income Tax Act, 1961 was issued on 10.03.2016 and the assessee’s income was determined at Rs.98,72,400/- thereby raising demand at Rs.30,50,030/-. The assessee filed appeal before the CIT(A) on 11.04.2018 but the Assessing Officer observed that the assessee did not make any payment in response to notice of demand issued under Section 156 of the Act and, therefore, issued notice under Section 221 on 08.03.2018 to the assessee. The assessee paid Rs.6,03,006/- on 12.03.2018 which is 20% of the outstanding demand. In response to the notice under Section 221, the assessee filed reply on 13.03.2018. The Assessing Officer, after taking cognisance of the reply held that the assessee is in default on the date of issue of notice in the payment of tax and, therefore, levied penalty of Rs.3,01,563/- i.e. 10% of the demand under Section 221(1) of the Act. 4. Being aggrieved by the Assessment Order under Section 221(1) of the Act (penalty order), the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the CIT(A) has not given any opportunity to the assessee and passed ex-parte order. The Ld. AR further submitted that in respect of quantum of the addition/demand the assessee has preferred appeal before the CIT(A). Besides this, the assessee paid 20% of the outstanding demand and, therefore, when the matter was under subjudice the Assessing Officer cannot impose penalty under Section 221(1) of the Act. 6. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). ITA No.533/Ahd/2022 Assessment Year: 2013-14 Page 3 of 3 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee in respect of income assessed and the demand raised by the Assessing Officer has preferred appeal before the CIT(A) which is pending. The assessee has also paid 20% of the outstanding demand and as per Section 221(1) and explanation to that it is clear that the assessee shall not cease to be liable to any penalty under this sub-section merely by reason of the fact that before the levy of such penalty he has paid the tax. But in assessee’s case the assessee has preferred appeal before the CIT(A) and as per the Section 220(6) such assessee cannot be treated as assessee being in default. Therefore, the Assessing Officer as well as the CIT(A) has overlooked this fact. Though the CIT(A) has passed ex-parte order, it deems appropriate to decide the appeal on merit before the Tribunal as the CIT(A) has not taken cognisance of the section 220 and 221 in its proper spirit. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 12 th day of April, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 12 th day of April, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad