NATIONAL PLASTIC INDUSTRIES LTD, MUMBAI V. DCIT 1(2), MUMBAI

ITA 7046/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88638 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 18-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S J SINGH
• Keywords: Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BE NCH, MUMBAI . , ! ' ' ' ' #$ %&'( , #) *+ # ! BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO. 7046/MUM/2011 ( , , , , / ASSESSMENT YEAR : 2010-11 M/S. NATIONAL PLASTIC INDUSTRIES LTD., A-59, MIDC, ROAD NO.1, MAROL, ANDHERI (E), MUMBAI-400 093 / VS. THE DCIT-1(2), MUMBAI +- #) ./ ./ ./ PAN/GIR NO. : AAACN 3948F ( -0 / APPELLANT ) .. ( 12-0 / RESPONDENT ) -0 3 # / APPELLANT BY: SHRI NISHIT GANDHI 12-0 4 3 # / RESPONDENT BY: SHRI S.J. SINGH 4 5) / DATE OF HEARING :12.03.2015 6, 4 5) / DATE OF PRONOUNCEMENT :18.03.2015 *#7 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE LD. CIT(A)-2, MUMBAI DT. 7.9.2011 PERTAINING TO ASSESSM ENT YEAR 2010-11. 2. THE ASSESSEE IS AGGRIEVED BY THE LEVY OF PENALTY U/S. 221(1) OF THE ACT AMOUNTING TO RS. 10,00,000/-. ITA NO. 7046/M/2011 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT IN THIS CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MA DE PAYMENTS BY WAY OF ADVANCE TAX. THE AO FURTHER OBSERVED THAT THE SE LF ASSESSMENT TAX COMES TO RS. 71,30,539/-. HOWEVER, THE ASSESSEE HA S PAID ONLY RS. 65,50,000/-. THE AO WAS OF THE STRONG BELIEF THAT SINCE THE ASSESSEE HAS FAILED TO PAY SELF ASSESSMENT TAX OF RS. 5,80,539/- IN TIME, THE ASSESSEE IS LIABLE FOR PENALTY U/S. 221(1) OF THE ACT. ACCORDI NGLY, SHOWCAUSE NOTICE WAS ISSUED. THE ASSESSEE FILED A DETAILED REPLY DT . 7.2.2011 GIVING THE DETAILS OF PAYMENTS MADE BY IT ON VARIOUS DATES. T HE AO SIMPLY RUBBISHED THIS SUBMISSION OF THE ASSESSEE. THE AO CONCLUDED BY HOLDING THAT THE ASSESSEE HAS PAID THE SELF ASSESSMENT TAX NOT BEFORE DUE DATE OF FILING THE RETURN, HENCE, FOR THE DEFAULT COMMITTED , THE AO LEVIED PENALTY OF RS. 10 LAKHS. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). IT WAS STRONGLY CONTENDED BEFORE THE LD. CIT(A) THAT THE A SSESSEE IS A LOSS MAKING COMPANY REQUIRED TO PAY TAX UNDER MAT. IT W AS POINTED OUT TO THE LD. CIT(A) THAT THE ASSESSEE HAD PAID SELF ASSE SSMENT TAX TO THE TUNE OF RS. 63.50 LAKHS, THEREFORE FOR THE MEAGER BALANC E OF RS.5,80,539/-, THE PENALTY LEVIED BY THE AO IS UNJUSTIFIABLE. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTIONS MADE BY THE ASSESSEE AND CONFIRMED THE ORDER OF THE AO. 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. COUNSEL THAT BEFORE LEVYING THE PENALTY, THE AO DID NOT OFFER ANY REASO NABLE OPPORTUNITY TO EXPLAIN ITS CASE. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE FINANCIAL POSITION OF THE ASSESSEE AND STATED T HAT DUE TO FINANCIAL DIFFICULTIES, THE ASSESSEE COULD NOT PAY THE BALANC E AMOUNT OF RS. ITA NO. 7046/M/2011 3 5,80,539/-. THE LD. COUNSEL FOR THE ASSESSEE FURTH ER POINTED OUT THAT THE PENALTY LEVIED BY THE AO IS NOT AS PER PROVISIONS O F THE LAW. 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. SEC. 221(1) READS AS UNDER: (1) WHEN AN ASSESSEE IS IN DEFAULT OR IS DEEMED TO BE IN DEFAULT IN MAKING A PAYMENT OF TAX, HE SHALL, IN AD DITION TO THE AMOUNT OF THE ARREARS AND THE AMOUNT OF INTEREST PA YABLE UNDER SUB- SECTION (2) OF SEC. 220) BE LIABLE, BY WAY OF PENAL TY, TO PAY SUCH AMOUNT AS THE [ASSESSING] OFFICER MAY DIRECT, AND I N THE CASE OF A CONTINUING DEFAULT, SUCH FURTHER AMOUNT OR AMOUNTS AS THE [ASSESSING] OFFICER MAY, FROM TIME TO TIME, DIRECT, SO, HOWEVER, THAT THE TOTAL AMOUNT OF PENALTY DOES NOT EXCEED TH E AMOUNT OF TAX IN ARREARS : PROVIDED THAT BEFORE LEVYING ANY SUCH PENALTY, THE ASSESSEE SHALL BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD : [PROVIDED FURTHER THAT WHERE THE ASSESSEE PROVES TO THE SATISFACTION OF THE [ASSESSING] OFFICER THAT THE DEFAULT WAS FOR GOOD AND SUFFICIENT REASONS, NO PENALTY SHALL BE LEVIED UNDE R THIS SECTION.] 8.1. A PERUSAL OF THE AFORESTATED PORTION CLEARLY S HOWS THAT THE AO HAS TO GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE BEFORE LEVYING ANY SUCH PENALTY. IT IS FURTHER PROVIDED T HAT IF THE ASSESSEE CAN SUCCESSFULLY SATISFY THE AO THAT THE DEFAULT WAS FO R GOOD AND SUFFICIENT REASONS, NO PENALTY SHALL BE LEVIED. 8.2. A PERUSAL OF THE PENALTY ORDER SHOWS THAT THE AO IN HIS NOTICE HAS SHOW CAUSED THE ASSESSEE TO EXPLAIN WHY PENALTY OF RS. 10 LAKHS SHOULD NOT BE LEVIED. THIS NOTICE/ACTION OF THE AO IS IN CONTRAVENTION TO THE PROVISIONS OF SEC. 221(1) OF THE ACT WHEREIN IT HAS BEEN SPECIFICALLY ITA NO. 7046/M/2011 4 MENTIONED THAT THE TOTAL AMOUNT OF PENALTY SHOULD N OT EXCEED THE AMOUNT OF TAX IN ARREARS. IT IS AN UNDISPUTED FACT THAT T HE TAX IN ARREARS IS RS. 5,80,539/-, WE FAILED TO UNDERSTAND HOW THE AO CAN PROPOSE TO LEVY PENALTY OF RS. 10 LAKHS. IN OUR CONSIDERED OPINION , THE PENALTY HAS BEEN LEVIED BY THE AO IN A MECHANICAL MANNER AND THE FIR ST APPELLATE AUTHORITY HAS ERRED IN CONFIRMING SUCH PENALTY. IN OUR CONSIDERED VIEW, THE PENALTY SO LEVIED DESERVES TO BE DELETED. WE, THEREFORE, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE AO TO DEL ETE THE PENALTY OF RS. 10 LAKHS. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2015 SD/- SD/- (D.MANMOHAN ) (N.K. BILLAIYA) ! / VICE PRESIDENT #) *+ / ACCOUNTANT MEMBER MUMBAI; 8* DATED : 18 TH MARCH, 2015 . . ./ RJ , SR. PS . . ./ RJ , SR. PS *#7 *#7 *#7 *#7 4 44 4 15% 15% 15% 15% 9#%,5 9#%,5 9#%,5 9#%,5 / COPY OF THE ORDER FORWARDED TO : 1. -0 / THE APPELLANT 2. 12-0 / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. %;< 15 , , / DR, ITAT, MUMBAI 6. < = / GUARD FILE. *#7 *#7 *#7 *#7 / BY ORDER, 2%5 15 //TRUE COPY// / . . . . (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI