M/s Kinship Services(India) P.Ltd, Ernakulam V. DCIT, Cochin

ITA 662/COCH/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4506 (ITAT-COCHIN)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 09-12-2010
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: PREETHA S NAIR ADV
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NOS. 661 & 662/COCH/2010 ASSESSMENT YEARS:2008-09 & 2009-2010 KINSHIP SERVICES (INDIA) P. LTD., KINSHIP HOUSE, PLOT NO. 1 & 6, CAT IV, DOOR NO. CC 24/492. MARAR ROAD, WILLINGDON ISLAND, KOCHI. [PAN: AABCK 1973G] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX (TDS), KOCHI. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SMT. PREETHA S. NAIR, ADV.-AR REVENUE BY SHRI S.R.SENAPATI, SR. DR O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF TWO APPEALS BY THE ASSESSE E, ARISING OUT TWO SEPARATE ORDERS BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, KOCHI (CIT(A) FOR SHORT) OF EVEN DATE, I.E., 29.9.2010, FOR TWO CONSECUTIVE ASSESSMENT YEA RS (A.YS.), BEING 2008-09 AND 2009- 10. 2.1 THE ISSUE ARISING FOR OUR ADJUDICATION IN THE S AID APPEALS IS THE MAINTAINABILITY OF THE PENALTY LEVIED U/S. 221(1) OF THE INCOME-TAX AC T, 1961 ('THE ACT' HEREINAFTER) BY THE ASSESSING AUTHORITY, SINCE SUSTAINED BY THE FIRST A PPELLATE AUTHORITY, EVEN AS HE ALLOWS THE ASSESSEE PARTIAL RELIEF. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOMESTIC COMPANY IN THE BUSINESS OF SHIPPING AND ANCILLARY BUSINESS, VIZ., AS HANDLING AGENTS, STEAMER AGENTS, CUSTOMS HOUSE AGENTS AND SHIPPING AGENTS. AS IT HAD NOT FILED THE (QUARTERLY) RETURNS OF TAX DEDUCTED AT SOURCE (TDS) FOR THE FIN ANCIAL YEAR 2007-08 AND 2008-09, PENALTY NOTICE U/S. 272A(2)(C) OF THE ACT WAS ISSUE D ON 29.9.2008 BY I.T.O. (TDS), KOCHI. ON THERE BEING NO COMPLIANCE, SUMMONS U/S. 131 OF THE ACT WERE ISSUED THERE-TO ITA NOS. 661 & 662/COCH/2010 2 ON 5.1.2009 . NOT SATISFIED WITH THE DETAILS FURNISHED, SPOT I NSPECTION WAS CARRIED OUT BY THE DEPARTMENT AT THE ASSESSEES BUSINESS PREMISES ON 17.2.2009. IT WAS FOUND THAT THE ASSESSEE-COMPANY HAD DEFAULTED IN REMITTING THE TAX DEDUCTED AT SOURCE TO THE CREDIT OF THE CENTRAL GOVERNMENT FOR THE SAID TWO YEARS, AS U NDER:- FINANCIAL YEAR TDS NOT REMITTED 2007-08 ` 2419838/- 2008-09 ` 2419172/- PENALTY PROCEEDINGS U/S. 221(1) OF THE ACT WERE AC CORDINGLY INITIATED. 2.2 THE ASSESSEE PLEADED POOR FINANCIAL HEALTH, O N ACCOUNT OF VARIOUS OPERATIONAL PROBLEMS, AS WELL AS THE FACT OF HAVING PAID THE EN TIRE TDS ALONG WITH INTEREST FOR BOTH THE YEARS, I.E., ON 25.2.2009 AND 26.2.2009 FOR F.Y . 