ACIT CEN CIR 36, MUMBAI V. VIGHNAHARTA PROPERTIES P. LTD, MUMBAI

ITA 7198/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3458 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 26-02-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 09-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIKAS KUMAR AGARWAL
• Keywords: Opportunity of being heard
• Section: 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO 7198/MUM/2013 ASSESSMENT YEAR: 2011-2012 THE A CIT/DCIT, CENTRAL CIRCLE - 36, ROOM NO.11, AYAKAR BHAWAN, M.K. MARG, MUMBAI 400020 VS. M/S VIGHNAHARTA PROPERTIES PVT. LTD., 201, COMMERCE HOUSE,140 N.M. ROAD FORT MUMBAI-400023. PAN: AABCV9990J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. VIKAS KUMAR AG ARWAL RESPONDENT BY : SHRI. NITESH JO SHI & HARSH SHAH DATE OF HEARING: 26/02/2016 DATE OF PRONOUNCEMENT: 18/03/2016 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAI NST ORDER DT. 27/09/2013 PASSED BY THE LD. CIT(APPEALS)-29, MUMBAI FOR THE A SST. YEAR 2011-12, WHEREBY THE LD. CIT(A) DELETED PENALTY LEVIED U/S 2 21 R.W.S. 140A(3) OF THE INCOME TAX ACT 1961 (THE ACT IN SHORT). THE REVEN UE HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING EFFECTIVE GROUND: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING PENALTY LEVIE D U/S 221R.W.S. 140A(3) OF THE IT ACT DESPITE OF THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE ITS OBLIGATION AS REQUIRED U/S 140A OF TH E ACT,1961 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS ORIGINAL RETURN OF INCOME UNDER SECTION 139 OF THE ACT, FOR THE ASSESSMENT YE AR 2011-12, DECLARING TOTAL 2 ITA NO.7198/MUM/2013 ASSESSMENT YEAR: 2011-12 INCOME OF RS. 9,07,79,381/-. SINCE, THE ASSESSEE CO MPANY HAD NOT PAID SELF ASSESSMENT TAX, THE AO DECLARED THE SAID COMPANY AS ASSESSEE IN DEFAULT AND LEVIED PENALTY OF RS. 25,00,000/- UNDER SECTION 221 OF THE ACT, FOR NONPAYMENT OF SELF ASSESSMENT TAX BEFORE FILING THE RETURN OF INCOME IN TERMS OF PROVISIONS OF SECTION 140A (3) OF THE ACT. THE ASSESSEE CHALLE NGED THE ASSESSMENT ORDER BY FILING APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) RELYING UPON THE ORDERS OF ITAT PASSED IN DY CIT V. KAMLA MILLS LTD., ITA NO 7775-77/MUM/2004 ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE PENALTY. THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL AGAINST THE IMPUGNED ORDER PAS SED BY THE LD. CIT(A). 3. BEFORE US THE LD. DR RELYING UPON THE PENALTY OR DER SUBMITTED THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS ERRONEOU S AS THE PENALTY IN QUESTION HAS BEEN DELETED WITHOUT CONSIDERING THE PROVISIONS OF SECTION 221 OF THE ACT. ON THE OTHER HAND THE LD. AR ARGUED THAT AS PER THE SETTLED LAW LACK OF LIQUID FUNDS IS SUFFICIENT CAUSE FOR NON-PAYMENT OF SELF ASSESSMENT TAX UNDER SECTION 140A OF THE ACT, THEREFORE, THE LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED BY THE AO. THE LD. AR FURTHER ARGUED THAT PR IOR TO 1.4.1989 THERE WAS CLEAR PROVISION UNDER SECTION 140A(3) OF THE ACT FO R LEVY OF PENALTY AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE BUT THERE IS NO CLEAR MANDATE TO DO SO IN THE AMENDED SECTION. IN SUPPORT OF HIS CONTENTION THE LD. AR RELIED ON THE DECISION OF THE ITAT MUMBAI RENDER ED IN DY CIT V. KAMLA MILLS LTD., (SUPRA) 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE RESPECTIVE SUBMISSIONS INCLUDING T HE DECISIONS RELIED UPON BY THE PARTIES. SECTION 140A(3) OF THE ACT READS AS UN DER: IF ANY ASSESSEE FAILS TO PAY THE WHOLE OR ANY PART OF SUCH TAX OR INTEREST OR BOTH IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1), 3 ITA NO.7198/MUM/2013 ASSESSMENT YEAR: 2011-12 AND TO ANY OTHER HE SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF THE TAX OR INTEREST OR BOTH R EMAINING UNPAID, AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCO RDINGLY. 5. SECTION 221(1) OF THE ACT PROVIDES THAT WHEN AN ASSESSEE IS IN DEFAULT OR IS DEEMED TO BE IN DEFAULT IN MAKING A PAYMENT OF TAX, HE SHALL, IN ADDITION TO THE AMOUNT OF THE ARREARS AND THE AMOUNT OF INTEREST PA YABLE UNDER SUB-SECTION 2 OF SECTION OF THE ACT, BE LIABLE TO PAY BY WAY OF P ENALTY SUCH AMOUNT AS THE AO MAY DIRECT. HOWEVER, THE AO SHALL NOT LEVY SUCH PEN ALTY IF THE ASSESSEE PROVES THAT THERE WAS GOOD AND SUFFICIENT REASON FOR NON-P AYMENT OF TAX. HENCE, THE ASSESSEE DEEMED TO BE ASSESSEE IN DEFAULT WITHIN TH E MEANING OF SECTION 140A (3) IS LIABLE FOR PENALTY UNDER SECTION 221 OF THE ACT. 6. IN THE PRESENT CASE ADMITTEDLY, THE ASSESSEE DID NOT FILE ANY EXPLANATION IN RESPONSE TO THE NOTICE ISSUED TO IT ON 6.3.2012. DU RING ARGUMENTS, THE LD. AR CONTENDED THAT DUE TO NON AVAILABILITY OF LIQUID FU NDS THE ASSESSEE COULD NOT PAY THE SELF-ASSESSMENT TAX AND THIS FACT WAS ALSO BROUGHT TO THE NOTICE OF THE AO. HOWEVER, NO EVIDENCE WAS ADDUCED BEFORE US TO SUBSTANTIATE I TS CONTENTION THAT THE COMPANY WAS FACING FINANCIAL CRUNCH DURING THE RELEVANT PERIOD AND DUE TO THE SAID REASON, IT WAS UNABLE TO PAY THE TA X IN QUESTION. FROM THE ABOVE FACTS AND CIRCUMSTANCES, IT CANNOT BE CONCLUD ED THAT THE ASSESSEE HAS PROVED GOOD AND SUFFICIENT REASON FOR NON-PAYMENT O F SELF-ASSESSMENT TAX. 7. THOUGH, THE COORDINATE BENCH OF THE MUMBAI TRIBU NAL HAS HELD IN THE CASE OF KAMALA MILLS LTD. (SUPRA) THAT THE PAYMENT OF TA X MADE WITHIN THE REASONABLE TIME DOES NOT IPSO FACTO MAKE THE ASSESSEE AS ASSESSEE IN DEFAULT. HOWEVER, IN THE INSTANT CASE THE ASSESSEE COULD NOT FURNISH THE DATE OF PAYMENT OF THE SELF-ASSESSMENT TAX. BEFORE US ALSO, THE LD. AR SUBMITTED 4 ITA NO.7198/MUM/2013 ASSESSMENT YEAR: 2011-12 REGARDING PAYMENT OF DEMAND RAISED BY THE AO WHILE GIVING EFFECT TO THE ORDER OF THE LD. CIT(A) BUT COULD NOT FURNISH THE DETAILS OF PAYMENT OF SELF- ASSESSMENT TAX. WHEN THIS ASPECT WAS POINTED OUT, T HE LD. AR PRAYED THAT A REASONABLE VIEW MAY BE TAKEN ON THIS ISSUE. HE ALSO PLACED RELIANCE ON THE DECISION RENDERED BY COORDINATE BENCH IN THE CASE O F TOP CLASS CAPITAL MARKET LTD VS. JT. COMMISSIONER OF INCOME TAX, ITA NUMBER 505/MUM/2013 DATED 3.6.2015 AND SUBMITTED THAT THE ITAT BENCH MUMBAI H AS CONFIRMED PENALTY TO THE EXTENT OF 2.5% OF SELF ASSESSMENT TAX. 8. HAVING HEARD THE RIVAL SUBMISSIONS, WE NOTICE TH AT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO PAY SELF-ASSESSMENT TAX AS PER SECTION 140A (3) OF THE ACT. FURTHER AS ASSESSEE COULD NOT FURNISH THE DETA ILS REGARDING PAYMENT OF SELF ASSESSED TAX. UNDER THESE SET OF FACTS, WE ARE OF T HE VIEW THAT THE ASSESSEE IS LIABLE TO PAY PENALTY UNDER SECTION 221 OF THE ACT. WE NOTICE THAT THE AO HAS LEVIED OF PENALTY OF RS. 25.00 LACS, BUT IT APPEARS TO BE ON THE HIGHER SIDE SINCE THE PAYMENT OF REGULAR ASSESSMENT TAX SIGNIFIES THA T THE AO HAS RECOVERED SELF ASSESSMENT TAX ALSO. ACCORDINGLY, WE ARE OF THE VIE W THAT THE PENALTY UNDER SECTION 221 OF THE ACT MAY BE RESTRICTED TO 2.5% OF THE SELF-ASSESSMENT TAX WE ORDER ACCORDINGLY. THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) IS, THEREFORE, SET-ASIDE. THE AO IS DIRECTED TO LEVY PE NALTY AS STATED ABOVE. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR T HE A.Y. 2011-12 IS ALLOWED FOR THE STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 18/03/2016 5 ITA NO.7198/MUM/2013 ASSESSMENT YEAR: 2011-12 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA