The ACIT, Circle-6,, Ahmedabad v. Shri Ravi Hansraj Gouthi(HUF), Ahmedabad

ITA 297/AHD/2011 | 2006-2007
Pronouncement Date: 17-04-2014 | Result: Dismissed

Appeal Details

RSA Number 29720514 RSA 2011
Assessee PAN AAHHR3118K
Bench Ahmedabad
Appeal Number ITA 297/AHD/2011
Duration Of Justice 3 year(s) 2 month(s) 14 day(s)
Appellant The ACIT, Circle-6,, Ahmedabad
Respondent Shri Ravi Hansraj Gouthi(HUF), Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 17-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 17-04-2014
Date Of Final Hearing 11-04-2014
Next Hearing Date 11-04-2014
Assessment Year 2006-2007
Appeal Filed On 03-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER ITA NO.297/AHD/2011 A.Y. 2006-07 ACIT CIRCLE-6 AHMEDABAD. VS SHRI RAVI HANSRAJ GOUTHI (HUF) 10 SWAMI GUNTINAGAR SOCIETY MEMNAGAR AHMEDABAD. PAN: AAHHR 3118K (APPELLANT) (RESPONDENT) REVENUE BY : SHRI O.P. BATHEJA SR.D.R. ASSESSEE(S) BY : SHRI T.P. HEMANI AR / DATE OF HEARING : 11/04/2014 / DATE OF PRONOUNCEMENT: 17/04/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(A)-XI AHMEDABAD DATED 24.11.2010. THE ONLY GROUND RAISED BY THE REVENUE IS AS UNDER: THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED I N LAW AND ON FACTS IN DELETING THE PENALTY OF RS.43 99 051/- LEVIED U/S. 140A(3) OF THE INCOME TAX ACT. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S.140A(3) WERE THAT THE ASSESSEE-FIRM HAS FILED A RETURN OF INCOME FOR A.Y. 2006-07 DECLARING AN INCOME OF RS.1 44 99 740/-. IT WAS SUMMARILY ASSESSED U/S.143(1) DATED 26.03.2008. THE RE WAS NO SELF ASSESSMENT TAX PAID BY THE ASSESSEE AS PRESCRIBED U /S.140A OF IT ACT. AS A RESULT A DEMAND OF RS.43 99 051/- WAS RAISED AGA INST THE ASSESSEE. IT IS ITA NO.297/AHD/2011 ACIT AHMEDABAD VS. SHRI RAVI HANSRAJ GOUTHI (HUF) A.Y.2006-07 - 2 - WORTH TO MENTION THAT THE SELF-ASSESSMENT WHICH WAS REQUIRED TO BE PAID BY THE ASSESSEE WAS ALSO RS.43 99 051/-. DUE TO SAI D FAILURE ON THE PART OF THE ASSESSEE THE ASSESSEE WAS TREATED IN DEFAULT A ND ATTRACTED THE PENALTY U/S.140A(3) OF IT ACT. THE ASSESSEES EXPLANATION W AS THAT DUE TO LOSSES HE HAS NO FUND TO MAKE THE PAYMENT HENCE DEFAULTED BUT LATER ON PAID THE AMOUNT. DUE TO THE SAID FAILURE ON THE PART OF THE ASSESSEE A PENALTY OF RS.43 99 051/- WAS LEVIED ON THE ASSESSEE. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY LEARNED CIT(A) HAS HELD AS UNDER: 2.1.2 THAT VERY FACT INSTALLMENT FACILITY WAS GRAN TED BY THE A.O. POINTS TO ACCEPTANCE OF APPELLANTS CLAIM THAT HE HAD INCURRE D HUGE LOSSES IN STOCK- MARKET AND WAS EXPERIENCING SEVERE FINANCIAL CRUNCH . THUS A.O.S ACTION POINTS TO HIS SATISFACTION THAT THE DEFAULT WAS FOR GOOD AND SUFFICIENT REASONS [WITHIN THE MEANING OF SECOND PROVISO TO SEC. 221(1 )] IN THIS CONNECTION IT IS ALSO SEEN THAT THE APPELLANT RETURNED HUGE LOSS OF RS.1 39 09 808/- FOR THE IMMEDIATELY SUCCEEDING A.Y. 2007-08 (I.E. THE PERIO D IN WHICH TAX U/S. 140A WAS TO BE PAID). APPELLANT COMPLIED WITH THE INSTAL LMENTS GIVEN. IN THE FACTS OF THE CASE I AM OF THE VIEW THAT THIS IS NOT A FIT C ASE FOR IMPOSITION OF PENALTY. RELIANCE IS PLACED IN THIS REGARD ON THE CASE OF CI T VS. HYDROFLEX EQUIPMENTS LTD. (150 TAXMAN 264)(BOM) WHEREIN IT WAS HELD THA T THE VERY ACT OF CCIT EXTENDING TIME FOR PAYMENT OF TAX SHOWED THAT THERE WAS A REASONABLE CAUSE FOR NON-PAYMENT OF TAX IN TIME AND THEREFORE PENAL TY PROCEEDINGS INITIATED U/S.221 WERE TO BE DISMISSED. THE PENALTY LEVIED IS CANCELLED. THIS GROUND OF APPEAL IS ALLOWED. 4. WE HAVE HEARD BOTH THE SIDES. THE ADMITTED FACTU AL POSITION IS THAT INSTALLMENTS WERE GRANTED BY THE REVENUE DEPARTMENT AND THE ASSESSEE HAD DEPOSITED THE IMPUGNED TAX SUBSEQUENTLY IN THE FOLLOWING MANNER: SR. NO. AMOUNT DATE 1. 2 50 000/- 28.03.2009 2. 8 50 000/- 28.03.2009 3. 2 50 000/- 15.04.2009 ITA NO.297/AHD/2011 ACIT AHMEDABAD VS. SHRI RAVI HANSRAJ GOUTHI (HUF) A.Y.2006-07 - 3 - 4. 87 000/- 20.08.2009 5. 20 00 000/- 29.08.2009 6. 9 62 051/- 10.09.2009 TOTAL 43 99 051/- 4.1 WE HAVE ALSO EXAMINED THE RELEVANT PROVISION A CCORDING TO WHICH SECTION 140A(3) SAYS THAT IF AN ASSESSEE FAILS TO P AY THE WHOLE OR ANY PART OF TAX OR INTEREST IN ACCORDANCE WITH PROVISION OF SUB SECTION (1) OF SECTION 140A THEN HE SHALL BE DEEMED TO PUT AN ASSE SSEE IN DEFAULT. SECTION 221 HAS DEFINED PENALTY WHEN THE ASSESSEE I S IN DEFAULT. SUB SECTION 1 OF SECTION 221 PRESCRIBES THAT WHEN AN AS SESSEE IS IN DEFAULT OR IS DEEMED TO BE IN DEFAULT IN MAKING A PAYMENT OF T AX THEN HE SHALL IN ADDITION TO THE AMOUNT OF THE ARREARS BE LIABLE BY WAY OF PENALTY TO PAY SUCH AMOUNT AS AO MAY DIRECT. HOWEVER AS PER SECON D PROVISO IT IS PROVIDED AS UNDER: 221. (1) WHEN AN ASSESSEE IS IN DEFAULT OR IS DEEM ED TO BE IN DEFAULT IN MAKING A PAYMENT OF TAX HE SHALL IN ADDITION TO T HE AMOUNT OF THE ARREARS AND THE AMOUNT OF INTEREST PAYABLE UNDER SUB-SECTIO N (2) OF SECTION 220 BE LIABLE BY WAY OF PENALTY TO PAY SUCH AMOUNT AS THE [ASSESSING] OFFICER MAY DIRECT AN IN THE CASE OF A CONTINUING DEFAULT SUCH FURTHER AMOUNT OR AMOUNTS AS THE [ASSESSING] OFFICER MAY FROM TIME TO TIME DIRECT SO HOWEVER THAT THE TOTAL AMOUNT OF PENALTY DOES NOT EXCEED THE AMOUNT OF TAX IN ARREARS: PROVIDED THAT BEFORE LEVYING ANY SUCH PENALTY THE ASSESSEE SHALL BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD: PROVIDED FURTHER THAT WHERE THE ASSESSEE PROVES TO THE SATISFACTION OF THE [ASSESSING] OFFICER THAT THE DEFAULT WAS FOR GOOD A ND SUFFICIENT REASONS NO PENALTY SHALL BE LEVIED UNDER THIS SECTION. 4.2 THUS THE SECOND PROVISO PRESCRIBES THAT IN A S ITUATION WHEN THE ASSESSEE PROVES THAT THERE WAS A GOOD AND SUFFICIEN T REASON THEN NO PENALTY IS TO BE LEVIED ON THE ASSESSEE. TO ASCERTA IN WHETHER THERE WAS GOOD AND SUFFICIENT REASON WE HAVE INQUIRED FROM TH E ASSESSEE THAT WHETHER LOSSES WERE INCURRED BEFORE THE DATE OF FIL ING OF THE RETURN OR THE ITA NO.297/AHD/2011 ACIT AHMEDABAD VS. SHRI RAVI HANSRAJ GOUTHI (HUF) A.Y.2006-07 - 4 - DATE ON WHICH ACTUALLY THE RETURN WAS FILED. WE HAV E BEEN INFORMED THAT AS PER THE ORDER/INTIMATION MADE U/S.143(1) THE DUE DATE OF FILING OF RETURN FOR A.Y. 2006-07 WAS 31.12.2006 HOWEVER TH E RETURN WAS FILED ON 29 TH OF MARCH 2007. THE ASSESSMENT U/S.143(1) WAS MADE ON 26 TH OF MARCH 2008. THE ASSESSEE HAS FURNISHED A BALANCE S HEET DRAWN AS ON 31 ST OF DECEMBER 2006 AND DEMONSTRATED THAT THERE WAS H EAVY LOSSES INCURRED IN SHARE TRADING TO THE TUNE OF RS.1 36 46 928/-. THE ASSESSEE HAD CASH IN HAND OF ONLY RS.47 873/-. LIKEWISE IN THE BANK ACCOUNTS THE BALANCE WAS ONLY RS.8 848/-. THERE WAS HEAVY CURREN T LIABILITIES AGAINST THE INVESTMENT IN SHARES. DUE TO THE SAID REASON T HE ASSESSEE HAS NO LIQUID FUNDS TO MAKE THE PAYMENT OF SELF-ASSESSMENT ALTHOUGH HE HAD EARNED PROFIT IN THE FINANCIAL YEAR 2005-06 BUT BY THE TIME HE WAS REQUIRED TO FILE THE RETURN HE HAD SUFFERED HEAVY LOSSES AND THE ENTIRE PROFIT HAD WASHED AWAY DUE TO LOSSES IN SHARE TRADI NG. IN SUPPORT OF THE FACTS AND THE LEGAL POSITION RELIANCE WAS PLACED O N THE FOLLOWING DECISIONS: 1. SAFARI MERCANTILE (P) LTD. VS. ACIT (2008) 21 SOT 531 2. CIT VS PURE DRINKS (NEW DELHI) LTD. (2013) 37 TAXMANN.COM 30 (P&H.) 3. V. GOVINDA CHETTY VS. CIT (1998) 231 ITR 615 (MADRAS) 4. DIAMONDSTAR EXPORTS LTD. VS. ITO (2013) 40 TAX MANN. COM 460 5. M/S. LOK HOUSING AND CONSTRUCTION LTD. VS. ADDI TIONAL CIT ITA NO.5224 & 5225/MUM/2009. 5. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUM STANCES OF THE CASE WE ARE OF THE VIEW THAT THE ASSESSEE HAS SATISFIED US THAT THERE WAS A GOOD AND SUFFICIENT REASON FOR THE SAID DEFAULT; HENCE NO PENALTY SHOULD BE LEVIED IN SUCH CIRCUMSTANCES ESPECIALLY WHEN THE ASSESSEE HAS LATER ON DEPOSITED THE ENTIRE AMOUNT AS DETAILED ABOVE. RES ULTANTLY WE HEREBY AFFIRM THE FINDINGS OF LEARNED CIT(A) AND WE FIND N O FORCE IN THIS GROUND OF THE REVENUE. ITA NO.297/AHD/2011 ACIT AHMEDABAD VS. SHRI RAVI HANSRAJ GOUTHI (HUF) A.Y.2006-07 - 5 - 6. IN THE RESULT REVENUES APPEAL IS HEREBY DISMIS SED. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 17/04/2014 PRABHAT KR. KESARWANI SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III AHMEDABAD 5. / DR ITAT AHMEDABAD 6. / GUARD FILE. / BY ORDER / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD