New Wave Computing Pvt Ltd., CHENNAI v. ACIT, CHENNAI

CO 202/CHNY/2009 | 2005-2006
Pronouncement Date: 08-10-2010 | Result: Dismissed

Appeal Details

RSA Number 20221723 RSA 2009
Assessee PAN AAACN9078L
Bench Chennai
Appeal Number CO 202/CHNY/2009
Duration Of Justice 10 month(s) 12 day(s)
Appellant New Wave Computing Pvt Ltd., CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Cross Objection
Pronouncement Date 08-10-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 08-10-2010
Date Of Final Hearing 29-09-2010
Next Hearing Date 29-09-2010
Assessment Year 2005-2006
Appeal Filed On 26-11-2009
Judgment Text
IN THE INCOMETAX APPELLATE TRIBUNAL: C- BENCH:CHENN AI (BEFORE SHRI HARI OM MARATHA JUDICI AL MEMBER AND SHRI ABRAHAM P. GEORGE. ACCOUNTANT MEMBER) ITA NO. 1651/ MDS/09 ASST. YEARS 2005-06 THE ACIT VS. M/S. NEW WAVE COMPUTIG P.LTD. CO. CIR.IV(4) CHENNAI. PRESTIGE POINT II FLOOR 33/16 HADDOWS RD CHENNAI-600006 PAN AAACN9078L (APPELLANT) (RESPONDENT) AND CO NO.202/MDS/09 IN ITA NO.1651/MDS/09 ASSESSMENT YEAR 2005 -06 M/S NEW WAVE COMPUTING P. LTD VS. THE ACIT. CHENNAI 600006 CO.CIR.IV(4) CHENNAI (CROSAS-OBJECTOR) (RESPONDENT) ASSESSEE BY: DEPARTMENT BY: SRI A.ANAND DIRECTOR SHRI B.SRINIVAS ITA NO.1651 & CO.202/09 2 ORDER PER SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER- CAPTIONED CASES ARE AN APPEAL BY THE REVENUE AND A CROSS- OBJECTION FILED BY THE ASSESSEE. 2. REVENUE IN ITS APPEAL IS AGGRIEVED THAT THE CIT(A ) DELETED THE PENALTY LEVIED ON THE ASSESSEE UNDER SEC.221(1) OF THE INCOME-TAX ACT 1961 (THE ACT FOR SHORT). 3. SHORT FACTS APROPOS ARE THAT THE ASSESSEE HAD FI LED ITS RETURN OF INCOME ON 31-10-2005 AND ON THE TOTAL INCOME DECLAR ED SELF ASSESSMENT TAX PAYABLE UNDER SEC.140A OF THE ACT ALONGWITH INTE REST UNDER SEC.234B AND 234C CAME TO `.11 07 832/-. ASSESSEE HAD FILED A LETTER DATED 28-10- 2005 ALONGWITH ITS RETURN ADDRESSED TO THE AO REQU ESTING DEFERMENT OF PAYMENT OF SELF ASSESSMENT TAX BY TWO INSTALMENTS OF `.5 53 916/- EACH. THEREAFTER THESE INSTALMENTS WERE PAID BY THE ASSES SEE ON 14-11-2005 AND 20-01-2006 RESPECTIVELY. INTEREST OF `. 56 644/- UNDER SEC.220(2) OF THE ACT WAS ALSO PAID BY THE ASSESSEE ON 22-02-2006 . LD. AO PROCESSED THE RETURN UNDER SEC. 143(1) OF THE ACT AND IN THE INTIMATION SERVED ON THE ASSESSEE ON 24-01-2006 SELF ASSESSMENT TAX OF ` .5 53 916/- PAID BY THE ASSESSEE ON 20-01-2006 WAS NOT CONSIDERED. ASSE SSEE DID POINT OUT TO ITA NO.1651 & CO.202/09 3 THE AO THAT SELF ASSESSMENT TAX STOOD WHOLLY PAID BY 20-01-2006. NEVERTHELESS LD.AO ISSUED A NOTICE UNDER SEC.220(1 ) OF THE ACT REQUIRING THE ASSESSEE TO SHOW CAUSE WHY PENALTY UNDER THAT S ECTION OUGHT NOT BE LEVIED ON THE BALANCE TAX OF `.6 10 559/- WHICH W AS SHOWN AS PAYABLE IN THE INTIMATION UNDER SEC. 143(1) OF THE ACT. AS SESSEE THEREUPON REPLIED THAT IT HAD IN FACT REMITTED THE TAX AND DUE S AND COPIES OF CHALLANS WERE ALSO FURNISHED. HOWEVER THE AO WAS O F THE OPINION THAT THE ASSESSEE COULD NOT GIVE ANY VALID REASON WHY HE WAS UNABLE TO MAKE PAYMENT OF THE SELF ASSESSMENT TAX WITHIN THE STIPUL ATED TIME. HENCE HE LEVIED PENALTY OF `.6 10 560/- UNDER SEC. 221(1). 4. IN ITS APPEAL BEFORE THE CIT(A) IT WAS SUBMITTED B Y THE ASSESSEE THAT THE FINANCIAL DIFFICULTIES FACED BY IT WAS BRO UGHT TO THE NOTICE OF THE AO WHILE FILING THE RETURN OF INCOME BY WAY OF A L ETTER ANNEXED TO THE RETURN AND THE AO STILL LEVIED PENALTY WITHOUT CONS IDERING SUCH DIFFICULTIES FACED BY IT. LD. CIT(A) WAS OF THE OPIN ION THAT THE ASSESSEE HAD PAID ITS TAX WELL BEFORE ISSUE OF NOTICE UNDER SEC. 220(1) OF THE ACT AND IT HAD ALSO EXPLAINED THE FINANCIAL DIFFICULTY C OMPELLING IT TO MAKE THE PAYMENT OF SELF ASSESSMENT TAX ALONGWITH INTERES T IN TWO INSTALMENTS. HE THEREFORE DELETED THE PENALTY LE VIED BY THE AO. ITA NO.1651 & CO.202/09 4 5. NOW BEFORE US THE LD. DR SUBMITTED THAT FINANCI AL DIFFICULTY OF THE ASSESSEE WAS NEVER PROPERLY EXPLAINED BEFORE THE AO . ACCORDING TO HIM ASSESSEE HAD NO REASON FOR NOT MAKING THE REMITTANC E OF SELF ASSESSMENT TAX IN ACCORDANCE WITH LAW AND PENALTY UNDER SEC. 22 0(1) WAS RIGHTLY LEVIED BY THE AO. PER CONTRA THE DIRECTOR OF THE A SSESSEE APPEARING PERSONALLY STRONGLY DEFENDED THE ORDER OF THE LD. CIT(A). 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL S UBMISSIONS. FACTS WHICH ARE NOT DISPUTED ARE THAT THE ASSESSEE HAD PA ID THE SELF ASSESSMENT TAX BEFORE THE ISSUE OF NOTICE UNDER SE C. 220(1) OF THE ACT. ON 14-11-2005 IT HAD PAID `.5 53 916/- AND AGAIN ON 20-01-2006 IT HAD PAID THE BALANCE SUM OF `. 5 53 916/-. INTEREST UNDE R SEC. 220(2) OF `.56 644/- WAS ALSO PAID ON 22-02-2006. ASSESSEE HA D ALSO FILED A LETTER POINTING OUT ITS FINANCIAL DIFFICULTIES ON ACCOUNT OF ITS COMMITMENTS TO ITS SUPPLIERS AND WHY IT WAS DEFERRING PAYMENT O F SELF ASSESSMENT TAX. TWO FACTS ARE CLEAR. FIRST ONE IS THAT THE DUES WE RE OF SELF ASSESSMENT TAX. SECOND IS THAT EVEN BEFORE THE RECEIPT OF INTIM ATION UNDER SEC.143(1) OF THE ACT ON 24-01-2006 ASSESSEE HAD MA DE THE PAYMENTS. IN OUR OPINION THIS WAS NOT A FIT CASE FOR LEVY OF PE NALTY. ASSESSEE HAD EXPLAINED ITS FINANCIAL DIFFICULTIES ALONGWITH ITS R ETURN AND HAD ALSO PAID THE SELF ASSESSMENT TAX ALBEIT WITH SOME DELAY. SE COND PROVISO TO SEC.220(1) OF THE ACT STATES THAT ONCE AN ASSESSEE PROVES TO THE ITA NO.1651 & CO.202/09 5 SATISFACTION OF THE AO THAT THE DEFAULT WAS FOR GOO D AND SUFFICIENT REASON NO PENALTY SHOULD BE LEVIED. SATISFACTION O F THE AO MENTIONED IN THE PROVISO IS NOT SUBJECTIVE BUT OBJECTIVE. IT SHOU LD BE A SATISFACTION THAT A REASONABLE MAN WOULD ARRIVE AT HAVING REGAR D TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE GIVEN FACTS AND CIRC UMSTANCES ARE IN OUR OPINION SUCH THAT NO REASONABLE MAN COULD HAVE COM E TO A CONCLUSION THAT IT WAS NOT SATISFACTORY. LEVY OF PENALTY WAS T HEREFORE RIGHTLY DELETED BY THE LD.CIT(A). WE ARE IN THIS REGARD FORTIFIED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NA CHIMUTHU INDUSTRIAL ASSOCIATION V. CIT (123 ITR 611) WHEREIN THEIR LORDSH IPS HAD HELD THAT WHERE AN ASSESSEE WAS PLEADING PAUCITY OF FUNDS CA NCELLATION OF PENALTY WAS JUSTIFIED. THIS DECISION WAS LATER AFFIRMED BY THE HONBLE APEX COURT IN 235 ITR 190. WE THUS FIND NO REASON TO INTERFER E WITH THE ORDER OF THE CIT(A). 7. APPEAL OF THE REVENUE IS DISMISSED. 8. COMING TO THE CROSS OBJECTION FILED BY THE ASSES SEE WE FIND THAT IT IS IN SUPPORT OF THE ORDER OF THE LD. CIT(A). SINCE WE HAVE CONFIRMED THE ORDER OF THE CIT(A) DELETING THE LEVY OF PENALTY SU CH CROSS OBJECTION HAS BECOME INFRUCTUOUS AND IT STANDS DISMISSED. ITA NO.1651 & CO.202/09 6 9. TO SUMMARISE APPEAL OF THE REVENUE AS WELL AS TH E CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 08 - 10 -2010 SD/- SD/- ( HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 8TH OCTOBER 2010 NBR CC: ASSESSEE/ ASSESSING OFFICER/ CIT(A)/ CIT/ D .R/ GUARD FILE.