Naresh Kumar Jaggi, New Delhi V. ACIT, New Delhi

ITA 5833/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74427 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 19-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAJNISH SHARMA
• Keywords: Recovery proceedings; Bonafide belief; Reasonable cause; Difference of opinion; Change of opinion
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI) BEFORE SHRI U. B. S. BEDI, JUDICIAL MEMBER AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 5833 /DEL/2012 (ASSESSMENT YEAR 2009-10) NARESH KUMAR JAGGI, VS. ACIT, CC-11, F-10/11, MODEL TOWN NEW DELHI NEW DELHI PAN/GIR NO.: ADEPJ2932M I.T.A. NO. 5854/DEL/2012 (ASSESSMENT YEAR 2009-10) ITO, WARD 20(3), VS. NARESH KUMAR JAGGI, NEW DELHI F-10/11, MODEL TOWN NEW DELHI (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI RAJNISH SHARMA, C.A. DEPARTMENT BY: SHRI KEYUR PATEL, SR. DR ORDER PER U B S BEDI, JUDICIAL MEMBER: THESE CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE DEPARTMENT ARE DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-XXXI, NEW DELHI DATED 31.08.2012 RELEVANT TO ASSESSMENT YEAR 2009-10 WHEREBY THE ASSESSEE HAS CHALLENGED RESTRICTING OF PENALTY IMPO SED U/S 140A(3) AT 25% FROM 100% IMPOSED BY THE A.O. AND DEPARTMENT IS IN APPEAL FOR THE RELIEF I.T.A. NOS.5833, 5854/DEL/2012 2 GIVEN BY LD. CIT(A) TO THE EXTENT OF 75% OF THE PEN ALTY IMPOSED U/S 140A(3) OF THE ACT. 2. THE A.O. IN THIS CASE, IMPOSED PENALTY OF RS.1,2 5,29,942/- U/S 140A(3) OF THE I. T. ACT, 1961 BY TREATING THE ASSE SSEE IN DEFAULT TO BE EQUIVALENT TO THE AMOUNT REMAINED UNPAID AFTER THE EXPIRY OF THE PROVIDED PERIOD IN THE DEMAND NOTICE. WHICH WAS CHALLENGED I N APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND LD. CIT(A) RECORDED THE FAC TS OF THE CASE AND ARGUMENTS OF THE A.O. AS CONTAINED IN ASSESSMENT OR DER AS PER PARA 4.1 TO 4.6 FROM PAGE 2-4 AS UNDER: 4.1 THE ASSESSEE FILED RETURN OR INCOME FOR THE ASS ESSMENT YEAR 2009-10 ON 3' NOVEMBER, 2010, DECLARING INCOME OF R S. 6,23,36,790/- . THE ASSESSEE DID NOT MAKE PAYMENT UNDER SECTION 2 10 OF THE INCOME TAX ACT, 1961 OF THE AMOUNT OF TAX. AFTER CLAIMING CREDIT OF RS. 14,60,000/- ON ACCOUNT OF ADVANCE TAX AND SELF ASSE SSMENT TAX, A TOTAL ADMITTED TAX LIABILITY WAS SHOWN AS PAYABLE RS. 1,2 6,46,875/- . THE ASSESSEE DID '10T MAKE THE PAYMENT OF ADMITTED TAX LIABILITY UNDER SECTION 140A OF THE ACT AND FILED. THE' RETURN OF I NCOME SHOWING TAX AMOUNT PAYABLE AT RS. 12,64,875/- ON ACCOUNT OF SEL F ASSESSMENT TAX. 4.2 THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 ON 28.12 .2010. OUT OF TOTAL TAX PAYABLE, CREDIT OF RS. 14,00,000/- WAS ALLOWED ON ACCOUNT OF SELF ASSESSMENT TAX AND A DEMAND OF RS. 1,84,02,860/- WA S RAISED AGAINST THE ASSESSEE UNDER SECTION 143(1) OF THE ACT. THE I NTIMATION UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 WAS SERV ED UPON THE ASSESSEE ON 01.02.2011 AND THE ASSESSEE WAS REQUIRE D TO MAKE THE PAYMENT BY 01.02.2011. 4.3 THE ASSESSEE DID NOT MAKE ANY PAYMENT OF OUTSTA NDING DEMAND UNDER SECTION 143(1) OF THE ACT BY THE DUE DATE GIV EN IN THE INTIMATION SERVED UPON THE ASSESSEE IN VIEW OF THE CASE OF THE ASSESSEE, A SHOW CAUSE NOTICE UNDER SECTION 140A(3) OF THE INCOME TA X ACT, 1961 WAS SERVED UPON, THE APPELLANT BY THE AO VIDE F. NO. AC IT/CC-5/2011- 12/2348 DATED 22ND NOVEMBER, 2011 AND THE ASSESSEE WAS REQUIRED TO I.T.A. NOS.5833, 5854/DEL/2012 3 SUBMIT ITS REPLY BY 1ST DECEMBER, 2011 TREATING THE ASSESSEE IN DEFAULT AS PER PROVISIONS OF SECTION 140(3) OF THE ACT FOR NOT MAKING PAYMENT OF TAX DUE UNDER SECTION 140A( 1) OF THE INCOME TAX ACT, 1961. 4.4 ON THE DATE OF HEARING 01.02.2011, NONE ATTENDE D, HOWEVER, A WRITTEN REPLY WAS SUBMITTED BY THE ASSESSEE ON RECE IPT COUNTER OF A.O.S OFFICE WHICH READS AS UNDER: THAT THIS IS FOR YOUR KIND INFORMATION THAT THE TOT AL ADMITTED TAX OF RS. 1,41,06,8751- FOR THE ASSESSMENT YEAR 2009-10 WAS P AID BY ME. THAT RS. 14000001- WAS PAID BY ME BEFORE THE FILING OF T HE RETURN IN YOUR OFFICE AND BALANCE AMOUNT OF RS. 12646175/- WAS PAI D IN THE MONTH OF APRIL, 2011 AND IN SUPPORT OF MY CLAIM THE COPIES O F THE TAX PAID CHALLANS ARE FILED ALONG WITH THIS LETTER. THE DETAILS OF THE PAYMENTS OF TAX ARE AS UNDER: DATE OF PAYMENT MODE AMOUNT BANK DETAILS 08.04.2011 CHEQUE 1000000/- SBI G.T. KAMAL ROAD, DE LHI 08.04.2011 CHEQUE 10000000/- SBI G.T. KAMAL ROAD, D ELHI 26.04.2011 CHEQUE 1706875/- SBI G.T. KAMAL ROAD, DELHI SO ON THE BASIS OF THE ABOVE FACTS I HAVE PAID THE COMPLETE AMOUNT OF RS. 12646175/- & IN SUCH CIRCUMSTANCES I SHALL NOT BE TREATED AS ASSESSEE IN DEFAULT AND CONSEQUENTLY ALL THE PROVIS IONS OF SECTION 140A (3) OF THE ACT, 1961 WAS NOT APPLICABLE TO ME. SO I HAVE MADE A GENUINE PRAY BEFORE YOU THAT NO PE NALTY PROCEEDINGS UNDER SECTION 140A (3) OF THE ACT IS MAINTAINABLE A GAINST ME THEREFORE YOU ARE REQUESTED TO PLEASE NOT TO INITIATE ANY PEN ALTY PROCEEDINGS AGAINST ME UNDER SECTION 140A(3) OF THE ACT, 1961. ' 4.5 REPLY OF THE ASSESSEE WAS CONSIDERED BY THE AO. IN THE REPLY THE ASSESSEE HAD FURNISHED ONLY DETAILS OF PAYMENT OF T AX AND HAD NOT MENTIONED ANY REASONABLE CAUSE FOR NOT MAKING PAYME NT OF ADMITTED I.T.A. NOS.5833, 5854/DEL/2012 4 TAX LIABILITY WIDER SECTION 140A(1) OF THE IT ACT, 1961. NOTHING CAME FORWARD FROM THE REPLY OF THE ASSESSEE TO OVERCOME THE DEFAULT COMMITTED UNDER SECTION 140A(3). THE CONTENTIONS AB OVE DID NOT CARRY ANY FORCE AND HELP THE ASSESSEE TO BUILD UP A NY REASONABLE CAUSE FOR NON-'PAYMENT OF ADMITTED TAX, LIABILITY. FROM THE ABOVE DETAILS AND DISCUSSION, IT WAS HELD THAT THE ASSESS EE DID NOT MAKE' THE PAYMENT OF ADMITTED TAX LIABILITY AND COMMITTED DEF AULT WITHIN THE PROVISIONS OF SECTION 140A(3). THE AD PLACED RELIAN CE ON THE FOLLOWING CASES. 