CITYGOLD FARMING P. LTD, MUMBAI V. ITO WD 8(1)(4), MUMBAI

ITA 8147/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9365 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 8147/MUM/2011 (ASSESSMENT YEAR: 2009-10) M/S CITYGOLD FARMING P. LTD. 6 TH FLOOR, AKRUTI TRADE CENTRE, MIDC, MAROL, ANDHERI(E) MUMBAI -400 093 PAN AAFCA 8865 R VS INCOME TAX OFFICER WARD 8(1)(4) AAYKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : RAJARSHI DWIVEDY DATE OF HEARING: 21.11.2012 DATE OF PRONOUNCEMENT: 21.11.2012 O R D E R PER VIVEK VARMA, JM: THE INSTANT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) 16, MUMBAI DATED 20.10.2011, WHEREIN THE SOLITARY ISSUE IS WITH REGARD TO THE PENALTY LEVIED U/S 221(1) READ WITH SEC TION 140A(3) AT RS. 22,994 AND SUSTAINED BY THE CIT(A). 2. THE FACTS AS STATED BY THE AR ARE THAT THE ASSESS EE DID NOT PAY RS. 2,55,340 AS TAX, WHICH WAS DUE TO BE FILED ALONG WITH T HE RETURN U/S 140A. THE AO, VIDE LETTER DATED 18.01.2010, DIRECTED T HE ASSESSEE TO MAKE THE PAYMENT AND PRODUCE THE COPY OF CHALLAN, ON OR BEFORE 05.02.2010. M/S CITYGOLD GARMING P. LTD. ITA NO. 8147/MUM/2011 2 3. THE ASSESSEE, ON RECEIPT OF THE DIRECTION OF THE AO, AS PER LETTER DATED 18.01.2010, ON 03.02.2010, DEPOSITED THE SUM ON 03.02 .2010 AND PRODUCED THE CHALLAN ON THE APPOINTED DATE, AS PER LETTER DATED 04.02.2010 (AS MENTIONED IN PARA 2.2.1 OF THE CIT(A) ORDER) . 4. THE AO, DISREGARDING HIS OWN DIRECTION AS PER THE LETTE R DATED 18.01.2010 LEVIED A PENALTY OF RS. 25,535, BEING 10% OF RS. 2,55,351. 5. THE ASSESSEE APPROACHED THE CIT(A), WHO SUSTAINED TH E LEVY OF PENALTY. 6. BEFORE, US THE AR REITERATED THE SUBMISSIONS MADE BEFO RE THE REVENUE AUTHORITIES AND PLEADED THAT THE PROVISIONS OF SE CTION 221(1) ARE DISCRETIONARY AND NOT MANDATORY AND WHEN ONCE THE AO APPLIED HIS DIRECTION TO LEVY THE PENALTY AFTER 05.02.2010 IN CASE T HE AMOUNT OF ADVANCE TAX IS NOT PAID, THE AO CANNOT ALTER THE DISCRET ION TILL THE NON PAYMENT IS NOT PROVED AND ASSESSEE IS NOT AT DEFAULT AFT ER THE DATE, AS GIVEN BY THE AO. THE AR REFERRED TO THE DECISION OF HONB LE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS STATE OF OR ISSA, REPORTED IN 83 ITR 26, WHEREIN THEIR LORDSHIP HAD OBSERVED THAT IF T HE REASONS OFFERED BY THE APPELLANT ARE GOOD ENOUGH FOR EXONERATION, HE COULD DESIST FROM VISITING THE TAX PAYER WITH THE RIGOUR OF PENALT Y (AS MENTIONED BY THE CIT(A) IN THE IMPUGNED ORDER AT PAGE 5 & 6) . 7. THE AR, THEREFORE, PRAYED THAT THE PENALTY NEEDS TO BE DELETED. 8. THE DR ON THE OTHER HAND RELIED ON THE ORDER OF THE REVENUE AUTHORITIES AND REFERRED TO THE EXPLANATION AND ALSO SUBM ITTED THAT PAYMENT OF SELF ASSESSMENT TAX ALONG WITH THE RETURN IS M ANDATORY AND THE PAYMENT MADE AFTER HAVING BEING CALLED UPON TO P AY THE SELF ASSESSMENT TAX DOES NOT ABSOLVE THE ASSESSEE FROM THE DEFAULT. HE, THEREFORE, SUBMITTED THAT THE REVENUE AUTHORITIES WERE C ORRECT IN THE LEVY OF PENALTY UNDER SECTION 221(1). M/S CITYGOLD GARMING P. LTD. ITA NO. 8147/MUM/2011 3 9. WE HAVE HEARD THE ARGUMENTS AND HAVE GONE THROUG H THE ORDER OF THE REVENUE AUTHORITIES ON THE IMPUGNED ISSUE AND HAV E ALSO PERUSED THE IMPUGNED SECTION. WE FIND THAT THE IMPUGNED S ECTION IS NOT MANDATORY. THE AO, THEREFORE, USED HIS DISCRETION, CALLIN G UPON THE ASSESSEE TO DEPOSIT THE TAX ON OR BEFORE 05.02.2010 , WHICH THE ASSESSEE DID ON 03.02.2010 AND PRODUCED THE COPY OF PAYMENT THERE OF. IN OUR CONSIDERED VIEW, WHEN THE TERMS OF DISCRETION AND DIRECTION HAD BEEN MET BY THE ASSESSEE WELL IN TIME, THE SCOPE TO VISIT THE PENAL PROVISIONS GETS EXTINGUISHED. WE DO NOT INTEND TO GO INTO THE DETAILS THAT WHY ASSESSEE DID NOT DEPOSIT ITS SELF ASSESSMENT TA X, WHILE FILING OF THE RETURN, BECAUSE, THE AO HAS BYPASSED THE MERITS BY CALLING UPON THE ASSESSEE TO DEPOSIT THE SELF ASSESSMENT TAX. A CCORDING TO US, NOTHING WAS IGNORED BY THE ASSESSEE, WHICH COULD HAVE EN ABLED THE LEVY OF PENALTY. 10. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND C ANCEL THE PENALTY OF RS. 22,994 LEVIED UNDER SECTION 221(1) OF THE INC OME TAX ACT. 11. IN THE RESULT, APPEAL, THUS FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 21/11/2012. SD/- ( RAJENDRA SINGH ) ACCOUTANT MEMBER SD/- ( VIVEK VARMA ) JUDICIAL MEMBER MUMBAI, DATE: 21/11/2012 COPY TO : 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- 22 , MUMBAI. 4) THE CIT 10, MUMBAI, M/S CITYGOLD GARMING P. LTD. ITA NO. 8147/MUM/2011 4 5) THE D.R. C BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER ASSTT. REGISTRAR I.T.A.T., MUMBAI RASIKA