Ritu Mishra, Gurgaon V. ACIT circle 54(1), New Delhi

ITA 6830/DEL/2019

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The case revolves around a penalty imposed on Ritu Mishra by the Assessing Officer (AO) for non-payment of Self Assessment Tax (SA Tax) at the time of filing her income tax return for the assessment year 2009-10. The AO issued a penalty of Rs. 14,10,164 under section 140A(3) read with section 221(1) of the Income Tax Act, 1961, after the assessee failed to respond to multiple show cause notices. The assessee contested the penalty, arguing that it was due to a bonafide mistake by her consultant, who failed to inform her about the tax due. The first appellate authority (CIT(A)) upheld the penalty, leading to the filing of the present appeal. The Tribunal, after considering the circumstances and the assessee's prompt payment of the arrears upon realization, ruled in favor of the assessee, highlighting the lack of proper communication from the consultant and the financial distress caused by unrelated investigations as mitigating factors.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131639 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 13-06-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 15-08-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Period of limitation; Time period of passing order; Bonafide mistake

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar US, Judicial Member ITA No. 6830/Del/2019 : Asstt. Year: 2009-10 Ritu Mishra, D-187, Sushant Lok-1, Gurgaon, Haryana-122001 Vs. ACIT, Circle-54(1), New Delhi (APPELLANT) (RESPONDENT) PAN No. AATPM5732A Assessee by : Sh. T. M. Shiva Kumar, Adv. Ms. Priyanka Singh, Adv. Revenue by : Ms. Indu Bala Saini, Sr. DR Date of Hearing: 14.06.2023 Date of Pronouncement: 19.06.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of ld. CIT(A)-35, New Delhi dated 08.04.2019. 2. The Assessing Officer noticed that the self-assessment tax payable under section 140A of the Act on the returned income had remained payable at the time of filing the return. 3. As per the return, a sum of Rs.14,10,164/- had been shown as tax payable u/s 140A of the Income Tax Act, 1961. The details of the same is as under: a. Taxes payable Rs. 13,09,347/- b. Default in payment of advance tax (Sec. 234B) Rs.52,372/- ITA No. 6830/Del/2019 Ritu Mishra 2 c. Default in payment of advance tax (Sec. 234C) Rs.48,445/- 4. The AO also noted that even until the date of finalization of the Assessment order, the assessee had not paid the said SA tax. He therefore, issued a show cause notice u/s 140A(3) of the Act on 29.12.2011 seeking compliance on 10.01.2012. On failure of the assessee to respond to the said show cause notice, the AO followed it up with two more notices dated 18.04.2012 and 13.06.2012. Since there was no response from the assessee he proceeded to finalize the penalty proceedings by treating the assessee as ‘Assessee in default’ and levied a penalty of Rs.14,10,164/- u/s 140A(3) r.w.s. 221(1) of the Act. He issued order u/s 140A(3) r.w.s. 221(1) of the Act on 27.06.2012 whereby he imposed a penalty of Rs. 14,10,164/- stating that the same was in addition to amount of arrears and amount of interest payable u/s 220(2) of the Act. 5. Aggrieved by the said penalty order, the assessee filed first appeal before the Ld. CIT(A) on 28.04.2017 along with application for condonation of delay in filing the appeal. The grounds raised before Ld. CIT(A) are as under: “1. That the impugned order is not only bad in law and nature but also whimsical and therefore, the same is liable to be quashed. 2. That the facts and circumstances of the case, the Ld. AO has grossly erred in levying the penalty of Rs.13,67,341/- (sic: Rs.14.10,164/-) by applying the provisions of section 140A(3) r.w.s 221(1), of the Act, which is illegal and liable to be deleted. 3. The assessee craves for the addition, deletion of any of the grounds of appeal.” ITA No. 6830/Del/2019 Ritu Mishra 3 6. The assessee submitted before the first Appellate Authority that he had promptly deposited the tax amount every year on time for AY 2010-11, 2011-12 and 2012-13. However, due to mistake of the consultant in not informing and keeping the assessee in dark on the tax payable at the time of filing the return, the subject SA tax has remained payable. As soon as he came to know of the default, he cleared the SA tax arrears by 02.06.2016. He submitted before the Ld. CIT(A) that it was a bonafide mistake committed due to the non-information by the the consultant and that there was reasonable cause within the meaning of proviso to section 221(1) of the Act. 7. The Ld. CIT(A) condoned the delay in filing the first appeal. However, Ld. CIT(A) did not agree with the assessee’s plea and confirmed the order of the AO. The appeal thus came to be dismissed on 27.06.2012. 8. Aggrieved by the order of the Ld. CIT(A), the assessee has filed the present appeal on 16.08.2019 raising the following grounds: “That Ld. CIT (A) has erred in confirming penalty of Rs.14,10,164/- u/s 140A/3) read with section 221(1) of the Income Tax Act, 1961 because: (a) the assessee was having the reasonable cause of not depositing the tax on time and the good and sufficient reasons for not depositing the tax were totally ignored by the Ld. CIT(A). (b) the imposition of the penalty is discretionary in nature and not mandatory and the facts of the case -were ITA No. 6830/Del/2019 Ritu Mishra 4 not considered in correct perspective and the discretion of imposing the penalty -were made arbitrary. (c) the reasons stated by the appellant were not disputed,, but simply not considered whereas before rejection of the same there is a burden on the revenue to prove that the reasons stated for not depositing the tax were not good and sufficient enough to confirm the imposition of the penalty. (d) the citations to justify the stand of assessee were not controverted before confirming the penalty. 2. The appellant craves leave for addition, modification, alteration, amendment, deletion of any of the grounds of appeal.” 9. The assessee has also filed an application along with an affidavit seeking condonation of delay in filing the present appeal. In the said application it has been stated that the assessee was not served the copy of the appellate order which was received by her by hand on 14.05.2019. Further, it has been stated that the assessee was in her native place in Mirzapur and after her return from there she became busy in attending to litigation proceedings including prosecution matters initiated by the Income Tax department and in the meantime the limitation period for filing the appeal had expired. It has been submitted that the delay was on account of bonafide reasons and that it was not caused due to laches or negligence etc. The assessee has accordingly prayed for condonation of the delay in filing the appeal. Hence, the delay is condoned. ITA No. 6830/Del/2019 Ritu Mishra 5 10. It is submitted that there were good and sufficient grounds for default in payment of Self Assessment Tax as explained in Para 4 of the CIT(A) order. The AO has imposed the subject penalty without hearing the assessee who was completely in dark about the ongoing proceedings before the AO as he was stuck with handling various investigation agencies and the prosecution proceedings relating to the investigation conducted by DRI. It was submitted that because of the investigations, the payments from these customers got struck resulting in serious financial problems to the assessee. The Counsel who was handling the income tax matters, had filed the ITR without the SA tax, as, he thought to at least avoid late filing of the ITR. The assessee had not received any intimation from his consultant because of his own preoccupation with investigations and thus there was default payment of SA tax. As soon as he came to know of it, the Assessee deposited the same by 02.06.2016. The default was on account of bonafide reasons as the consultant who handled the matter did not inform the same to the assessee. He had filed the return without informing that SA tax had remained payable. In view of the above it can be held that there was a reasonable cause for the default in payment of SA tax within the meaning of Proviso to Section 221(1) of the Act which for the relevant period read as under: “Provided further that where the assessee proves to the satisfaction of the AO that the default was for good and sufficient reasons, no penalty shall be levied under this section.” 11. In the above background the assessee submitted that the subject penalty u/s 221(1) of the Act was not leviable as there ITA No. 6830/Del/2019 Ritu Mishra 6 were good and sufficient reasons for the default. This aspect was not appreciated by the Ld. CIT(A) who confirmed the penalty order in a mechanical way. He did not appreciate that there were good and sufficient reasons for default in payment of SA tax. The concerned consultant had kept the assessee in dark throughout the assessment and penalty proceedings before the AO and the assessee was handling the investigations and her customers were also subjected to raids resulting in huge financial stress. The assessee had also not received any notices in time and it is in that background that the default in payment of SA tax in time had occurred. Payment of SA tax was further delayed as Department of Revenue Intelligence had taken action against the assessee and his accounts were frozen. After the matter was sorted out with DRI, the assessee was able to deposit the SA by 02.06.2016. Ld. CIT(A) has confirmed the penalty only for the reason that the assessee has not responded to the notices issued by the AO and that the SA tax had remained payable till the finalization of the Assessment order. The Ld. CIT(A) failed to appreciate that there were good and sufficient reasons behind the alleged default as duly explained to him. The said explanation has been completely ignored. He has also ignored that the SA tax was subsequently paid by 02.06.2016. 12. Hence, in view of the specific facts and circumstances of the instant case, we hold that the order of the ld. CIT(A) cannot be supported. ITA No. 6830/Del/2019 Ritu Mishra 7 13. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 19/06/2023. Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 19/06/2023 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR