IKF Finance Ltd., Vijayawada V. THE Dy CIT, Vijayawada

ITA 533/VIZ/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1193 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 10-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVINDA RAJAN

Judgement Text

ITA NO.533/VIZAG/2014 IKF FINANCE LTD., VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.533/VIZAG/2014 ( / ASSESSMENT YEAR: 2012-13) IKF FINANCE LTD., VIJAYAWADA VS. DCIT, CIRCLE - 2(1), VIJAYAWADA [PAN: AAACI4784J ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI GOVINDA RAJAN, DR / DATE OF HEARING : 03.05.2016 / DATE OF PRONOUNCEMENT : 06.05.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), VIJAYAWADA FOR THE ASSESSMENT YEAR 2012-13. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE HAD FILED A RETURN OF INCOME ON 29.9.2012 ADMITTING TOTAL INCOME OF ` 2,67,65,244/-. THE TOTAL TAX ITA NO.533/VIZAG/2014 IKF FINANCE LTD., VIJAYAWADA 2 PAYABLE AS ON THE DATE OF FILING OF THE RETURN OF I NCOME WAS ` 1,14,73,950/-. THE ASSESSEE FILED A RETURN OF INCO ME WITHOUT PAYMENT OF TAX. SUBSEQUENTLY, THE ASSESSEE HAS PAID TAXES OF ` 30 LAKHS, ` 25 LAKHS, ` 25 LAKHS AND ` 30 LAKHS ON 1.10.2012, 5.10.2012, 17.10.2012 & 18.10.2012 RESPECTIVELY LEAVING A BALANCE OF RS.4,7 3,950/-. HENCE, THE A.O. HAS ISSUED A NOTICE TO THE ASSESSEE U/S 221(1) R.W.S. 140A(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS TH E ACT) DATED 25.10.2012 PROPOSING LEVY OF PENALTY U/S 221(1) OF THE ACT. THE ASSESSEE PAID THE BALANCE AMOUNT OF ` 4,73,950/- ON 29.10.2012 AND REQUESTED THE A.O. TO DROP THE PENALTY PROCEEDINGS. HOWEVER, THE A.O. DID NOT ACCEPT THE ASSESSEES EXPLANATION AND PASSE D THE PENALTY ORDER BY LEVYING A PENALTY OF RS.1,14,73,950/- BEING 100% TAX PAYABLE, FOR THE ASSESSEES FAILURE TO PAY THE SELF ASSESSMENT T AX IN TIME. 2. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE CIT(A), HE HAS MADE DETAILED SUBMISSIONS WHI CH IS REPRODUCED AS UNDER: WITH REFERENCE TO YOUR NOTICE CITED IN (2) ABOVE, IN THE MATTER OF OUR APPEAL AGAINST THE PENALTY OF ` 1,14,73,950/- FOR THE ASSE SSMENT YEAR 2012-13 WE SUBMIT YOU AS STATED BELOW. 1. A COPY OF THE NOTICE U/S 221(1) OF THE INCOME TAX A CT, 1961 DATED 25.10.2012 RECEIVED ON 30.10.2012 TOGETHER WITH OUR EXPLANATION LETTER DATED 30.10.2012 SUBMITTED IN THIS REGARD AR E ENCLOSED. THE FORM NO.26AS DOWNLOADED FROM THE WEBSITE WHERE FROM THE TAX PAYMENTS CAN BE VERIFIED. IN THIS REGARD, WE SUBMIT THAT WE HAVE PAID OF THE COMPLETE SELF ASSESSMENT TAX DUE ` 1,14,73,9 50/- EVEN BEFORE ITA NO.533/VIZAG/2014 IKF FINANCE LTD., VIJAYAWADA 3 THE NOTICE U/S 221(1) HAS BEEN RECEIVED BY US ON 30 .10.2012 AND WITHIN ONE MONTH AFTER FILING THE RETURN OF INCOME ON 29.9.2012 FOR THE ASST YEAR 2012-13. WE ALSO SUBMIT THAT WE ARE HIGH LY VIGILANT ABOUT THE TAX IN ARREARS AND HAVE CLEARED THE TAX DUE AMO UNT VOLUNTARILY IN WEEKLY PAYMENT FROM THE RECOVERIES ON TOP PRIORITY. 2. WE FURTHER SUBMIT THE HDFC BANK ACCOUNT STATEMENT F OR THE PERIOD 29.9.2012 TO 29.10.2012 FROM WHICH IT CAN BE VERIFI ED THAT THE COLLECTIONS FROM THE CUSTOMERS FROM THE BRANCHES LO CATED AT DIFFERENT PLACES HAVE BEEN POOLED TOGETHER AND UTILIZED FOR P AYMENT OF THE TAX DUES IN THE MONTH OF OCTOBER, 2012. FROM THE BANK ACCOUNT IT MAY BE NOTICED THAT SOON AFTER ACCUMULATI8ON OF FUNDS WE H AVE MADE WEEKLY PAYMENTS TOWARDS SELF ASSESSMENT TAX WITHOUT ANY DE LAY AND CLEARED THE TOTAL LIABILITY OF RS.1,14,73,950/- WITHIN A MO NTH AFTER FILING THE ROI. 3. FOR THE ASST. YEAR 2012-13 WE HAVE PAID THE TOTAL T AX OF RS.3,06,18,430/- OUT OF WHICH WE HAVE PAID AN AMOUN T TO THE TUNE OF RS.1,91,44,480/- BY WAY OF TDS/ADVANCE TAX. THE MA RGINAL DELAY OF ONE MONTH IN PAYMENT OF SELF-ASSESSMENT TAX RS.114. 73 LACS AFTER FILING THE RETURN OF INCOME IS DUE TO PAUCITY OF FU NDS AND RECESSION IN THE BUSINESS CAUSING DELAY IN THE RECOVERIES. IN VIEW OF THE ABOVE, WE PLEAD YOUR GOOD SELVES OFF ICE TO KINDLY CONSIDER THE FACTS OF THE CASE AND THE GENUINE DIFFICULTY AND HA RDSHIP CAUSED TO US AND REQUEST YOU TO GRANT RELIEF OF THE PENALTY LEVIED ON US. 3. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, HE HAS OBSERVED THAT THE ASSESSEE WAS IN DEFAULT IN PAYMENT OF SELF ASSESSMENT TAX ON THE DATE OF FILING OF RET URN OF INCOME. HOWEVER, EFFORTS WERE MADE TO CLEAR THE TAX IN ARRE ARS AT THE EARLIEST. THE ASSESSEE PAID THE BALANCE TAXES IMMEDIATELY AFT ER ACCUMULATION OF FUNDS WITHIN A MONTH OF FILING OF THE RETURN OF INC OME, THAT TOO, EVEN BEFORE THE ISSUE OF NOTICE U/S 221(1) OF THE ACT VO LUNTARILY. WITH THE ABOVE OBSERVATION, HE HAS SCALED DOWN THE PENALTY I MPOSED BY THE A.O. ITA NO.533/VIZAG/2014 IKF FINANCE LTD., VIJAYAWADA 4 FROM 100% TO 10% AND THE APPEAL OF THE ASSESSEE IS ALLOWED PARTLY. ON BEING AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE TH E TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT DUE TO NON- AVAILABILITY OF THE FUNDS, THE ASSESSEE IS NOT IN A POSITION TO PAY THE TAXES IMMEDIATELY. HOWEVER, AFTER RECEIVING THE FU NDS FROM THE CUSTOMERS, DUES WERE PAID WITHIN A MONTH THAT TOO E VEN BEFORE THE ISSUE OF THE NOTICE U/S 221(1) OF THE ACT BY THE A. O. AND SUBMITTED THAT THE TAX PAID BY THE ASSESSEE VOLUNTARILY AND THEREF ORE, NO PENALTY CAN BE LEVIED. 5. ON THE OTHER HAND, THE LD. D.R. HAS SUPPORTED TH E ORDER PASSED BY THE A.O. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND THAT THE ASSESSEE FILED THE RETURN OF INCOME. HOWEVER, ON THE DATE OF RETURN OF INCOME FILED, THE ADMITTED TAX IS NOT PAID. SUBSEQUENTLY, WITHIN A MONTH, ASSESSEE HAS PAID ALMOST ALL THE AM OUNTS WHICH ARE PAYABLE ON THE DATE OF THE FILING OF THE RETURN OF INCOME. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS VIOLATED THE P ROVISIONS OF SECTION 221(1) OF THE ACT AND ACCORDINGLY LEVIED THE PENALT Y AT 100% OF TAX PAYABLE. ON APPEAL, THE LD. CIT(A) BY CONSIDERING THE EXPLANATIONS GIVEN BY THE ASSESSEE, HE HAS RESTRICTED THE PENALT Y TO 10% OF TAX ITA NO.533/VIZAG/2014 IKF FINANCE LTD., VIJAYAWADA 5 PAYABLE WITH AN OBSERVATION THAT THE ASSESSEE HAS P AID THE TAXES EVEN BEFORE THE ISSUE OF THE NOTICE BY A.O. U/S 221(1) O F THE ACT AND COMPLIED THE TAX DEMAND VOLUNTARILY. WE FIND THAT T HE ASSESSEE HAS PAID TAXES WHICH ARE PAYABLE ALONG WITH A RETURN OF INCOME, HOWEVER PAID WITHIN A MONTH EVEN BEFORE THE NOTICE ISSUED B Y THE A.O. AND THE ASSESSEE COMPLIED THE DEMAND OF TAX VOLUNTARILY. U NDER THESE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS NOT A FI T CASE TO IMPOSE PENALTY U/S 221(1) OF THE ACT. 7. UNDER SIMILAR CIRCUMSTANCES, THE ITAT BOMBAY IN THE CASE OF NIRMAN CONSTRUCTIONS VS. ACIT IN ITA NO.6191/MUM/20 11 BY ORDER DATED 15.1.2014 HAS OBSERVED THAT WHERE THERE WAS R EASONABLE AND SUFFICIENT CAUSE FOR NOT MAKING A PAYMENT OF SELF A SSESSMENT TAX AT THE TIME OF FILING OF THE RETURN OF INCOME, NO PENALTY U/S 221 OF THE ACT WAS WARRANTED. 8. IN ANOTHER CASE, ITAT BOMBAY TRIBUNAL IN THE CAS E OF JEHANGIR LENTIN ESTATES PVT. LTD. VS. ITO (2014) 63 SOT 0067 MUMBAI (URO), WHEREIN TRIBUNAL HAS OBSERVED THAT PENALTY U/S 221( 1) OF THE ACT SHALL NOT BE LEVIED WHEN GOOD AND SUFFICIENT REASON IS GI VEN FOR DEFAULT IN PAYMENT OF TAX. ASSESSEE HAS A BONAFIDE INTENTION TO PAY THE TAX AND STATUTORY LIABILITIES. ITA NO.533/VIZAG/2014 IKF FINANCE LTD., VIJAYAWADA 6 9. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE AND ALSO BY FOLLOWING THE JUDICIAL PRECEDENTS, WE A RE OF THE OPINION THAT THIS IS NOT A FIT CASE TO IMPOSE THE PENALTY U/S 22 1(1) OF THE ACT. ACCORDINGLY, THE PENALTY CONFIRMED BY THE CIT(A) TO THE EXTENT OF 10% IS ALSO DELETED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH MAY16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 06.05.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT IKF FINANCE LIMITED, D.NO.40-1-14 4, 3 RD FLOOR, CORPORATE OFFICE, LABBIPET, VIJAYAWADA-520 010. 2. / THE RESPONDENT THE DCIT, CIRCLE-2(1), VIJAYAWA DA 3. ) / THE CIT, VIJAYAWADA 4. ) ( ) / THE CIT(A), VIJAYAWADA 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM