CALYX CHEMICALS & PHARMACEUTICALS LTD, NAVI MUMBAI V. ITO WD 8(1)(2), MUMBAI

ITA 6073/MUM/2011

• Counselvise Citation: 607319914 RSA 2011
• Duration Of Justice: 3 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 02-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Reasonable cause; Revised return

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI , BEFORE SHRI H. L. KARWA , PRESIDENT & SHRI R.C.SHARMA , A M ( / ITA NO. 6073 /MUM/201 1 ) ( ASSESSMENT YEAR :200 9 - 20 10 ) M/S CALYX CHEMICALS & PHARMACEUTICALS LTD., 5, MARWAH COMPLEX, MARWAH ESTATE, SAKI VIHAR ROAD, SAKI NAKA,, ANDHERI (EAST), MUMBAI - 400072 VS. ITO, RANGE - 8(1)(2), MUMBAI PAN/GIR NO. : A A B CC 1457 B ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. M.SUBRAMANIAN /REVENUE BY : MR. PREMANAND J. DATE OF HEARING : 9 TH DEC EMBER 201 4 DATE OF PRONOUNCEMENT : 12 /01/2015 O R D E R PER R.C.SHARMA ( A .M.) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 29 - 6 - 2011 FOR THE ASSESSMENT YEAR 2009 - 2010 IN THE MATTER OF IMPOSITION OF PENALTY U /S.221(1) R.W.S.140A(3) OF THE I.T.ACT. 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.2,71,70,079/ - FOR THE A.Y.2009 - 2010 ON 29 - 9 - 2009. THE ASSESSEE HAD COMPUTED IT S TAX LIABILITY ON ACCOUN T OF SELF ASSESSMENT TAX AT R S.1,45,35,730/ - . HOWEVER, SAME WAS NOT PAID BEFORE FILING OF RETURN OF INCOME U/S.139(1) OF THE ACT. IN VIEW OF THE SAME, A LETTER DATED 3 - 2 - 2010 ITA NO. 6073 /201 1 2 WAS ISSUED AND THE ASSESSEE WAS REQUESTED TO FURNISH THE COPY OF THE CHALLANS EVIDENCING THE PAYMENT OF SELF ASSESSMENT TAX. IN RESPONSE, THE ASSESSEE FILED LETTER ON 19 - 3 - 2010 FURNISHING PHOTOCOPIES OF THE CHALLANS EVIDENCING E - PAYMENT OF THE SELF ASSESSMENT TAX FOR THE ASSESSMENT YEAR 2009 - 2010 AS UNDER : - DA TE AMOUNT 16.02.2010 15,00,000/ - 23.02.2010 3,00,000/ - 26.02.2010 15,00,000/ - 06.03.2010 5,00,000/ - 09.03.2010 15,00,000/ - 12.03.2010 80,00,000/ - 13.03.2010 7,00,000/ - 17.03.2010 35,730/ - TOTAL 1,40,35,730/ - FROM THE ABOVE, THE AO NOTED THAT ASS ESSEE HAS DEFAULTED IN MAKING PAYMENT OF SELF ASSESSMENT TAX U/S.140A(1) OF THE ACT . ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE PENALTY SHOULD NOT BE IMPOSED U/S.221(1) OF THE ACT. IN REPLY OF THE SAME, IT WAS SUBMITTED THAT THE RETURN OF INCOME WAS FI LED BY THE AUDITORS OFFICE AND FINAL ACKNOWLEDGEMENT WITH COMPUTATION WAS NOT SENT AS WELL AS DID NOT RECEIVED THE ACKNOWLEDGEMENT FROM IT DEPARTMENTS BANGALORE OFFICE. IT WAS FURTHER SUBMITTED THAT AS SOON AS ASSESSEE CAME TO KNOW THE SELF ASSESSMENT TAX LIABILITY, IT HAD PAID THE SAME. THE AO REJECTED ASSESSEES CONTENTION AND HELD THAT ASSESSEE HAS FAILED TO DEPOSIT TAX WITHIN THE TIME LIMIT, ACCORDINGLY, PENALTY WAS IMPOSED U/S.221 ( 1) OF THE ACT, AMOUNTING TO RS.36,33,932/ - ,WHICH WAS 25% OF THE UNPAID AMOUNT OF SELF ASSESSMENT TAX. ITA NO. 6073 /201 1 3 3 . BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ACTION OF AO, AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4 . IT WAS CONTENDED BY THE LD. AR THAT ASSESSEE WAS HAVING VERY BAD FINANCIAL POSITION, THEREFORE, COULD NOT PAY THE TAX IN TIME. WHATEVER THE INTEREST LEVIED FOR THE DELAY, HAD BEEN DEPOSITED AND THE DELAY WAS DUE TO REASONABLE CAUSE. RELIANCE WAS PLACED ON THE DECISION OF LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF SHREE SHAKTI CREDIT LTD., 66 SOT 175 , WH EREIN PENALTY IMPOSED FOR DELAY IN DEPOSIT OF SELF ASSESSMENT TAX WAS DELETED BY OBSERVING THAT ASSESSEE HAS FILED THE REVISED RETURN AND ALSO PAID TAX AS PER THE REVISED RETURN OF INCOME. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA, (1972) 83 ITR 26 (SC) , WHEREIN IT WAS OBSERVED THAT NO PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION, WHICH IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIA LLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. 5 . ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF LOWER AUTHORITIES. 6 . WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM T HE RECORD THAT THERE WAS DELAY IN DEPOSIT OF SELF ASSESSMENT TAX, THEREFORE, THE AO IMPOSED PENALTY U/S.221(1) OF THE ACT. PROVISIONS OF SECTION 221(1) OF THE ACT, PROVIDES THAT WHE RE THE ASSESSEE PROVES THAT THE DEFAULT WAS FOR GOOD AND SUFFICIENT REASON S, NO PENALTY SHALL BE LEVIED UNDER THIS SECTION. IT IS ALSO CLARIFIED THAT THIS PENALTY IS IN ADDITION TO THE AMOUNT OF TAX AND ITA NO. 6073 /201 1 4 INTEREST THEREON. MEANING THEREBY IF THERE IS ANY DELAY IN PAYMENT OF TAX, ASSESSEE IS NOT ONLY LIABLE TO PAY TAX AND INTEREST FOR THE DELAY, BUT ALSO PENALTY U/S.221(1) OF THE ACT, WILL BE IMPOSED. HOWEVER, THE AO GOT THE DISCRETION NOT TO LEVY PENALTY, IF THERE IS SUFFICIENT REASONS FOR DELAY IN DEPOSIT OF TAX. IN THE INSTANT CASE, IT WAS EXPLAINED BY THE LD. AR THAT DELAY WAS DUE TO FINANCIAL CRISIS. HE ALSO RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD.(SUPRA) , WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI - CRIMIN AL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. IT WAS ALSO OBSERVED BY THE HONBLE SUPREME COURT THAT PENALTY MAY NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A C ONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSED THE PENALTY, WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE AC T OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 7 . IN THE CASE OF BRIJLAL BA N IK, 79 STC 217 , THE HONBLE GAUHATI HIGH COURT HELD THAT WHILE IMPOSING PENALTY U/S.221(1) THE AUTHORITY CONCERNED HAS TO CONSIDER THE RELEVANT FACTOR S SUCH AS P E RIOD OF DELAY, CONDUCT OF ASSESSEE AND SUCH OTHER CONSIDERATIONS, AND LEVY OF PENALTY WITHOUT ITA NO. 6073 /201 1 5 STATING ANY REASON MAY NOT BE SUSTAINABLE . IN THE INSTANT CASE, WE FOUND THAT AMOUNT OF SELF AS SESSMENT TAX DUE CAME TO THE ASSESSEES KNOWLEDGE WHEN THE AO INFORMED THE ASSESSEE ABOUT THE SAME. REASON FOR NOT DEPOSIT TAX WAS ALSO THE FINANCIAL CRISIS AT THE RELEVANT POINT OF TIME . THE MAXIMUM AMOUNT OF PENALTY IMPOSABLE U/S.221(1) OF THE ACT IS EQU AL TO THE AMOUNT OF TAX IN ARREARS. THE ACT DOES NOT PRESCRIBE ANY MINIMUM AMOUNT WHICH OUGHT TO BE IMPOSED, ON THE CONTRARY A CT PRESCRIBES THAT FOR SUFFICIENT REASON, NO PENALTY IS TO BE IMPOSED. KEEPING IN VIEW THE PERIOD OF DELAY IN DEPOSIT OF SELF ASSE SSMENT TAX, REASONABLE CAUSE ADVANCED FOR DELAY AND TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT APPROPRIATE TO RESTRICT THE PENALTY TO 5% TO THE UNPAID SELF ASSESSMENT TAX IN PLACE OF 25% IMPOSED BY THE AO . ACCORDINGLY, ORDERS OF LOWER AUTH ORITIES ARE MODIFIED AND THE AO IS DIRECTED TO REDUCE THE AMOUNT OF PENALTY. WE DIRECT ACCORDINGLY. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 / 01 /2015 . 12 / 01 /2015 SD/ - SD/ - ( ) ( H.L.KARWA ) ( ) ( R.C.SHARMA ) / PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED 12 / 01 /201 5 /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI ITA NO. 6073 /201 1 6 / BY ORDER, ( ASSTT. REGI STRAR) / ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//