Kosaraju Vijaya Rama Rao, Visakhapatnam V. THE DCIT, Vijayawada

ITA 643/VIZ/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9011 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 04-08-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 12-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T SATYANDHAM
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HONBLE JUDICIAL MEMBER & SHRI G. MANJUNATHA, HONBLE ACCOUNTANT MEMBER ITA NO. 643/VIZ/2014 (ASST. YEAR : 2012-13) KOSARAJU VIJAYA RAMA RAO, PROP. VIJAYA ENGINEERING WORKS, S-4, SUNNY SIDE HOMES, NEAR RAGHAVENDRA SWAMY TEMPLE, WALTAIR MAIN ROAD, VISAKHAPATNAM. VS. DCIT, CIRCLE-2(1), VIJAYAWADA. PAN NO. ACRPK 5092 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADVOCATE. DEPARTMENT BY : SHRI T. SATYANDHAM SR.DR DATE OF HEARING : 11/04/2017. DATE OF PRONOUNCEMENT : 19/04/2017. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VIJAYAWADA, DATED 26/09/2014 FOR THE ASSESSMENT YEARS 2012-13. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED A RETURN OF INCOME BY ADMITTING TOTAL INCOME OF 4,08,14,789/-. THE TAX PAYABLE AS ON THE DATE OF FILING OF RETURN OF INCOME WAS 42,85,469/-. THE ASSESSEE FILED THE RETURN WITHOUT PAYING ADMITTED TAX. THE ASSESSEE PAID THE TAX OF 25 LAKHS ON 31/10/2012. THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 221(1) READ WITH SEC. 140A(3) DATED 2 ITA NO. 643/VIZ/2014 (K. VIJAYA RAMA RAO) 25/10/2012. SUBSEQUENTLY, ASSESSEE PAID AN AMOUNT OF 18,28,235/- ON 31/10/2012 AND REQUESTED THE ASSESSING OFFICER TO DROP PENALTY PROCEEDINGS. HOWEVER, ASSESSING OFFICER ISSUED A SHOW-CAUSE NOTICE UNDER SECTION 221(1) ON 01/10/2013 CALLING EXPLANATION FOR DELAY IN PAYMENT OF SELF-ASSESSMENT TAX. IN RESPONSE TO THE SHOW-CAUSE NOTICE, ASSESSEE SUBMITTED BY A LETTER DATED 01/11/2012 (PAPER BOOK AT PAGE NO.5) THAT DELAY IN NON-PAYMENT OF ADVANCE TAX DUE TO DELAY IN REALIZATION OF THE BILLS AND, THEREFORE, PENALTY PROCEEDINGS MAY BE DROPPED. THE ASSESSING OFFICER, HOWEVER, CAME TO A CONCLUSION THAT THE ASSESSEE HAS MISERABLY FAILED TO PAY SELF-ASSESSMENT TAX UNDER SECTION 140A OF THE ACT AND ALSO FAILED TO SHOW REASONABLE CAUSE, HENCE, HUNDRED PER CENT PENALTY I.E. 42,85,469/- IS IMPOSED ON THE ASSESSEE. 3 . ON APPEAL, LD. CIT(A) HAS SCALED DOWN THE PENALTY FROM 100% TO 10% AND APPEAL FILED BY THE ASSESSEE IS ALLOWED PARTLY. 4. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE, ASSESSEE HAS FILED A RETURN OF INCOME WITHOUT PAYING SELF-ASSESSMENT TAX OF 42,85,469/-. THE ASSESSEE SUBSEQUENT TO THE FILING OF THE RETURN, HE PAID 25 LAKHS ON 13/10/2012 LEAVING A BALANCE OF 17,85,469/-. SUBSEQUENTLY, ASSESSING OFFICER HAS ISSUED A NOTICE UNDER SECTION 221(1) READ WITH SEC. 140A(3) ON 25/10/2012. AFTER 3 ITA NO. 643/VIZ/2014 (K. VIJAYA RAMA RAO) RECEIVING NOTICE, ASSESSEE PAID 18,28,235/- ON 31/10/2012. SUBSEQUENTLY, THE ASSESSING OFFICER AGAIN ISSUED SHOW-CAUSE NOTICE CALLING EXPLANATION FROM THE ASSESSEE AS TO WHY PENALTY SHOULD NOT BE IMPOSED. THE ASSESSEE EXPLAINED THAT DUE TO NON-REALIZATION OF BILLS, HE IS NOT ABLE TO PAY THE SELF-ASSESSMENT TAX, HOWEVER, ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND IMPOSED HUNDRED PER CENT OF THE SELF-ASSESSMENT TAX AS A PENALTY. ON APPEAL, LD. CIT(A) CONSIDERED THE EXPLANATION OF THE ASSESSEE AND SCALED DOWN PENALTY TO 10%. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREUNDER:- 4. I HAVE PERUSED THE ORDER OF THE AO, THE SUBMISSIONS MADE BY THE APPELLANT AND EVERY OTHER MATERIAL AVAILABLE ON RECORD. IT IS A FACT THAT THERE WAS DEFAULT ON THE PART OF THE APPELLANT TO THE TUNE OF 42,85,469/- IN PAYMENT OF SELF-ASSESSMENT TAX, FOR WHICH, THE AO LEVIED PENALTY. THE APPELLANT EXPLAINED THAT IN VIEW OF (I) HUGE AMOUNT OF TAX LIABILITY AND (II) THE DELAY IN REALIZATION OF BILLS, HE COULD NOT BE REMIT THE TAX WITHIN TIME. IT IS EXPLAINED THAT THE APPELLANT WAS WELL AWARE OF THE TAX IN ARREARS, AND HENCE, CLEARED THE MAJOR PORTION OF THE TAX DUE VOLUNTARILY ON TOP PRIORITY EVEN BEFORE THE RECEIPT OF INITIAL NOTICE U/S 221(1) OF THE ACT. THE APPELLANT PAID A SUM OF 25,00,000/- ON 16/10/2012, 18,28,235/- ON 31/10/2012 TO CLEAR OFF THE BALANCE TAX PAYABLE AS ON THE DATE OF FILING OF RETURN OF INCOME INCLUDING INTEREST. IT IS CONTENDED THAT THERE WAS ONLY MARGINAL DELAY OF ONE MONTH IN PAYMENT OF TAX DUE. ON VERIFICATION OF THE BANK ACCOUNT OF THE APPELLANT, IT IS NOTICED THAT THE APPELLANT DID NOT HAVE SUFFICIENT FUNDS AS ON 27/09/2012 TO CLEAR OFF THE TOTAL INCOME OF TAXES DUE BEFORE FILING OF RETURN OF INCOME. 4.1 IN VIEW OF THE HUGE QUANTUM OF TAX PAYABLE, EVEN THOUGH THE APPELLANTS SUBMISSIONS ARE NOT FULLY CONVINCING, THEY CANNOT BE TOTALLY BRUSHED ASIDE. THE APPELLANT WAS IN DEFAULT IN PAYMENT OF SELF- ASSESSMENT TAX AS ON THE DATE OF FILING OF RETURN OF INCOME, HOWEVER, EFFORTS WERE MADE TO CLEAR OFF THE TAX IN ARREARS AT THE EARLIEST. THE APPELLANT PAID THE BALANCE TAXES IMMEDIATELY AFTER ACCUMULATION OF FUNDS WITHIN A MONTH OF FILING THE RETURN OF INCOME ALONG WITH INTEREST. TAKING INTO CONSIDERATION ALL THE ABOVE FACTS, EVEN THOUGH PENALTY IS LEVIABLE IN APPELLANTS CASE, I AM OF THE VIEW THAT THE PENALTY LEVIED AT 100% OF TAX PAYABLE AT 42,85,469/- IS ON HIGH SIDE AND ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THIS PENALTY TO 10% OF THE TAX PAYABLE TO MEET BOTH THE ENDS OF JUSTICE. 4 ITA NO. 643/VIZ/2014 (K. VIJAYA RAMA RAO) 6 . WE FIND THAT LD. CIT(A) BY CONSIDERING THE DETAILED EXPLANATION GIVEN BY THE ASSESSEE, SCALED DOWN PENALTY FROM 100% TO 10%, HENCE, IN OUR OPINION, THE ORDER PASSED BY THE LD. CIT(A) IS FAIR AND REASONABLE AND NO INTERFERENCE IS CALLED FOR. THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF APRIL, 2017. SD/- SD/- (G. MANJUNATHA) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :19 TH APRIL, 2017. VR/- COPY TO: 1. THE ASSESSEE - KOSARAJU VIJAYA RAMA RAO, PROP. VIJAYA ENGINEERING WORKS, S-4, SUNNY SIDE HOMES, NEAR RAGHAVENDRA SWAMY TEMPLE, WALTAIR MAIN ROAD, VISAKHAPATNAM. 2. THE REVENUE - DCIT, CIRCLE-2(1), VIJAYAWADA. 3. THE CIT, VIJAYAWADA. 4. THE CIT(A), VIJAYAWADA. 5. THE D.R., VISAKHAPATNAM. 6. GUARD FILE. BY ORDER