A.C.I.T.-20(2), MUMBAI V. NIRMAN CONSTRUCTIONS, MUMBAI

ITA 7265/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3758 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 27-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K K LALKAKA
• Keywords: Reasonable cause
• Section: 143(3); 234B

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.7265/MUM/2011 ASSESSMENT YEAR:2007-08 DCIT-20(2), 612, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400012 VS M/S NIRMAN CONSTRUCTIONS, 14, NYAY SAGAR, OLD NAGARDAS ROAD, NEAR CHINOY COLLEGE, ANDHERI (EAST), MUMBAI-400069 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO. AACFN8428K % & ' $ ( / DATE OF HEARING : 01/03/2016 ' $ ( / DATE OF ORDER: 01/03/2016 / REVENUE BY SHRI SANJEEV JAIN-DR !'# $ / ASSESSEE BY SHRI K. K. LALKAKA ITA NO.7265/MUM/2011 M/S NIRMAN CONSTRUCTOINS 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 05/08/2011, OF THE LD. FIRST APPELLATE AUTHORITY, M UMBAI, RESTRICTING THE PENALTY LEVIED U/S 140A(3) R.W.S. 2 21 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) TO 20% O F SA TAX PAYABLE ALONG WITH INTEREST U/S 234B & C OF THE ACT AS AGAINST 100% IMPOSED BY THE LD. ASSESSING OFFICER I GNORING THE FACT THAT IN THE PRESENT CASE, THE ASSESSEE HAS NOT PAID SELF ASSESSMENT TAX. 2. DURING HEARING, THE LD. DR, SHRI SANJEEV JAIN, ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUN D RAISED. ON THE OTHER HAND, SHRI K.K. LALKAKA, LD. COUNSEL F OR THE ASSESSEE, CONTENDED THAT THE IMPUGNED ISSUE IS COVE RED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL FOR A.Y. 2007-08 (ITA NO.6191/MUM/2011) ORDER DATED 15/01/20 14. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY LD. DR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 15/0 1/2014 FOR READY REFERENCE AND ANALYSIS:- THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE CHALLENGING THE IMPUGNED ORDER DATED 5 TH AUGUST 2011, PASSED BY THE COMMISSIONER (APPEALS) XXXI, MUMBAI, IN RELATION TO PENALTY PROCEEDINGS UNDER SECTION 221 OF THE INCOME TAX ACT, ITA NO.7265/MUM/2011 M/S NIRMAN CONSTRUCTOINS 3 1961 (FOR SHORT 'THE ACT') FOR THE ASSESSMENT YEAR 2007 08, ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN PARTIALLY SUSTAINING THE PENALTY OF 3,28,407 AGAINST THE PENALTY LEVIED BY THE A.O. OF 16,42,037 ALTHOUGH THE ASSESSEE HAD ESTABLISHED GOOD AND SUFFICIENT CAUSE FOR NONIMPOSITION OF PENALTY . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE I THE LEI. CIT (A) HAS ERRED IN HOLDING THAT THE A.O. WAS JUSTIFIED IN INCLUD ING INTEREST CHARGEABLE U/S 234B AND 234C WHILE IMPOSING PENALTY ALTHOUGH TAX IS DEFINED U/S 2(43) OF THE ACT MEANS INCOME TAX CHARGEABLE UNDER THE PROVISIONS OF THE ACT AND DOES NOT INCLUDE INTEREST AND PENALTY. 2. THE FACTS, APROPOS THE LEVY OF PENALTY UNDER SECTIO N 221 OF THE ACT ARE THAT, THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND REAL ESTA TE DEVELOPER. IT HAS FILED ITS RETURN OF INCOME FROM 29 TH OCTOBER 2007, DECLARING TOTAL INCOME OF 47,15,420. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAS NOT PAID THE SELF ASSESSMENT TAX ALONG WITH THE INT EREST BEFORE FILING OF THE RETURN OF INCOME IN VIEW OF THE PROVI SIONS OF SECTION 140A. ACCORDINGLY, THE ASSESSING OFFICER ISSUED SHO W CAUSE NOTICE UNDER SECTION 140A(3) R/W SECTION 221 ON 9 TH FEBRUARY 2010 AFTER THE COMPLETION OF THE ASSESSMENT UNDER S ECTION 143(3) OF THE ACT VIDE ORDER DATED 30 TH DECEMBER 2009. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE SUBMITTED AND STATED AS UNDER: PLEASE REFER TO YOUR ABOVE REFERRED SHOW CAUSE NOT ICE DATED 9 TH FEBRUARY 2010 WHICH WAS RECEIVED ON 11 TH FEBRUARY 2010. FIRSTLY, WE WOULD LIKE APOLOGISE FOR THE DELAY IN P AYMENT OF SELF ASSESSMENT TAX FOR THE ABOVE REFERRED YEAR; WHICH WAS DUE TO FOLLO WING CONSTRAINTS AT OUR END: 1. OUR COMPANY WAS HAVING LIQUIDITY CRUNCH AND WAS THE PRIME REASON FOR DELAY IN PAYMENTS. 2. OUR AUDITORS AND TAX CONSULTANTS HAD RESIGNED AND TH ERE WAS TIME LAG IN APPOINTMENT TO FILL THE VACANCY. 3. MANPOWER CONSTRAINTS AS COUPLE OF KEY EMPLOYEES OF ACCOUNTS DEPARTMENT LEFT IN SHORT SPAN OF TIME. FURTHER WE WOULD LIKE TO BRING TO YOUR NOTICE A FAC T THAT ALL THESE SELF ASSESSMENT TAX DUES WERE DISCHARGED FEBRUARY 2008 O N OUR OWN WITHOUT ANY ACTION FROM THE DEPARTMENT. ITA NO.7265/MUM/2011 M/S NIRMAN CONSTRUCTOINS 4 ON THE BASIS OF ABOVE SAID GROUNDS YOU ARE HUMBLY RE QUESTED TO DO THE NEEDFUL AND CONDONE THE DELAY IN PAYMENT OF SELF AS SESSMENT TAX AND DROP THESE PROCEEDINGS. 3. THE ASSESSING OFFICER REJECTED THE ASSESSEES EXPLA NATION AND HELD THAT THERE IS NO NEXUS BETWEEN THE GOVERNM ENT TAX DUES AND THE REASONS CITED BY THE ASSESSEE. THE TAX DUES UNDER SELFASSESSMENT TAX IS MANDATORY BEFORE FILING OF T HE RETURN OF INCOME. AFTER REFERRING TO THE PROVISIONS OF SECTIO N 140A, HE HELD THAT IT IS A FIT CASE FOR LEVY OF PENALTY UNDER SEC TION 221(1) AND LEVY 100% PENALTY OF 16,42,037 BEING AN AMOUNT EQUAL TO SELF ASSESSMENT TAX NOT PAID BEFORE THE FILING OF T HE RETURN OF INCOME. THE COMPUTATION OF THE PENALTY HAS BEEN DON E AS UNDER: RETURN OF INCOME FOR A.Y. 200708 FILED ON 29.10.20 07 INCOME DECLARED : 47,15,420 INCOME TAX ON RETURNED INCOME 14,14,626 SURCHARGE 1,41,463 EDUCATION CESS 31,122 TOTAL TAX PAYABLE 15,87,211 LESS: ADVANCE TAX PAID 2,00,000 BALANCE TAX PAYABLE 13,87,211 ADD: 1) INTEREST U/S 234B 97,105 2) INTEREST U/S 234C 1,57,721 SELF ASSESSMENT TAX PAYABLE 16,42,037 4. BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSE SSEE REITERATED THE SAME CONTENTION AS WAS RAISED BEFORE THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT DU E TO BUSINESS EXIGENCIES BEYOND THE CONTROL OF THE ASSESSEE AND L ACK OF FUNDS, THE ASSESSEE COULD NOT PAY THE SELF ASSESSMENT TAX. EVEN WITHOUT RECEIVING ANY INTIMATION OR NOTICE FROM THE DEPARTMENT, THE ASSESSEE PAID THE SELF ASSESSMENT TAX ON 11 TH FEBRUARY 2008 I.E., AFTER THREE MONTHS. REGARDING THE LIQUIDITY C RUNCH, THE ASSESSEE SUBMITTED THAT ALMOST ALL ITS FUNDS WERE P ARKED IN THE ITA NO.7265/MUM/2011 M/S NIRMAN CONSTRUCTOINS 5 CONSTRUCTION WORK AND THE PROJECT WORK IN PROGRESS WAS AT 7.27 CRORES. BESIDES THIS, THE ASSESSEE HAS ALSO MA DE ADVANCE FOR THE FUTURE DEVELOPMENT OF THE PROPERTY TO THE EXTENT OF 70.20 LAKHS. AT THE TIME OF FILING OF THE RETURN OF INCOME, THE ASSESSEE DID NOT HAD SUFFICIENT FUNDS T O IMMEDIATELY PAY THE SELFASSESSMENT TAX. ACCORDINGLY, THERE WAS A REASONABLE CAUSE AND DEFAULT FOR NON-PAYMENT OF SEL F ASSESSMENT TAX WAS DUE TO BONAFIDE REASONS. THEREFO RE, IN VIEW OF THE SECOND PROVISO TO SECTION 221, PENALTY SHOUL D NOT BE LEVIED. ALTERNATIVELY, IT WAS ALSO SUBMITTED THAT T HE ASSESSING OFFICER HAS LEVIED 100% PENALTY LOOKING TO THE FACT THAT IN THE PAST, THE ASSESSEE HAS NEVER DEFAULTED IN COMPLYING WITH THE PAYMENT OF SELFASSESSMENT TAX NOR IT HAS BEEN DONE IN THE SUBSEQUENT YEARS. RELIANCE WAS ALSO PLACED ON CERTA IN DECISIONS WHEREIN IT HAS BEEN HELD THAT PENALTY CANNOT BE JUS TIFIED IF THERE ARE SUFFICIENT OR REASONABLE CAUSE FOR THE DEFAULT COMMITTED BY THE ASSESSEE. THESE CASE LAWS HAVE BEEN MENTIONED I N PARA 2.2.2 OF THE APPELLATE ORDER. 5. THE LEARNED COMMISSIONER (APPEALS) CALLED FOR THE D ETAILS OF CLOSING BANK BALANCES INCLUDING CASH IN HAND AS PER THE BOOKS OF ACCOUNT AS ON 1 ST APRIL 2007 AND 31 ST OCTOBER 2007 THE DETAILS OF WHICH HAVE BEEN REPRODUCED AT PAGE5 OF THE APPE LLATE ORDER IN PARA2.3. AFTER ANALYZING THE AFORESAID DETAILS, THE LEARNED COMMISSIONER (APPEALS) DREW FOLLOWING INFERENCES: FROM THE ABOVE CHART IT CAN BE SEEN THAT AS ON 01. 04.2007 AND AS ON 01.10.2007 THE APPELLANT HAD SUFFICIENT CASH BALANC E IN ITS BOOKS OF ACCOUNTS I.E. AN AMOUNT OF RS.38,40,621/- ( TOTAL DEBIT BALA NCE) AS ON 01.04.2007 AND RS.14,05,159/- (DEBIT BALANCE) AS ON 31.10.2007. FO R THIS PURPOSE ONLY THE DEBIT BALANCES IN ITS VARIOUS BANK ACCOUNTS HELD BY THE APPELLANT ARE TAKEN INTO CONSIDERATION. ALTHOUGH, THE APPELLANT HAS SHOWN NE T CREDIT BALANCE OF RS.91,576.1) IN THE ABOVE CHART AS ON 31.10.2007 WH ICH IS DUE TO THE CREDIT BALANCE OF RS.14,96,739/- IN ITS BANK ACCOUNT NO.201 8 MAINTAINED WITH IDBI. AT THE SAME TIME IT IS SEEN THAT THE APPELLANT HAS DEBIT BALANCE TO THE TUNE OF RS.14,15,159/- IN ITS VARIOUS BANK ACCOUNTS ON 31.1 0.2007. IT TOO HAS SUFFICIENT SUCH BANK BALANCE AS ON 01.04.2007 TO EA SILY MEET OUT ITS SELF ASSESSMENT TAX LIABILITY. THE APPELLANT COULD NOT F URNISH THE DETAILS OF CASH IN HAND AS 01.04.2007 AND ON 31.10.2007. THEREFORE, FR OM THE POSITION OF CASH BALANCE IN ITS VARIOUS BANK ACCOUNTS AS REPRODUCED ABOVE, I FIND THAT THE APPELLANT HAS SUFFICIENT FUNDS AT ITS DISPOSAL TO M EET ITS LIABILITY OF PAYMENT OF ITA NO.7265/MUM/2011 M/S NIRMAN CONSTRUCTOINS 6 SELF ASSESSMENT TAX ON TIME. IT MAY ALSO BE NOTICED THAT THE APPELLANT IS REGULARLY ENGAGED IN THE BUSINESS OF CONSTRUCTION A ND DEVELOPMENT OF VARIOUS PROJECTS DURING THIS PERIOD HAVING SUFFICIENT OR RE ASONABLE AMOUNT OF FUNDS AT ITS DISPOSAL. THEREFORE, ON ACCOUNT OF THESE FACTS IT CANNOT BE HELD THAT THE APPELLANT WAS HAVING ACUTE FINANCIAL DIFFICULTIES O R LIQUIDITY CRUNCH TO THE EXTENT THAT IT COULD NOT MAKE THE PAYMENT OF SELF ASSESSME NT TAX ON TIME. 6. AS REGARDS CHARGEABILITY OF INTEREST UNDER SECTION 234B AND 234C, THE LEARNED COMMISSIONER (APPEALS) HELD T HAT THE PROVISIONS OF THE ACT ARE VERY CLEAR AND THEY ARE C ONSEQUENTIAL. HOWEVER, THE LEARNED COMMISSIONER (APPEALS) REDUCED THE QUANTUM OF PENALTY TO 20% AND RESTRICTED THE PENALT Y AT 3,28,407 ON THE GROUND THAT THE ASSESSEE HAS PAID T HE ENTIRE SELF ASSESSMENT TAX WITH THE MARGINAL DELAY OF THRE E MONTHS AND THAT THE ASSESSEE HAS NEVER BEEN AT DEFAULT EARLIER AND THIS WAS THE FIRST TIME DEFAULT. 7. BEFORE US, THE LEARNED COUNSEL, MR. K.K. LALKAKA, O N BEHALF OF THE ASSESSEE, REITERATING THE EXPLANATION AND THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, SUBM ITTED THAT THE ASSESSEE ACTUALLY DID NOT HAD ANY SUFFICIENT FU NDS TO PAY THE SELF ASSESSMENT TAX AT THE TIME OF FILING OF THE RE TURN OF INCOME. IMMEDIATELY, WHEN THE ASSESSEE HAD THE FUNDS, HE DE POSITED THE SAME TO THE GOVERNMENT EXCHEQUER IN THREE MONTH S. HE ALSO REITERATED THAT THE ASSESSEE HAS NEVER DEFAULT ED FOR PAYMENT OF TAX EITHER SELF ASSESSMENT OR ASSESSED T AX IN THE EARLIER YEARS OR IN THE SUBSEQUENT YEARS. THE ASSES SEE HAS EVEN DEPOSITED THE PENALTY AMOUNT. THE INTENTION OF THE ASSESSEE WAS NEVER TO DELAY THE SELF ASSESSMENT TAX PURPOSELY, B UT IT WAS DUE TO EXTREME BUSINESS EXIGENCIES AND LACK OF FUNDS TH AT THE ASSESSEE COULD NOT PAY THE SELF ASSESSMENT TAX AT T HE TIME OF FILING OF THE RETURN OF INCOME. THIS YEAR, IT WAS O NLY A ONE TIME DEFAULT AND, THEREFORE, THE ASSESSEE SHOULD NOT BE PENALIZED WITH THE LEVY OF PENALTY. 8. REGARDING THE LEARNED COMMISSIONERS OBSERVATION TH AT THERE WERE DEBIT BALANCE AS ON 31 ST OCTOBER 2007 TO THE TUNE OF ITA NO.7265/MUM/2011 M/S NIRMAN CONSTRUCTOINS 7 14,15,159 IN VARIOUS BANK ACCOUNT, HE SUBMITTED THA T THE LEARNED COMMISSIONER (APPEALS) HAS FAILED TO APPREC IATE THAT OVER ALL THERE WAS A CREDIT BALANCE OF 91,576 AS ON 31 ST OCTOBER 2007. THIS WAS DUE TO THE FACT THAT IN CASH CREDIT ACCOUNT WITH IDBI, THE ASSESSEE HAD A HUGE CREDIT B ALANCE OF 14,96,740. IF ALL THE ACCOUNTS ARE TAKEN INTO CONSI DERATION, THEN INSTEAD OF DEBIT BALANCE, THERE WAS LIABILITY UPON THE ASSESSEE TO THE BANK AND, HENCE, SUCH AN INTERPRETA TION BY THE LEARNED COMMISSIONER (APPEALS) FOR COMING TO THE CO NCLUSION THAT THE ASSESSEE HAD SUFFICIENT FUNDS, IS NOT CORR ECT. THUS, HE SUBMITTED THAT IN VIEW OF THE SECOND PROVISO TO SEC TION 221, NO PENALTY SHOULD BE LEVIED AS THERE WAS REASONABLE AN D SUFFICIENT CAUSE FOR NOT MAKING THE PAYMENT OF SELF ASSESSMENT TAX AT THE TIME OF FILING OF THE RETURN OF INCOME. 9. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IT IS A STATUTORY MAN DATE THAT THE ASSESSEE HAS TO FILE SELF ASSESSMENT TAX BEFORE FIL ING OF THE RETURN OF INCOME. SUCH SELF ASSESSMENT TAX CANNOT B E WAIVED OFF AND THERE IS NO DISCRETION PROVIDED UNDER THE LAW. IF SUCH TAX HAS NOT BEEN PAID, THEN THE ASSESSEE HAS TO SUFFER PENAL CONSEQUENCES IN VIEW OF THE PROVISIONS OF SECTION 2 21. MOREOVER, THE LEARNED COMMISSIONER (APPEALS) HAS SUBSTANTIALL Y REDUCED THE QUANTUM OF PENALTY FROM 16,42,037 TO 3,28,407. THIS HAS BEEN DONE BY THE LEARNED COMMISSIONER (APPEALS) AFTER EXAMINING THE ASSESSEES PLEA OF LACK OF FUNDS AND LIQUIDITY CRUNCH AS ON 31 ST OCTOBER 2007. HE, THUS, STRONGLY RELIED UPON THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS). 10. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE RE LEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. REGARDING THE PAYMENT OF SELF ASSESSMENT TA X, THE LAW, AS ENVISAGED IN SECTION 140A IS THAT, THE ASSESSEE IS LIABLE TO ITA NO.7265/MUM/2011 M/S NIRMAN CONSTRUCTOINS 8 PAY SELF ASSESSMENT TAX WHICH IS PAYABLE ON THE BAS IS OF ANY RETURN OF INCOME REQUIRED TO BE FURNISHED UNDER THE PROVISIONS OF THE ACT. SUCH A TAX HAS TO BE PAID TOGETHER WITH THE INTEREST PAYABLE BEFORE FURNISHING OF THE RETURN OF INCOME. NOT ONLY THAT THE ASSESSEE HAS TO FURNISH THE PROOF OF PAYMENT AC COMPANIED WITH THE RETURN OF INCOME. SECTION 221 PROVIDES FOR LEVY OF PENALTY ALONG WITH ARREARS OF TAX AND THE AMOUNT OF INTEREST PAYABLE UNDER SUBSECTION (2) OF SECTION 220 WHERE THE ASSESSEE IS IN DEFAULT IN MAKING PAYMENT OF TAX. TH E SECOND PROVISO TO SECTION 221, PROVIDES DISCRETION TO THE ASSESSING OFFICER THAT IF THE ASSESSEE PROVES TO THE SATISFAC TION OF THE ASSESSING OFFICER THAT THE DEFAULT WAS FOR GOOD AND SUFFICIENT REASONS THEN, IN THAT CASE, NO PENALTY SHALL BE LEV IED UNDER SECTION 221. IT IS UNDISPUTED FACT THAT THE ASSESSE E HAD NOT PAID THE SELF ASSESSMENT TAX BEFORE THE FILING OF THE RE TURN OF INCOME ON 29 TH OCTOBER 2007, WHEREIN THE ADMITTED TAX LIABILITY W AS RS.15,87,211 ALONG WITH THE INTEREST UNDER SECTION 234B. THE ASSESSEES CASE HAS BEEN THAT AT THE TIME OF FILING OF RETURN OF INCOME, THE ASSESSEE DID NOT HAVE SUFFICIENT FUND F OR PAYING THE SELF ASSESSMENT TAX. THIS HAS BEEN DEMONSTRATED THR OUGH VARIOUS CLOSING BALANCES OF THE BANK ACCOUNTS AS ON 31 ST OCTOBER 2007. THE LEARNED COMMISSIONER (APPEALS) TOO HAS EX AMINED THE AVAILABILITY OF FUNDS AT THE TIME OF FILING OF THE RETURN OF INCOME. HOWEVER, INSTEAD OF TAKING THE AGGREGATE PO SITION AS ON 31 ST OCTOBER 2007 OF ALL THE BANK ACCOUNTS, HE HAS DRAW N ADVERSE INFERENCE ON ACCOUNT OF DEBIT BALANCE IN SO ME OF THE BANK ACCOUNTS. ON THE CONTRARY, THE AGGREGATE POSIT ION AS ON 31 ST OCTOBER 2007 WAS THAT THE ASSESSEE HAD OVER ALL DE BIT BALANCE OF 14,05,163 AND THE CREDIT BALANCE WAS 14,96,740. THUS, THERE WAS A NET CREDIT BALANCE OF 91,576 WHICH WAS PAYABLE TO THE BANK. FROM THESE ACCOUNTS, IT CAN BE HELD THAT THE ASSESSEES CONTENTION WAS CORRECT THA T IT DID NOT HAD SUFFICIENT FUNDS ON THE DATE OF RETURN OF INCOM E TO PAY THE SELF ASSESSMENT TAX. BESIDES THIS AND LOOKING TO TH E FACT THAT THE ITA NO.7265/MUM/2011 M/S NIRMAN CONSTRUCTOINS 9 ASSESSEE IS NOT A HABITUAL DEFAULTER AND THAT THE A SSESSEE HAD MADE THE PAYMENT OF TAXES DUE UNDER SECTION 140A IM MEDIATELY AFTER THREE MONTHS WITHOUT ANY NOTICE FROM THE DEPA RTMENT, IT CAN BE HELD THAT THERE WAS A REASONABLE AND SUFFICI ENT REASON IN VIEW OF THE SECOND PROVISO TO SECTION 221. SINCE TH E LEVY OF PENALTY UNDER SECTION 221 IS DISCRETIONARY IN VIEW OF THE SECOND PROVISO TO SECTION 221, THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY OF 3,28,407 AS SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) IS LIABLE TO BE DELETED. CON SEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARN ED COMMISSIONER (APPEALS) AND DELETE THE PENALTY. THUS , THE GROUND NO.1 RAISED BY THE ASSESSEE IS TREATED AS AL LOWED. 11. GROUND NO.2, AS RAISED BY THE ASSESSEE, HAS BECOME ACADEMIC FOR THE REASON THAT THE PENALTY HAS BEEN D ELETED AND THE INTEREST CHARGEABLE UNDER SECTION 234B AND 234C IS ALREADY PART OF SELF ASSESSMENT TAX WHICH HAS BEEN PAID AND THE ASSESSEES PLEA THAT WHILE IMPOSING THE PENALTY, SU CH INTEREST HAS TO BE REMOVED DOES NOT REQUIRE ANY SEPARATE ADJ UDICATION. THUS, GROUND NO.2, RAISED BY THE ASSESSEE IS TREATE D AS INFRUCTUOUS. 12. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL AND T HE CONCLUSION DRAWN IN THE ORDER OF THE TRIBUNAL DATED 15/01/2014, IF KEPT IN JUXTAPOSITION AND ANALYZED, THE FACTS, IN BRIEF, THAT THE ASSESSEE, A PARTNERSHIP FIRM, EN GAGED IN THE ITA NO.7265/MUM/2011 M/S NIRMAN CONSTRUCTOINS 10 BUSINESS OF CIVIL CONSTRUCTION AND REAL ESTATE DEVE LOPERS, DECLARED TOTAL INCOME OF RS.47,15,420/-, WHICH WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE OF THE AS SESSEE WAS, LATER ON, SELECTED FOR SCRUTINY, THEREFORE, RE QUISITE NOTICES U/S 143(2) AND 142(1), ALONG WITH QUESTIONN AIRE WAS SERVED UPON THE ASSESSEE. THE ASSESSEE ATTENDED THE PROCEEDINGS AND FURNISHED NECESSARY DETAILS. THE LD . ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NO T PAID SELF ASSESSMENT TAX, AS REQUIRED U/S 140A OF THE ACT, ON THE RETURNED INCOME. AS PER THE ASSESSING OFFICER, THE TOTAL TAX PAYABLE INCLUDING SURCHARGE AND CESS WAS RS.15,87,2 11/- AGAINST WHICH THE ASSESSEE PAID ONLY RS.2 LAKHS, TH EREFORE, THERE IS VIOLATION OF PROVISIONS OF SECTION 140A(3) R.W.S. 221 OF THE ACT. A PENALTY OF RS.16,42,037/- WAS INVOKED. O N APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , THE PENALTY WAS RESTRICTED TO 20% OF THE SELF ASSESSMEN T TAX PAYABLE INCLUDING THE AMOUNT OF TAX AND INTEREST, CONSEQUENTLY, THE AMOUNT RESTRICTED TO RS.3,28,407/ - (BEING 20% OF RS.16,42,037/-). THE REMAINING PENALTY WAS D ELETED. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE TH IS TRIBUNAL RESTRICTING THE PENALTY TO 20%. HOWEVER, ON APPEAL, BY THE ASSESSEE, THE PENALTY WAS DELETED BY AFORESA ID ORDER DATED 15/01/2014. FOLLOWING THE REASONING CONTAINE D IN THE ORDER OF THE TRIBUNAL, WE FIND NO MERIT IN THE APPE AL OF THE REVENUE, BECAUSE, THE ORDER WAS ARRIVED AT AFTER CO NSIDERING THE TOTALITY OF FACTS AND THE PROVISIONS OF THE ACT . LEVY OF INTEREST U/S 234 B & C OF THE ACT WAS ALSO HELD TO BE ITA NO.7265/MUM/2011 M/S NIRMAN CONSTRUCTOINS 11 INFRUCTUOUS, THUS, THE APPEAL OF THE REVENUE IS HAV ING NO MERIT, CONSEQUENTLY, DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING ON 01/03/2016. SD/- SD/- ( SANJAY ARORA ) (JOGINDER SINGH) ! ' / ACCOUNTANT MEMBER # ' /JUDICIAL MEMBER % & MUMBAI; ) DATED : 01/03/2016 F{X~{T? P.S/. . . $#%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 % 1$ ( + ) / THE CIT, MUMBAI. 4. 0 0 % 1$ / CIT(A)- , MUMBAI 5. 34 .$ ! , 0 +( ! 5 , % & / DR, ITAT, MUMBAI 6. ' 7& / GUARD FILE. / BY ORDER, /3+$ .$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % & / ITAT, MUMBAI