2007-08 AND F.Y. 2008-09 RESPECTIVELY. THE SAME WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER (AO), AS THE COMPANYS ANNUAL ACCOUNTS REVEALED, ON THE CONTRARY, SOUND FI NANCIAL HEALTH, TABULATING THE PROFITABILITY RATIOS, BOTH IN ABSOLUTE AND %AGE TER MS FOR F.Y. 2006-07 AND F.Y. 2007-08, AT PARA 4A OF THE PENALTY ORDERS. THE (INTERIM) FINAN CIAL RESULTS FOR THE CURRENT YEAR (F.Y. 2008-09) WERE NOT PRODUCED BY THE ASSESSEE TO CORRO BORATE ITS STATEMENT, FOR THE AO TO CONSIDER THE SAME FOR ITS VALIDITY. IN FACT, ONCE TAX IS DEDUCTED, IT WAS ARGUED BY HIM, THE ASSESSEE-DEDUCTOR IS ONLY A CUSTODIAN FOR THE AMOUN T WITHHELD ON BEHALF OF THE GOVERNMENT, I.E., TILL THE TIME PERMITTED U/S. 200 OF THE ACT, WHERE-AFTER THE SAME HAD TO BE DULY DEPOSITED WITH IT. UNDER THE CIRCUMSTANCES , THE COMPANY HAD ONLY DIVERTED THE SAME FOR ITS OWN PURPOSES, I.E., THE DEFAULT WAS CO NSCIOUS AND DELIBERATE, CARRIED OUT IN FULL KNOWLEDGE OF THE PROVISIONS OF LAW, AS WELL OF THE CONSEQUENCE/S OF ITS BREACH. THE PAYMENT OF THE IMPUGNED TAX SUBSEQUENTLY WOULD NOT UNDER THE CIRCUMSTANCES SAVE PENALTY U/S. 221(1). IN FACT, THE PAYMENT ITSELF W OULD NOT HAVE BEEN MADE BUT FOR THE DETECTION OF THE DEFAULT THROUGH SPOT INSPECTION, I .E., CONSIDERING THE QUANTUM INVOLVED AND THE UNSATISFACTORY NATURE OF THE ASSESSEES EXP LANATION TOWARD THE ADMITTED DEFAULT, WHICH WAS EVEN OTHERWISE UNSUBSTANTIATED. PENALTY U NDER SECTION 201 R/W S. 221(1) OF THE ACT, I.E., FOR BEING IN DEFAULT, WAS RESULTANTLY L EVIED AT ` 13 LAKHS AND ` 12 LAKHS FOR THE ITA NOS. 661 & 662/COCH/2010 3 TWO CONSECUTIVE YEARS RESPECTIVELY, NOTING THAT THE MAXIMUM PENALTY IMPOSABLE UNDER THE RELEVANT PROVISION/S FOR THE TWO YEARS WORKS TO ` 35.8 LAKHS AND ` 24.2 LAKHS RESPECTIVELY. 2.3 IN APPEAL, THE LD. CIT(A) ENDORSED THE FINDINGS OF THE ASSESSING AUTHORITY. THE PENALTY COULD UNDER BE LAW SAVED ONLY FOR GOOD AND SUFFICIENT REASONS, WHICH THE ASSESSEE FAILED TO ADVANCE. SO, HOWEVER, THE COMPAN Y HAD PAID THE ENTIRE AMOUNT OF TAX, AND FOR WHICH SOME CONSIDERATION HAD TO BE ALLOWED. HE, THEREFORE, WHILE CONFIRMING THE LEVY IN PRINCIPLE, REDUCED ITS QUANTUM FOR BOTH THE YEARS TO ` 10 LAKHS EACH. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 3. BEFORE US, LIKE CONTENTIONS STOOD RAISED. THE P ERSON LOOKING AFTER THE RELEVANT FUNCTIONS HAD LEFT ABRUPTLY, SO THAT TAX COULD NOT BE DEPOSITED IN TIME. A GOOD PROFITABILITY DOES NOT NECESSARILY IMPLY A GOOD LIQ UID POSITION AS WELL. AS CLARIFIED BY THE APEX COURT IN THE CASE OF B.M. MALANI VS. CIT (2008) 306 ITR 146 (SC), A GENUINE HARDSHIP WOULD MEAN, INTER ALIA , A GENUINE DIFFICULTY. AS FURTHER EXPLAINED BY IT, THERE CAN BE NO PRESUMPTION THAT A PERSON WITH LARGE ASSE TS COULD NOT BE IN DIFFICULTY AS HE COULD SELL THOSE ASSETS TO PAY THE DEMAND. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW, STATING THAT NO RE ASON, MUCH LESS GOOD AND SUFFICIENT REASON/S, WHICH ONLY COULD SAVE PENALTY, STAND ADVA NCED BY THE ASSESSEE. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD AS WELL AS THE CASE LAW CITED. 4.1 THE LAW IN THE MATTER IS TRITE, WHICH WE MA Y THOUGH SEEK TO OUTLINE FOR THE SAKE OF READY REFERENCE, IN TERMS OF THE RELEVANT PARAMETER S. LEVY OF PENALTY U/S. 221(1), AS ANY OTHER, IS NOT AUTOMATIC BUT DISCRETIONARY, WHICH (D ISCRETION) IS REQUIRED TO BE EXERCISED JUDICIALLY, CONSIDERING ALL THE RELEVANT FACTS AND CIRCUMSTANCES. THE CRUCIAL WORDS GOOD AND SUFFICIENT REASONS (REFER SS. 201 AND 221(1)), COULD, AS IN ANY OTHER PROVISION, ONLY RECEIVE A REASONABLE INTERPRETATION, I.E., WHICH WO ULD RENDER IT POSSIBLE TO ACHIEVE EFFECTIVE, SPEEDY AND PROPER IMPLEMENTATION OF THE PROVISIONS OF THE ACT AND IN PARTICULAR ITA NOS. 661 & 662/COCH/2010 4 APPROPRIATE MEASURES TO SAFEGUARD THE INTERESTS OF THE REVENUE. FURTHER, WHETHER THE FACTS OF A GIVEN CASE WILL CONSTITUTE GOOD AND SUFFICIENT REASONS FOR NOT IMPOSING PENALTY IS A QUESTION OF FACT [REFER: CIT VS. CHEMBARA PEAK ESTATES LTD ., 183 ITR 471 (KER.) AND NACHIMUTHU INDUSTRIAL ASSOCIATION V. CIT , 123 ITR 611 (MAD.)]. 4.2 THE QUESTION INVOLVED IS, THUS, ESSENTIALLY A ND PRINCIPALLY, FACTUAL. THAT IS, WHETHER THE ASSESSEE; THE DEFAULT BEING ADMITTED, H AS BEEN ABLE TO FURNISH GOOD AND SUFFICIENT REASON/S FOR THE DEFAULT, SO AS TO SAVE ITSELF FROM PENAL CONSEQUENCES FOR HAVING NOT PAID ITS DUES. WE SHALL, THEREFORE, PROCEED TO FACTUALLY EXAMINE THE ASSESSEES EXPLANATION. ITS FIRST PLEA IS OF FINANCIAL CONSTRA INT, AND TOWARD WHICH IT CITES SEVERAL OPERATIONAL PROBLEMS ATTENDING ITS BUSINESS. FIRST LY, THE SAME IS COMPLETELY DE HORS ANY FACTUAL INFORMATION. NEITHER THE REVENUE AUTHORITIE S NOR ARE WE COMPETENT TO FULLY COMPREHEND AND APPRECIATE THE WORKING LOGISTICS OF THE ASSESSEES BUSINESS, WHICH WOULD, THEREFORE, REQUIRE AN ELABORATE AND GRAPHICA L DESCRIPTION OF ITS OPERATIONS, AS WELL AS ANSWERING, AND SATISFACTORILY AT THAT, ANY QUERI ES THAT MAY EMANATE THERE-FROM. THAT IS, IT IS NECESSARY, FOR THE SAID EXPLANATION TO BE ACC ORDED ADMISSIBILITY, FOR IT TO BE AN INFORMED ONE, RATHER THAN BEING A GENERAL AND BROAD STATEMENT OF ITS UN-EVIDENCED PROBLEMS. IN FACT, THE EXPLANATION IS HIGHLY DEFICI ENT QUA OBJECTIVITY, ONLY ON WHICH BASIS IT COULD BE PURPOSIVELY EVALUATED. THE DATA ON VARI OUS OPERATIONAL PARAMETERS, VIZ., HOURS LOST ON ACCOUNT OF IDLENESS/ PLANT AND MACHINERY BR EAKDOWN, ETC.; AVERAGE DEBT COLLECTION PERIOD; TOTAL TONNAGE SHIPPED AND THE PROPORTION TH EREOF PER CHARTERED VESSELS; OPERATING COSTS, ETC. OBTAINING OVER THE RELEVANT PERIOD, AND ITS COMPARISON WITH THE PAST, WOULD AT ONCE AND EXPLICITLY EXHIBIT ITS CASE. FORTUNATELY, HOWEVER, FOR THE ASSSESSEE, HAVING NOT DONE SO WOULD NOT WORK TO ITS DISADVANTAGE, AS WOUL D ORDINARILY BE THE CASE. THIS IS AS THE PROOF OF THE PUDDING LIES IN ITS EATING. THE AS SESSEE PLEADS POOR FINANCIAL HEALTH, AND IF IT COULD DEMONSTRATE THE SAME, IT HAS AT LEAST O FFERED A PLAUSIBLE EXPLANATION. THAT IS, PAUCITY OF WORKING FUNDS IS WITHOUT DOUBT A RELEVAN T CIRCUMSTANCE, BUT THE SAME WOULD NEED TO BE ESTABLISHED AS A FACT . IN FACT, THE FINDING OF POOR FINANCIAL HEALTH WOU LD NO DOUBT NEED TO BE SUPPLEMENTED WITH THE STATEMENT OF UNDERLYING CAUSES OR REASONS FOR THE DETERIORATION, AS, EVEN AS EXPLAINED BY THE APEX CO URT IN THE CASE OF B.M. MALANI (SUPRA), A PERSON COULD NOT TAKE ADVANTAGE OF HIS OWN WRONG. AND, CONSEQUENTLY, BY A FINDING OF ITA NOS. 661 & 662/COCH/2010 5 IT BEING ESSENTIALLY FOR REASON/S OUTSIDE THE ASSES SEES IMMEDIATE CONTROL, I.E., FOR THE SAID EXPLANATION TO FIND ACCEPTANCE. SO, HOWEVER, ON THE CONTRARY, THE REVENUE FINDS, WITH REFERENCE TO THE PROFITABILITY RATIOS FOR THE IMMED IATELY PRECEDING TWO YEARS AS DISCLOSED PER THE AUDITED ANNUAL ACCOUNTS, THE ASSESSEE TO BE ENJOYING A SOUND FINANCIAL HEALTH, EVEN AS THE ASSESSEE HAS NOT FURNISHED ANY FINANCIA L INFORMATION FOR THE CURRENT YEAR. THE PROFIT BEFORE TAX AND DEPRECIATION (PBDT), WHICH ON LY WOULD BE RELEVANT OR AT LEAST THE MOST RELEVANT, FOR F.Y. 2007-08 AND F.Y. 2006-07, I S AT ` 952.60 LAKHS AND ` 1156.57 LAKHS RESPECTIVELY, REPRESENTING 49.6% AND 58.4% OF THE G ROSS INCOME. THAT IS, THE COMPANY HAS GENERATED A TIDY SURPLUS FROM ITS OPERATIONS. AS SUCH, NOT ONLY HAS THE ASSESSEE NOT SUBSTANTIATED ITS CASE OF POOR FINANCIALS, THE SAME STANDS CONTRADICTED . IN FACT, THE AMOUNT (OF TAX) WITHHELD IS ONLY FROM THAT OTHERWISE PAYABLE TO THE VARIOUS SERVICE PROVIDERS, SO THAT THE SAME FORMS A PART OF THE WORKING CAPITAL FUNDS OF THE COMPANY. THE SAME (TAX DEDUCTED) HAS, THEREFORE , EITHER BEEN RETAINED AS WORKING CAPITAL OR STANDS INVESTED IN FIXED ASSETS. EITHER WAY, THEREFORE, THE CHARGE OF DIVERSION OF FUNDS FOR ITS PURPOSES WOULD SUCCESSFULLY ARISE. IT IS ONLY WHERE THE COMPANY IS SO SQUEEZED OF WORKING FUNDS, BEING UNABLE TO DISCHARG E ITS TRADING LIABILITIES ON A GOING BASIS, THAT IT COULD VALIDLY PLEAD GENUINE HARDSHIP , WHILE THE FACTS INDICATE OTHERWISE. THERE IS NOTHING ON RECORD TO SHOW THAT THE COMPANY IS FACING ANY LIQUIDITY CRISES, WHICH COULD DEFINITELY OBTAIN DESPITE IT BEING IN PROFIT, AS WHERE IT IS SADDLED WITH HEAVY ILLIQUID ASSETS. IN FACT, THE IMMEDIATE DEPOSIT OF THE ENTIR E ARREARS, ALONG WITH INTEREST, AGGREGATING TO ` 49.76 LAKHS, I.E., ON 25.2.2009 AND 26.2.2009, FOLL OWING THE SPOT VERIFICATION ON 17/2/2009, EFFECTIVELY REBUTS AND PUT PAYS THE ASSE SSEES CLAIM QUA FINANCIAL DELINQUENCY, WHICH WE HAVE FOUND TO BE UNPROVED AND, RATHER, DIS PROVED. 4.3 WE, NEXT, CONSIDER THE ASSESSEES SECOND EXPL ANATION, I.E., OF IT BEING IN FACT UNAWARE OF THE DEFAULT, WHICH CAME TO LIGHT ONLY ON THE RECEIPT OF NOTICE U/S. 221(1); THE PERSON RESPONSIBLE FOR THE SAID FUNCTIONS IN THE CO MPANY HAVING ABRUPTLY LEFT IT. THE FIRST QUESTION WITH REGARD TO THIS EQUALLY GENERAL AND VA GUE EXPLANATION WOULD BE AS TO WHO IS THIS UNSPECIFIED PERSON, AND WHEN DID HE/SHE SUDDEN LY LEAVE ? THAT IS, THE EXPLANATION IS SANS EVEN THE BASIC, PRIMARY DETAILS/PARTICULARS. THE S AME IN FACT LEADS TO A NUMBER OF ANCILLARY AND FACTUAL QUESTIONS, ONLY A SATISFACTOR Y REPLY TO WHICH WOULD COMPLETE THE ITA NOS. 661 & 662/COCH/2010 6 EXPLANATION, AS: WAS HE/SHE (SUCH A PERSON) FUNCTIO NING COMPLETELY INDEPENDENTLY, WITH NOBODY ELSE TO BE IN THE KNOW OF THE SAME, AND WHIC H IS RARELY THE CASE, AND HIGHLY IMPROBABLE IN A LARGE CONCERN; HOW IS IT THEN THAT THE TAX STOOD DEDUCTED ALL THE WHILE; HOW ARE THE REGULAR ACCOUNTING FUNCTIONS BEING MANA GED AND, AS IT APPEARS FROM THE REGULAR DEDUCTION OF TAX AND THE TIMELY AUDIT AND F ILING OF ITS ANNUAL ACCOUNTS, IN A PROPER MANNER; WHO IS/ARE RESPONSIBLE FOR THE TDS FUNCTION IN THE ORGANIZATION SINCE, ETC. IN OTHER WORDS, THE ASSESSEES EXPLANATION IS TOTALLY BEREFT OF ANY FACTUAL INFORMATION, AND WOULD RATHER NOT QUALIFY TO BE TERMED AS ONE. AN EX PLANATION, DE HORS THE FACTS, IS NO EXPLANATION AT ALL. AS EXPLAINED TIME AND AGAIN BY THE HIGHER COURTS OF LAW, IT IS NOT ANY EXPLANATION, HOWSOEVER FANTASTIC AND FRIVOLOUS, T HAT COULD BE TERMED AS ONE, WHICH HAS TO BE REASONABLE, BESIDES BEING CORROBORATIVE (REFE R, INTER ALIA , CIT V. MOHANAKALA (P.) (2007) 291 ITR 278 (SC)). THE `EXPLANATION IS IN FACT, APART FRO M BEING UNSUBSTANTIATED AND DEVOID OF FACTUAL INFORMATION, ALSO NOT VALID. FIRSTLY, THE L AW CASTS THE RESPONSIBILITY ON THE PRINCIPAL OFFICER, SO THAT THE SAME HAS TO BE WITH REFERENCE TO HIM. WE SHALL ALSO SEPARATELY EXAMINE THIS ASPECT OF THE MATTER. SECON DLY, AS NOTED EARLIER, THE TAX STANDS DEDUCTED REGULARLY, SO THAT A COMPETENT PERSON WAS ALL THROUGH IN CHARGE OF THIS FUNCTION, WHICH IS EVEN OTHERWISE THE RESPONSIBILITY OF THE O RGANISATION, WHICH WE FIND TO BE SERVICED, APART FROM AN EXTERNAL, STATUTORY AUDITOR , BY AN INTERNAL AUDITOR, SHRI SUBRAMANIAM IYER (REFER PARA 2 OF THE PENALTY ORDER (S)), SO THAT THE ASSESSEE WAS AT ALL TIMES AWARE AND CONSCIOUS OF THE DEFAULT, CONTINUIN G TO DEDUCT TAX AT SOURCE FROM MONTH TO MONTH. THIS IS ALSO BORNE OUT BY THE FACT OF THE LIABILITY QUA TDS BEING DULY REFLECTED IN ITS ACCOUNTS. FURTHER, TDS TO THE EXTENT OF ` 11.60 LAKHS (FOR F.Y. 2007-08) STOOD PAID VOLUNTARILY DURING THE PERIOD JULY, 2008 TO DECEMBE R, 2008. NOT ONLY THAT, THE SPOT VERIFICATION BY THE DEPARTMENT DETERMINED THE ARREA RS ONLY ON THE BASIS OF THE ASSESSEES REGULAR ACCOUNTS . IN FACT, THE SAME (SAID EXPLANATION) CONTRADICTS ITS EARLIER, EQUALLY UNSUBSTANTIATED EXPLANATION. THIS IS FOR THE SIMPL E REASON THAT ONLY A PERSON IN THE KNOW COULD POSSIBLY PLEAD FINANCIAL STRINGENCY AS THE RE ASON FOR THE DEFAULT OF NON-DISCHARGE. NO WONDER, THIS EXPLANATION WAS TENDERED BY THE ASS ESSEE FOR THE FIRST TIME BEFORE THE FIRST APPELLATE AUTHORITY. WHY? IF TRUE, THIS IS IN FACT THE FIRST THING THAT WOULD HAVE BEEN ITA NOS. 661 & 662/COCH/2010 7 STATED BY THE ASSESSEE, WHILE NO SUCH EXPLANATION W AS BEFORE THE AO. AS SUCH, THE EXPLANATION IS, AGAIN, CONTRADICTORY, AND ONLY A SP ECIOUS PLEA. THEN, COMES THE QUESTION OF RELEVANCE OF THE EXPLANATION, I.E., LEGALLY, AS IT IS ONLY WITH REFERENCE TO THE PRINCIPAL OFFICER (PO) O F THE COMPANY THAT THE ACT DEFINES THE DEFAULT (S. 200). CLEARLY, THE PERSON WHO AUTHORIZE S THE DEDUCTION OF TAX (WHICH CONTINUED THROUGHOUT) AND PAYMENT (WHICH STOOD OSTENSIBLY MAD E REGULARLY UP TO F.Y. 2006-07), AND THEN AGAIN FROM JULY, 2008 ONWARDS, IS ITS PRIN CIPAL OFFICER. AS AFORE-STATED, THE ASSESSEES EXPLANATION IS DE HORS ANY PERSON, LEAVE ALONE ITS P.O. 4.4 FINALLY, THOUGH THE MATTER, AS AFORE-STATED, IS PURELY FACTUAL, AND STANDS DECIDED BY US ON THAT BASIS, WE MAY ALSO MEET THE CASE LAW REL IED UPON BY THE ASSESSEE. THE DECISION IN THE CASE OF B.M. MALANI VS. CIT (SUPRA) HAS ALREADY BEEN FOUND TO BE INAPPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE (REFER PARA 4.2 ABOVE ). IN THE CASE OF AZADI BACHAO ANDOLAN VS. UOI , 252 ITR 471 (DEL.), THE HONBLE COURT FOUND THAT THE DEPARTMENT, IN NOT LEVYING/DROPPING THE PENALTY PRO CEEDINGS FOR FAILING TO DEDUCT, AND CONSEQUENTLY, PAY TAX DEDUCTED AT SOURCE COULD NOT BE SAID TO HAVE ACTED UNREASONABLY, I.E., WITHOUT CONSIDERING THE RELEVANT MATERIALS OR ON IRRELEVANT MATERIALS; THE SCOPE OF INFERENCE IN A REFERENCE APPLICATION IS LIMITED, AN D MUCH LESS IN A WRIT PETITION, WHICH WAS, THUS, DISMISSED, FURTHER DIRECTING THE INCOME- TAX AUTHORITIES TO TAKE ACTION IN RESPECT OF EMPLOYEES IN INDIA IN ACCORDANCE WITH LAW. NO P ARALLEL OR ANY ASSISTANCE, AS WOULD BE APPARENT, FLOWS FROM THE DISMISSAL OF THE WRIT PETI TION CHALLENGING THE NON-LEVY OF PENALTY MOVED UNDER THE PUBLIC INTEREST LITIGATION. CONCLUSION 5. THE FACT THAT THE DEFAULT CONTINUED FOR TWO CONSECUTIVE YEARS, AND DESPITE A HEALTHY FINANCIAL POSITION, LENDS CREDENCE TO THE CONCURREN T FINDING BY THE TWO REVENUE AUTHORITIES THAT THE TAX DEDUCTED MAY NOT HAVE BEEN PAID BUT FOR ITS DETECTION AND THE FOLLOW-UP ACTION BY THE DEPARTMENT. THE LAW, AS AF ORE-STATED, PROVIDES FOR SAVING OF PENALTY FOR GOOD AND SUFFICIENT REASONS, WHILE WE F IND THE ASSESSEE TO HAVE FAILED TO FURNISH EVEN A PLAUSIBLE EXPLANATION. FURTHER, APAR T FROM BEING WITHOUT REFERENCE TO ANY FACTS, WHICH ONLY WOULD ESTABLISH ITS VALIDITY, THE SAME IS CONTRARY TO THE ADMITTED FACTS. ITA NOS. 661 & 662/COCH/2010 8 THE ASSESSEE HAS NEITHER RAISED ANY GROUND NOR EVEN ARGUED ITS CASE BEFORE US WITH REFERENCE TO THE QUANTUM OF THE PENALTY SUSTAINED, I.E., OF IT BEING EXCESSIVE OR UNREASONABLE UNDER THE FACTS AND CIRCUMSTANCES OF I TS CASE. EVEN SO, WE FIND THE SAME AS NOT UNREASONABLE; THE ASSESSEE HAVING FAILED TO ADV ANCE ANY EXPLANATION, EACH OF THOSE FURNISHED FAILING TO PASS MUSTER, WITH THE IMPUGNED PENALTY THE ASSESSEE HAVING BEEN ALLOWED PART RELIEF, WITH THE REVENUE BEING OSTENSI BLY NOT IN APPEAL - BEING AT A FRACTION (1/3 RD ) OF THE MAXIMUM PENALTY, I.E., WHEN RECKONED FOR B OTH THE YEARS. 6. IN THE RESULT, THE ASSESSEES APPEALS AR E DISMISSED. SD/- SD/ - (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 14TH JULY, 2011 GJ COPY TO: 1. M/S. KINSHIP SERVICES (INDIA) P.LTD., KINSHIP HO USE, PLOT NO. 1 & 6, CAT IV, DOOR NO. CC 24/492. MARAR ROAD, WILLINGDON ISLAND, KOCHI . 2. THE DEPUTY COMMISSIONER OF INCOME TAX (TDS), KOC HI. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, KO CHI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE.