M/s U.P State Yarn Company Ltd., Kanpur V. Dy.Commissioner of Income Tax-6, Kanpur

SA 04/LKW/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0220 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Application of stay; Reasonable cause; Tax effect; TDS; Set aside
• Section: 271(1)(c); 40(a)(ia)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER STAY APPLICATION NOS.04 & 05/LKW/2018 (IN I.T.A. NOS.62 & 63/LKW/20185) ASSESSMENT YEARS:2007-08 & 09-10 U.P. STATE YARN COMPANY LTD., 1, SMITH SQUARE, 14/2, CIVIL LINES, KANPUR. PAN:AAACU 1674 K VS. DY.C.I.T. - VI, KANPUR. (APPELLANT) (RESPONDENT) I.T.A. NOS.62 & 63/LKW/20185 ASSESSMENT YEARS:2007-08 & 09-10 U.P. STATE YARN COMPANY LTD., 1, SMITH SQUARE, 14/2, CIVIL LINES, KANPUR. PAN:AAACU 1674 K VS. DY.C.I.T.-VI, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THESE STAY APPLICATIONS HAVE BEEN FILED BY THE AS SESSEE AGAINST THE DEMAND IN THE TWO YEARS WHICH THE ASSESSING OFFICER HAS CREATED BY IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. APPELLANT BY SHRI P. K. KAPOOR, C. A. RESPONDENT BY SHRI YASHVENDRA SINGH, D.R. DATE OF HEARING 23/02/2018 DATE OF PRONOUNCEMENT 23 / 02 /201 8 2 2. LEARNED A. R. AT THE OUTSET SUBMITTED THAT PETIT IONER IS FULLY OWNED U.P. STATE GOVERNMENT COMPANY WHICH ENGAGED IN THE BUSINESS OF COTTON/SYNTHETIC YARN ACTIVITIES AND HAS CLOSED LAY ING FOR LAST SEVERAL YEARS. IT WAS STATED THAT FOR ASSESSMENT YEAR 2007-08 AND 2009-10 THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS HAD DISAL LOWED INTEREST ON BONDS DEBITED TO PROFIT & LOSS ACCOUNT FOR THE REASON THA T THE ASSESSEE HAD NOT DEDUCTED TDS. IT WAS STATED THAT IN THE QUANTUM PR OCEEDINGS THE MATTER HAD TRAVELLED TO HON'BLE TRIBUNAL AND HON'BLE TRIBU NAL HAD REMITTED BACK THE ISSUE TO THE ASSESSING OFFICER FOR READJUDICATI ON ON THE DISALLOWANCE. LEARNED A. R. STATED THAT THE ASSESSING OFFICER AGA IN MADE DISALLOWANCE. HOWEVER, SINCE THE ASSESSEE WAS HAVING HUGE ACCUMUL ATED LOSSES SO THERE WAS NO TAX EFFECT AND ON AN ADVICE GIVEN BY THE PRO FESSIONAL THE APPEAL AGAINST QUANTUM PROCEEDS WERE NOT FILED BY THE ASSE SSEE BEFORE LEARNED CIT(A). HOWEVER, IN THE MEANTIME THE ASSESSING OFF ICER INITIATED PROCEEDINGS U/S 271(1)(C) OF THE ACT AND IMPOSED PE NALTIES THEREBY CREATED DEMAND. IT WAS SUBMITTED THAT THE ASSESSEE HAS NO RESOURCE TO DEPOSIT THE SAID PENALTY AMOUNT AS THE ASSESSEE HAD INCURRED HU GE LOSSES AND HAS CLOSED LAYING FOR THE LAST SO MANY YEARS THEREFORE, IT WAS STATED THAT THE DEMANDS MAY BE STAYED. LEARNED A. R. FURTHER SUBMI TTED THAT BANK ACCOUNTS OF THE ASSESSEE HAVE BEEN ATTACHED AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PAGE NO. 21 OF THE PAPER B OOK WHEREBY A NOTICE U/S 226(3) OF THE ACT ISSUED TO BRANCH MANAGER, ORIENTA L BANK OF COMMERCE FOR RECOVERY OF THE PENALTY AMOUNT WAS PLACED. OUR ATT ENTION WAS FURTHER INVITED TO PAGE NO. 22 OF THE PAPER BOOK WHERE A CO PY OF LETTER WRITTEN BY ALLAHABAD BANK INTIMATING TO THE ASSESSEE REGARDING ATTACHMENT OF THEIR ACCOUNT WAS PLACED. LEARNED A. R. FURTHER SUBMITTE D THAT THE AUTHORITIES HAVE ALREADY RECOVERED AN AMOUNT OF RS.70,491/- FRO M ORIENTAL BANK OF COMMERCE AND FURTHER RECOVERED AN AMOUNT OF RS.10,9 7,665/- FROM ALLAHABAD BANK AND IN THIS RESPECT OUR ATTENTION WA S INVITED TO PAGES 22 3 AND 23 OF THE PAPER BOOK. IT WAS SUBMITTED THAT TH E ATTACHMENT OF BANK ACCOUNT HAS RESULTED HARDSHIP TO THE ASSESSEE AS TH E ASSESSEE IS NOT ABLE TO PAY SALARIES TO OUTSOURCED AND PERMANENT EMPLOYEES. THEREFORE, IN VIEW OF THESE FACTS AND CIRCUMSTANCES, IT WAS PRAYED THAT T HE REVENUE AUTHORITIES SHOULD BE DIRECTED TO RELEASE THE BANK ACCOUNTS AND SHOULD ALSO NOT TAKE FURTHER CORROSIVE ACTIONS. IT WAS FURTHER PRAYED T HAT REVENUE AUTHORITIES SHOULD BE DIRECTED TO REFUND THE AMOUNTS ALREADY RE COVERED. 3. LEARNED D. R., ON THE OTHER HAND, OBJECTED TO TH E STAY APPLICATIONS AND SUBMITTED THAT THE ASSESSEE HAD NOT DEDUCTED TA X ON INTEREST PAYMENTS TO BONDHOLDERS AND DURING SECOND ROUND OF THE PROCE EDINGS ALSO THE ASSESSEE WAS NOT ABLE TO PROVE THAT THE BONDHOLDERS AT THEIR OWN HAD DEPOSITED THE TAX ON THE ACCRUED INTEREST ON BONDS. IT WAS SUBMITTED THAT THE REVENUE HAS SUFFERED AS NEITHER THE ASSESSEE HA S DEDUCTED THE TAX ON INTEREST NOR BONDHOLDERS DEPOSITED TAX ON THEIR OWN . 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD WE FIND THAT IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS BEEN INCURRING LOSSES WHICH FACT IS APPARENT FR OM THE COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2009-10 WHICH IS PLACED AT PAGES 3 TO 6 OF THE PAPER BOOK WHEREIN THE ASSESSING OFFICE R HAS COMPUTED THE REVISED LOSS FOR ASSESSMENT YEAR 2009-10 AT RS.3,37 ,78,210/-. THE ABOVE SAID LOSS HAS BEEN ASSESSED AFTER TAKING INTO ACCOU NT THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT THEREFORE, BEFORE THE DISALLOW ANCE THE RETURNED LOSS WAS TO THE TUNE OF RS.5,45,46,207/-. THE ASSESSEE HAS NOT PREFERRED APPEAL AGAINST THE QUANTUM ADDITIONS IN THE SECOND ROUND O F APPEAL AS THE TAX LIABILITY WAS NIL AFTER CONSIDERING THE ACCUMULATED LOSS. DURING THE COURSE OF HEARING WE HAVE GONE THROUGH THE APPEALS FILES ALSO AND WE FOUND THAT LEARNED CIT(A) HAS DISMISSED THE APPEALS FOR NON PR OSECUTION. THEREFORE, IT WAS CONSIDERED APPROPRIATE THAT THE APPEALS MAY BE SET ASIDE TO CIT(A) 4 WHO SHOULD PASS A SPEAKING ORDER AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND AFTER ALLOWING OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. THE LEARNED CIT(A) SHOULD PASS THE ORDER WITHIN A P ERIOD OF THREE MONTHS. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE IN THE P ROCEEDINGS AND IS DIRECTED NOT TO SEEK ADJOURNMENTS WITHOUT REASONABLE CAUSE. IN VIEW OF THE ABOVE, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR S TATISTICAL PURPOSES. 4.1 AS REGARDS THE STAY APPLICATIONS, WE DIRECT THE REVENUE AUTHORITIES TO RELEASE THE BANK ACCOUNTS OF THE ASSESSEE SO THAT N ECESSARY AND ROUTINE BANKING OPERATIONS INCLUDING PAYMENT OF SALARIES TO EMPLOYEES COULD BE CARRIED OUT. THE REVENUE AUTHORITIES SHOULD NOT TA KE ANY CORROSIVE MEASURE TILL THE DISPOSAL OF APPEAL BY LEARNED CIT(A). 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES WHEREAS BOTH THE STAY APPLICAT IONS ARE DISPOSED OF IN THE MANNER AS STATED ABOVE. (ORDER PRONOUNCED IN THE OPEN COURT ON 23/02/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:23/02/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. R EGISTRAR