4:6 DEFAULT ON THE PART OF THE ASSESSEE HAS ALSO BE EN, EXAMINED IN VIEW OF THE FOLLOWING CASE LAWS AND DECISION OF DIF FERENT COURTS: COMMISSIONER OF INCOME TAX VS. DEVIDAYAL STAINLESS STEEL INDIA PRIVATE LIMITED (1991) 189 ITR 0506 (BOMBAY); COMMISSIONER OF INCOME TAX V. PITAMBARDAS G.) AND C O. (1995) 216 ITR 0172 (BOMBAY); TAYLOR INSTRUMENT CO. (INDIA) LIMITED V. COMMISSION ER OF INCOME TAX (1998) 232 ITR 0771 (DELHI); D) GOVINDA CHETTY (V.) V. COMMISSIONER OF INCOME T AX (1998) 231 ITR 0615 (MADRAS); RAMCHANDRA PESTICIDES P. LTD. V. COMMISSIONER OF IN COME TAX (2006)285 ITR 0045 (KARNATKA); INCOME TAX OFFICER V AM.S. SALIMARICAR (2D01) 247 I TR 0808 (SC). THEREFORE, THE ASSESSEE WAS HELD' IN DEFAULT FOR NO T MAKING PAYMENT OF ADMITTED TAX LIABILITY OF RS. 1,26,46,875/-. A PENA LTY OF AN AMOUNT EQUAL TO ADMITTED TAX LIABILITY WAS IMPOSED UNDER S ECTION 140A(3) OF THE INCOME TAX ACT, 1961. AMOUNT OF ADMITTED TAX LIABILITY 12646875/- PENALTY IMPOSED UNDER SECTION 140A(3) 100% 1264687 5/- 3. THE ASSESSEE GAVE HIS SUBMISSIONS TO THE FIST AP PELLATE AUTHORITY AS PER PARA 5-5.6 WHICH READ AS UNDER: I.T.A. NOS.5833, 5854/DEL/2012 5 THAT THE AO HAS IMPOSED 'THE PENALTY U/S 140A(3) OF THE ACT, 1961 WHICH IS TOTALLY AGAINST THE FACTS OF THE CASE. THE FACTS OF THE CASE AND DETAILED SUBMISSION ARE AS UNDER:- 5.1 THAT THE APPELLANT HAS PAID THE ADMITTED TAX BE FORE THE ISSUANCE OF THE SHOW CAUSE NOTICE ISSUED BY THE A O. THE AO ISS UED THE SHOW CAUSE NOTICE ON 22.11.2011 FOR THE NECESSARY REPLY TO BE FILED ON 01.12.2011, BUT THE APPELLANT HAS PAID THE ADMITTED TAX MUCH EARLIER I.E. COMPLETE PAYMENT OF TAX HAS BEEN PAID ON 25.01 .2011 AND THE DETAILS OF THE PAYMENT OF TAXES ARE AS UNDER:- DATE OF PAYMENT MODE AMT {RS.} BANK DETAILS 06-09- 2010 CHEQUE 4,00,000 SBI, G.T.K. ROAD, DELHI 14-10- 2010 CHEQUE 10,00,000 SBI, G.T.K. ROAD, DELHI 08-04- 2011 CHEQUE 10,00,000 SBI, G.T.K. ROAD, DELHI 08-04- 2011 CHEQUE 10,00,000 SBI, G.T.K. ROAD, DELHI 28-04- 2011 CHEQUE 17,06,875 SBI, G.T.K. ROAD, DELHI SO THESE FACTS ESTABLISH THAT THE INTENTION OF THE APPELLANT WAS NOT BAD AND HE HAS NOT WILLFULLY DELAYED THE PAYMENT OF THE ADMITTED TAX BUT THE DELAY IN PAYMENT OF TAX WAS DUE TO THE FINANCIA L HARDSHIP OR CONSTRAINT. 5.2 THAT THE COMPLETE DETAILS OF THE BANK STATEMENT & OTHER RELEVANT DETAILS HAS BEEN FILED BEFORE THE AO AT TH E TIME OF THE ASSESSMENT PROCEEDINGS WHICH CLEARLY EXPLAINED THAT THE APPELLANT HAS FINANCIAL CONSTRAINT/PROBLEM WHICH WAS BEYOND H IS CONTROL AND I.T.A. NOS.5833, 5854/DEL/2012 6 DUE TO THIS REASONS THE APPELLANT WAS NOT IN A POSI TION TO PAY THE ADMITTED TAXES WITHIN THE TIME LIMIT AS PRESCRIBED. THIS WAS THE REASONABLE CAUSE FOR DELAY IN PAYMENT OF THE ADMITT ED TAX. FURTHER NO PENALTY CAN BE IMPOSED IF THE DELAY IN PAYMENT OF A DMITTED TAX WAS DUE TO THE REASONABLE CAUSE, AS PRESCRIBED U/S 2738 OF THE ACT, 1961. MOREOVER THE APPELLANT IN HIS WRITTEN REPLY ON PROS ECUTION INITIATED AGAINST HIM U/S 276CC FILED BEFORE THE' CIT -CC-1, NEW DELHI IN THE MONTH OF FEB., 2011 IN WHICH THE APPELLANT HAS EXPL AINED IN DETAILS THE REASONS FOR DELAY IN DEPOSIT OF ADMITTED TAX. 5.3 THAT IT IS DEEMED TO BE IMPLIED THAT THE AO HAS ALLOWED TIME TO THE APPELLANT TO DEPOSIT THE ADMITTED TAX AND DUE TO TH IS HE HAS ISSUED SHOW CAUSE NOTICE AFTER THE PAYMENT OF THE ADMITTED TAX AND AFTER A LONG PERIOD OF TIME. THE AO HAS ISSUED THE NOTICE T O THE APPELLANT FOR COMMITTING A DEFAULT U/S 140A(3) OF THE ACT, 1961 I CLEARLY EXPRESS THE CHANGE OF MIND OF THE A.O. THIS ESTABLISH THE NON J UDICIOUSNESS OF THE AG. 5.4 THAT THE APPELLANT HAS FACED FINANCIAL HARDSHIP /CRISIS DURING THE PREVIOUS YEAR AS WELL AS ASSESSMENT YEAR I.E. A/Y: 2009-10 AND THIS HAS ESTABLISHED THROUGH THE EXAMINATION OF THE BANK STATEMENT 'AND OTHER RELEVANT DETAILS FILED BEFORE THE AG. AT THE TIME OF THE ASSESSMENT PROCEEDINGS, FURTHER AS CONSIDERED THE I MMEDIATE, SUBSEQUENT PREVIOUS YEAR AND THEREAFTER THE INCOME OF THE APPELLANT HAS SUBSTANTIALLY REDUCED AND IN THE NY:, 2009-10 T HE APPELLANT HAS INCURRED THE HUGE LOSSES IN SHARE INVESTMENT THIS, ALSO CAUSED THE FINANCIAL CONSTRAINT/CRISIS. SO AFTER CONSIDERING T HE FACTS, THE SITUATION IS BEYOND THE CONTROL OF THE APPELLANT TO ARRANGE T HE FUNDS. 5.5 THAT IF THERE IS SUFFICIENT REASONABLE CAUSE FO R THE NON-PAYMENT OF THE ADMITTED TAX LIABILITY BY THE 'APPELLANT THEN T HE IMPOSITION OF THE PENALTY U/S 140A(3) OF THE ACT, 1961 IS NOT MAINTAI NABLE, FURTHER THE PENALTY U/S 140A(3) IS NOT AUTOMATICALLY BECAUSE IT VIOLATES THE SECTION 2738 OF THE ACT, 1961 AND VARIOUS COURT OF THIS COU NTRY HELD THE SAME. THE APPELLANT PLACES HIS RELIANCE ON THE FOLLOWING JUDGMENT: I.T.A. NOS.5833, 5854/DEL/2012 7 - COMMISSIONER OF INCOME TAX VS. KAIJA KARINA TOOR [2010] 3231TR233 (P&H), - RAMCHANDRA PESTICIDES (P) LTD. VS. COMMISSIONER O F INCOME TAX [2006] 285ITR 45 (KAR), - COMMISSIONER OF INCOME-TAX VS. FREEWHEELS INDIA L IMITED [2001]248ITR689 (DELHI), - COMMISSIONER OF INCOME TAX VS WESTERN INDIA SALES AND SERVICE (1996) 220 ITR 292 (PATNA) 5.6 THAT AFTER CONSIDERING THE FACTS AND SUBMISSION OF THE APPELLANT YOU ARE REQUESTED TO PLEASE DELETE PENALTY U/S 140A (3) OF THE ACT, 1961 AS THE SAME IS NOT MAINTAINABLE AS THERE WAS S UFFICIENT CAUSE FOR DELAY IN DEPOSIT THE ADMITTED TAX BY THE APPELLANT. 4. LD. CIT(A) DETERMINED THE APPEAL TO RESTRICT THE PENALTY AT 25% TAX LIABILITY OF THE ASSESSEE AND GAVE RELIEF OF 75% OF THE TAX LIABILITY AS PER PARA 6 AS UNDER: THE ONLY GROUND OF HT APPEAL IS REGARDING IMPOSITI ON OF PENALTY U/S 140A (3) OF THE I. T. ACT, 1961. THE A .O. HAD IMPOSED THE PENALTY CONSIDERING THE ASSESSEE IN DEFAULT AS THE APPELLANT FAILED TO PAY TAX AS PER THE PROVISIONS CONTAINED IN SEC.140A OF THE I. T. ACT, 1961. IN HIS WRITTEN SUBMISSION THE APPELLANT HAS STATED THAT HE SHOULD HAVE NOT BEEN CONSIDERED THE ASSESSEE IN DEF AULT AS HE HAD PAID ADMITTED TAX PRIOR TO ISSUANCE OF SHOW CAUSE N OTICE BY THE A.O. IN THIS REGARD. FURTHER THE APPELLANT HAS ALSO STA TED THAT THE PENALTY SHOULD HAVE NOT BEEN LEVIED AS HE WAS FACING FINANC IAL CRISES AND THEREFORE PREVENTED BY SUFFICIENT CAUSE TO PAY TAX. I HAVE CONSIDERED THE ARGUMENTS OF THE A.O. AND RI VAL SUBMISSIONS MADE IN THIS REGARD. THE CONTENTION OF APPELLANT HAS NO FORCES. A PLAIN READING OF THE SEC. 140A(3) STATES : (3) IF ANY ASSESSEE FAILS TO PAY THE WHOLE OR AN Y PART OF SUCH TAX OR INTEREST OR BOTH IN ACCORDANCE WITH THE PROV ISIONS OF SUB- SECTION (1), HE SHALL, WITHOUT PREJUDICE TO ANY OTH ER CONSEQUENCES WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT I.T.A. NOS.5833, 5854/DEL/2012 8 OF THE TAX OR INTEREST OR BOTH REMAINING UNPAID, AN D ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY. THE INTENTION OF THE LEGISLATIVE IS CLEAR ON ABOVE PROVISIONS CONTAINED IN THE ACT. THE PROVISIONS ARE MADE TO E NSURE STRICT COMPLIANCE OF THE LAW. THIS IS EVIDENT FROM THE WO RD SHALL USED IN TREATING THE ASSESSEE IN DEFAULT. ANY OTHER INTERP RETATION WILL DEFEAT THE VERY PURPOSE OF THE PROVISION. WHERE THE A.O. INITIATED PROCEEDINGS FOR LEVY OF PENALTY BY TREATING THE ASS ESSEE AS ASSESSEE IN DEFAULT AND THE ASSESSEE CHALLENGED LEVY OF PENALTY UNDER SECTION 221 ON THE GROUND THAT NO NOTICE OF DEMAND UNDER SECTIO N 156 WAS SERVED BY THE A.O., IT WAS HELD THAT LIABILITY TO PAY SELF ASSESSMENT TAX ARISES ON THE BAISS OF THE RETURN FURNISHED BY THE ASSESSE E AND THE FAILURE TO PAY TAX OR INTEREST OR BOTH ON THE INCOME ADMITTED IN THE RETURN, RENDERS THE ASSESSEE TO BE IN DEFAULT. HENCE, THER E WAS NO NEED TO ISSUE NOTICE OF DEMAND. SAFARI MERCANTILE PVT. LT D .VS CIT (2008) 21 SOT 531 (MUM.). IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINION THAT ONCE THE DEFAULT IS COMMITTED THE APPE LLANT BECAME THE ASSESSEE IS DEFAULT AND CANNOT TAKE SHELTER UNDER A NY REASON OR CIRCUMSTANCES. IT IS QUITE A VAGUE REASON THAT THE APPELLANT WAS FACING FINANCIAL CRISES AND THAT TOO WITHOUT ANY PR OOF AND EVIDENCE. EVEN THOUGH THE TAX AND INTEREST HAVE BEEN PAID SUB SEQUENTLY THAT WILL NOT CUR THE DEFECT OF ASSESSEE IN DEFAULT U/S 140A( 3). DURING THE APPELLATE PROCEEDINGS THE APPELLANT STATED THAT HE HAD INFORMED THE A.O. ABOUT THEIR FINANCIAL CRISES AND INABILITY TO PAY TAX VIDE LETTER DATED 27/08/2010 AND 13/10/2010. THE APPELLANT HAD ALSO REQUESTED TO GRANT INSTALLMENTS FOR PAYMENT OF TAX. SINCE TH E APPELLANT HAD PAID THE ENTIRE AMOUNT OF TAX BEFORE ISSUANCE OF SHOW CA USE THE INTENTION TO PAY CANNOT BE DOUBTED AND THEREFORE DOES NOT DESERV E THE MAXIMUM PENALTY. HOWEVER, THE APPELLANT CANNOT ESCAPE FROM THE LIABILITY TO PAY PENALTY AS THE INTENTION OF THE LEGISLATURE REG ARDING PAYMENT OF TAX IS TO PAY AS YOU EARN. THE APPELLANT SHOULD HA VE ARRANGED FOR PAYMENT OF TAX AS THE INCOME WAS EARNED. IT IS QUI TE A VAGUE REASON THAT THE APPELLANT WAS FACING FINANCIAL CRISIS AND THAT TOO WITHOUT ANY PROOF AND EVIDENCE. IN MY OPINION THE APPELLANT DE FINITELY AN ASSESSEE IN DEFAULT AND IS LIABLE TO PAY PENALTY. SINCE THE INTENTION OF THE APPELLANT WAS NOT TO EVADE TAX AND THE ENTIRE T AX HAS BEEN PAID I.T.A. NOS.5833, 5854/DEL/2012 9 ALSO, THE IMPOSITION OF MAXIMUM PENALTY IS NOT JUST IFIED. IN VIEW OF THE ABOVE, I RESTRICT THE QUANTUM OF THE PENALTY TO THE 25% OF THE AMOUNT LEVIED BY THE A.O., I.E. 25% OF THE TAX LIAB ILITY OF THE APPELLANT. THUS THE PENALTY IS REDUCED TO RS.31,61 ,720/-. 5. AGAINST SUCH ORDER, ASSESSEE IS IN APPEAL FOR SU STAINING IMPOSITION OF PENALTY TO THE EXTENT OF 25% WHEREAS, THE DEPARTMEN T IS IN APPEAL AGAINST ALLOWING RELIEF FOR 75% OF THE AMOUNT DEMANDED. 6. LD. COUNSEL FOR THE ASSESSEE FILED FOLLOWING DET AILS AND SUBMISSIONS WITH CASE LAW AS UNDER: DATE OF PENALTY ORDER 16.01.2012 RETURN OF INCOME FILED ON 03.11.2010 ORDER U/S 143(3) PASSED ON 28.12.2010 INTIMATION U/S 143(1) ISSUED ON 02.01.2011 DEMAND TO BE PAID TILL 01.02.2011 SHOW CAUSE FOR PENALTY SERVED ON 22.11.2011 TAX PAID AS UNDER: RS. 10,00,000/- 08.04.2011 RS.1,10,00,000/- 08.04.2011 RS. 17,06,875/- 26.04.2011 ~ PENALTY IMPOSED BY THE LD. AO U/S 140A (3) AMOUNT ING TO RS. 12646875/- WHICH IS 100% OF TAX ARREARS. ~ CIT(A) REDUCED THE PENALTY BY RS. 9485156/- AND C ONFIRMED THE PENALTY OF RS. 3161720/- BEING 25% OF THE TAX ARREA RS ~ ASSESSEE SUO MOTO DEPOSITED THE TAX AND THERE WAS NO RECOVERY PROCEEDINGS INITIATED AGAINST THE ASSESSEE ~ THE MAXIMUM PENALTY (100%) MUST BE LEVIED IN EXTR EME CASES WHERE THE ASSESSEE EITHER RAN AWAY OR NOT PAYING TH E TAXES DESPITE RECOVERY PROCEEDINGS OR WITH MALA FIDE INTENTION. ~ THERE WAS REASONABLE CAUSE FOR NOT DEPOSITING THE TAX WITHIN THE TIME. ~ THE ASSESSEE EARNED AN UNEXPECTED INCOME FROM THE CAPITAL GAINS ON SALE OF PROPERTY/SHARES. I.T.A. NOS.5833, 5854/DEL/2012 10 ~ HE HAS AGAIN REINVESTED THE AMOUNT RECEIVED IN AN TICIPATION OF MORE PROFITS IN THE REAL ESTATES. ~ HE WAS UNDER BONAFIDE BELIEF THAT SINCE THERE WAS A BOOM IN THE REAL ESTATE SECTOR, HE WILL EARN A HANDSOME PROFIT TILL THE DATE OF FILING OF RETURN OF INCOME. ~ BUT UNFORTUNATELY THE ASSESSEE COULD NOT RECOVER THE AMOUNT INVESTED IN THE PROPERTIES. ~ HE HAD APPLIED FOR LOAN FOR PAYMENT OF TAXES BUT THE LOAN ALSO COULD NOT BE APPROVED DUE TO NON FILING OF RETURN OF INCO ME. ~ THE LOAN OF RS. 1.56 CRORES WAS APPROVED FROM IND IA BULLS FINANCIAL SERVICES LIMITED ON 30.03.2011 AFTER GREA T EFFORTS. ~ AS SOON AS THE CHEQUE GIVEN BY INDIABUILLS CLEARE D ON 08.04.2011, THE ASSESSEE PAID THE MAJOR AMOUNT OF TAX ON THE VE RY SAME DAY. ~ THERE WAS NO MALAFIDE INTENTION SINCE THE ASSESSE E SHOWN THE TAX AS PAYABLE IN THE RETURN OF INCOME. ~ THE ASSESSEE HAS NO FUNDS FOR PAYMENT OF TAXES TH EREFORE HE HAS TAKEN A LOAN FOR PAYMENT OF TAXES. ~ THE FACT THAT THE ASSESSEE HAS NO FUNDS FOR PAYME NT OF TAX IS ALREADY IN THE KNOWLEDGE OF THE ASSESSING OFFICER. HE WAS H AVING ALL THE BANK STATEMENTS AND FINANCIAL STATEMENTS OF THE ASSESSEE FOR MAKING THE ASSESSMENT U/S 153C OF THE ACT FOR LAST SIX YEARS. ~ ASSESSEE WAS AGAIN AND AGAIN REQUESTING AND BRING ING THE FACTS OF PAUCITY OF FUNDS IN THE KNOWLEDGE OF THE ASSESSING OFFICER. ~ THE PENALTY WAS LEVIED BY THE LD. AO WITH BIAS MI ND AND DUE TO CHANGE OF OPINION. ~ THE FACT THAT THE LD. AO WAS BIASED AGAINST ASSES SEE IS QUITE EVIDENT FROM THE ASSESSMENT ORDER PASSED. SOME OF THE FACTS ARE AS UNDER: THE STATEMENT OF PERSON SEARCHED WAS RECORDED BY TH E AO ON 07.12.2010 WHILE THE STATEMENT OF THE ASSESSEE RECO RDED ON 24.11.2010 IN WHICH THE LD. AO ASKED THE QUESTIONS BASED ON THE STATEMENT OF PERSON SEARCHED. SUMMONS DATED 06.09.2010 ISSUED BY THE LD. AO FOR A PPEARING ON 09.09.2010, BUT HE HAS ALSO ISSUED PENALTY NOTICE F OR NON APPEARANCE ON 08.09.2010 ITSELF. I.T.A. NOS.5833, 5854/DEL/2012 11 DESPITE REPEATED REQUESTS HE HAS NOT PROVIDED THE C OPY OF STATEMENTS RECORDED OF THE PERSONS SEARCHED AND U AGAINST THE ASSESSEE AND FURTHER NO CROSS EXAMINATION WAS ALLOWED. I) E. K. VARGHESE & ANR. VS ITO 96 ITR 577 (KER.) II) ACIT VS AVDESH KUMAR PARVINDER S. KOCHAR 117 TTJ 13 7 (DEL.) III) ADDL. CIT VS FREEWHEEL INDIA LIMITED 137 ITR 378 (D EL.) IV) CIT (TDS) VS GLOBAL INFOSYSTEMS LTD. 165 TAXMAN 486 (DEL.) V) ADDL.CIT VS KALYANMAL MILLS TENT FACTORY 116 ITR 88 1 (MP) VI) CIT VS CHEMBARA PEAK ESTATES LTD. 183 ITR 471 (KER. ) VII) CIT VS JAIPUR ELECTRO PVT. LTD. 183 ITR 476 (RAJ.) VIII) CIT VS BHIKAJI RAMCHANDRA 183 ITR 478 (BOM.) IX) ITO VS U. PVT. LTD. 9 TTJ (AHD.) 374 X) CIT VS MYSORE FERTILIZER CO. 145 ITR 91 (MAD.) XI) RAMCHADNRA PESTICIDES PT. LTD. VS CIT 285 ITR 45 (K ER.) XII) CIT VS INDO AMERICAN ELECTRICALS LTD. 155 ITR 63 (C AL.) XIII) DUFLON POLYMERS PVT. LD. VS DCIT I.T.A. NO. 2323/MU M/12 XIV) CIT VS H.T. HA. BIT PVT. LTD. 217 ITR 173 (MAD.) 7. IT WAS THUS PLEADED FOR DELETION OF THE AMOUNT O F PENALTY IMPOSED BY THE A.O. TO THE EXTENT SUSTAINED BY LD. CIT(A). 8. LD. D.R. WHILE RELYING UPON THE ORDER OF THE A.O ., HAS PLEADED THAT THERE IS A CLEAR DEFAULT HAVING BEEN COMMITTED BY T HE ASSESSEE AS THE AMOUNT OF DUE LIABILITY OF TAX HAS NOT BEEN PAID WITHIN TH E SPECIFIED TIME SO, THE ASSESSEE WAS TREATED IN DEFAULT FOR THE ENTIRE AMOU NT AND PENALTY HAS RIGHTLY BEEN IMPOSED BY THE A.O. TO THE EXTENT OF 100% OF T HE DUE DEMAND REMAINED UNPAID. IT WAS ALSO STRONGLY PLEADED THAT NO REASONABLE CAUSE HAS BEEN ESTABLISHED OR PLAUSIBLE REASON HAS BEEN GIVEN BY THE ASSESSEE BECAUSE IT IS NOT THE CASE OF THE ASSESSEE THAT HE HAD EARN ED ANY LOSS OR AMOUNT WAS NOT AVAILABLE WITH HIM BUT SIMPLY PLEA HAS BEEN TAK EN THAT THE ASSESSEE I.T.A. NOS.5833, 5854/DEL/2012 12 EXPECTS SAME TYPE OF RETURN ON THE AMOUNT INVESTED IN THE PROPERTY BECAUSE OF THE BOOM IN THE SHARE MARKET DURING THE PERIOD U NDER CONSIDERATION, THEREFORE, HE WAS NOT ABLE TO PAY THE SAME AND BEFO RE ISSUANCE OF SHOW CAUSE NOTICE AND IMPOSITION OF PENALTY, ENTIRE AMOUNT HAS BEEN PAID SO PENALTY CANNOT BE IMPOSED. 8. IT WAS SUBMITTED BY THE LD. D.R. THAT IN THE ABS ENCE OF REASONABLE CAUSE IN NOT MAKING THE PAYMENT NO OTHER REQUEST CO ULD BE A MITIGATING ONE TO ABSOLVE THE ASSESSEE FROM LEVY OF PENALTY AND AL L THE CASE LAW AS CITED BY THE ASSESSEE BEFORE LOWER AUTHORITIES AS WELL AS BE FORE THIS BENCH DO NOT DIRECTLY SUPPORT THE CASE OF THE ASSESSEE. MOREOVE R, FINANCIAL POSITION HAS NEITHER BEEN EXPLAINED NOR PROVED NOR IT HAS BEEN E STABLISHED THAT WHEN THE ASSESSEE HAS MADE THE PAYMENT. HOW HE CAME IN POSS ESSION OF AMOUNT DEPOSITED AND FROM WHICH SOURCE? IT IS MENTIONED T HAT ASSESSEE HAS JUST TAKEN A PLEA WITHOUT HAVING BEEN SUBSTANTIATED. AS SUCH, THE ORDER OF LD. CIT(A) IN REDUCING THE PENALTY FROM 100% TO 25% IS ALSO UNCALLED FOR AND UNWARRANTED. IT WAS THUS PLEADED FOR RESTORATION OF THE ORDER OF THE A.O. 9. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MAT ERIAL ON RECORD AS WELL AS SUBMISSIONS MADE BEFORE THE LOWER AUTHORITI ES AND REITERATED BEFORE THIS BENCH IN THE LIGHT OF THE PRECEDENTS RELIED UP ON BY LD. COUNSEL FOR THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE ASSESSEE HA S EARNED SUBSTANTIAL INCOME IN THE YEAR UNDER CONSIDERATION BUT HE DID NOT PAY THE DUE TAX WITHIN THE STIPULATED TIME AFTER SERVICE OF DEMAND NOTICE. NE ITHER ANY REASONABLE CAUSE HAS BEEN SHOWN NOR SUBSTANTIATED AND LD. CIT(A) APP EARS TO HAVE GIVEN RELIEF OF 75% OF THE AMOUNT OF PENALTY IMPOSED BY T HE A.O. WHILE TAKING A I.T.A. NOS.5833, 5854/DEL/2012 13 VERY LENIENT VIEW. CONSIDERING THE ENTIRETY OF FAC TS, CIRCUMSTANCES OF THE CASE AND MATERIAL ON RECORD IN THE LIGHT OF THE PRE CEDENTS RELIED UPON, WE ARE OF THE VIEW THAT RELIEF ALREADY GRANTED BY LD. CIT( A) IS SUFFICIENT. AS SUCH, THE ACTION OF LD. CIT(A) IS CONFIRMED AND RESULTANT LY, APPEAL OF THE ASSESSEE AS WELL AS OF THE DEPARTMENT ARE DISMISSED. 10. AS A RESULT, BOTH THE APPEALS ARE DISMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAR., 2014. SD./- SD./- (T. S. KAPOOR) (U.B.S.BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:31 ST MAR., 2014. SP. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI AR, ITAT, 5. CIT(ITAT), NEW DELHI NEW DELHI