Ayush Hospitals And Trauma Care Pvt Ltd, Bhubaneswar v. ACIT(TDS), Bhubaneswar

ITA 398/CTK/2011 | 2007-2008
Pronouncement Date: 09-11-2011

Appeal Details

RSA Number 39822114 RSA 2011
Assessee PAN AAFCA4859F
Bench Cuttack
Appeal Number ITA 398/CTK/2011
Duration Of Justice 2 month(s)
Appellant Ayush Hospitals And Trauma Care Pvt Ltd, Bhubaneswar
Respondent ACIT(TDS), Bhubaneswar
Appeal Type Income Tax Appeal
Pronouncement Date 09-11-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 09-11-2011
Assessment Year 2007-2008
Appeal Filed On 09-09-2011
Judgment Text
IN THE INC O ME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE : SHRI K.K.GUPTA AM AND SHRI K.S.S.PRASAD RAO JM ITA NO. 398/CTK/2011 (ASSESSMENT YEAR 2007 - 08) AYUSH HOSPITALS AND TRAUMA CARE PVT. LTD. PLOT NO.13 & 14 BHOI NAGAR ACHARYA VIHA R BHUBANESWAR PAN: AAFCA 4859 F. VERSUS ASST.COMMISSIONER OF INCOME - TAX (TDS) BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI P.R.MOHANTY AR FOR THE RESPONDENT SHRI S.C.MOHANTY DR DATE OF HEARING : 20.10.2011 DATE O F PRONOUNCEMENT : ORDER SHRI K.S.S.PRASAD RAO JM : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT. 11.7.2011 FOR THE ASSESSMENT YEAR 2007 - 08 IN CASE OF THE ASSESSEE. 2. TH E SOLE ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS AGAINST LEVY OF PENALTY OF 1 00 000 AGAINST THE ASSESSEE. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUE RAISED BY THE ASSESSEE AND ITS LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBM ISSIONS OF BOTH THE PARTIES THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND DERIVING INCOME FROM RUNNING OF A HOSPITAL AND THE YEAR UNDER CONSIDERATION HAPPENS TO BE THE FIRST YEAR OF ITS OPERATION. IN TH E PRECEDING YEARS THE CONSTRUCTION OF THE HOSPITAL WAS STARTED WITH HEAVY LOAN OF ALMOST 15 CRORES TAKEN FROM FINANCIAL INSTITUTIONS APART FROM THE CONTRIBUTIONS MADE BY THE PROMOTERS. AS THIS IS THE FIRST YEAR OF ITS OPERATION DUE TO HEAVY EXPENDITURE AND LOWER REVENUE THE APPELLANT SUFFERED HEAVY 2 LOSSES OF ALMOST 3.76 CRORES WHICH I NCLUDES CASH LOSS OF 3.29 C RORES . AS A RESULT OF THIS SITUATION THE ASSESSEE FOUND IT DIFFICULT TO ME ET EVEN THE DAY TO DAY EXPENSES IN RUNNING OF THE HOSPITAL AND HUGE AMOUNT REMAINED OUTSTANDING TOWARDS CREDITORS FOR EXPENSES AND LIABILITIES FOR EXPEN SES TO THE TUNE OF ALMOST AROUND 1 C RORE. THE ASSESSEE REELING UNDER SEVERE FUND CRUNCH WHEN IT COULD NOT MAKE PAYMENT TO THE PERSON FROM WHOM T.D.S HAS BEEN DEDUCTED COULD NOT DEPOSIT THE TDS WITHIN THE TIME FRAME . THEREFORE THE ASSESSEE HAS DEPOSIT ED THE SAME ALONG WITH INTEREST THEREON LATER ON. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER I NITIATED PENALTY PROCEEDING U/S. 221 (1) OF THE INCOME TAX ACT AGAINST THE ASSESSEE AND LEVIED PENALTY OF 3 25 000 AFFORDING ONLY ONE OPPORTUNITY ON 09.04.2008 TO THE ASSESSEE FOR VENTILATING ITS CASE. THE ASSESSEE FILED WRITTEN SUBMISSIONS BEFORE THE LEARNED CIT(A) AND CONTENDED BEFORE HIM THAT NO REASONABLE OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO EXPLAIN ITS STAND BEFORE THE ASSESSIN G OFFICER. BUT THE LEARNED CIT(A) WITHOUT CONSIDERING THE JUDICIAL PRONOUNCEMENTS RELIED ON BY THE ASSESSEE AND MAKING ERRONEOUS INTERPRETATION OF THE FACTS AS WELL AS LAW HAS RESTRICTED THE PENALTY IMPOSED BY THE ASSESSING OFFICER TO 1 00 000. HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARING THE LEARNED AR OF THE ASSESSEE HAS REITERATED WHAT ALL HE HAD CONTENDED BEFORE THE LEARNED CIT(A) APART FROM CONTENDING THAT IN VIEW OF THE FINANCIAL CRUNCH F ACED BY THE ASSESSEE THE NONPAYMENT OF TDS WITHIN TIME PRESCRIBED UNDER LAW BY THE ASSESSEE IS REASONABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE STATED SUPRA AND HENCE THE LEVY OF PENALTY AGAINST THE ASSESSEE U/S.221(1) OF THE I.T.ACT IS UNWARRANTED A ND THE SAME IS LIABLE TO BE CANCELLED. 3 6. CONTRARY TO THIS THE LEARNED DR HAS VEHEMENTLY ARGUED CONTENDING INTER ALIA THAT THE PAYMENT OF TAX THAT WAS DEDUCTED BY THE ASSESSEE AND NON - PAYMENT OF THE SAID DEDUCTED TAX BY THE ASSESSEE WITHIN THE ALLOWED PER IOD UNDER THE STATUTE CLEARLY ATTRACT S IMPOSITION OF PENALTY U/S.221(1) OF THE I.T.ACT. HENCE THE IMPOSITION OF PENALTY IN QUESTION AGAINST THE ASSESSEE IS VERY MUCH RIGHT AND ACCORDINGLY HE SOUGHT FOR UPHOLDING THE SAME BY DISMISSING THE APPEAL OF THE ASSESSEE. 7. ON CAREFUL ANALYSIS OF THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES IT IS SEEN THAT UNDISPUTEDLY THIS IS THE FIRST YEAR OF OPERATION OF THE ASSESSEE AND IT IS EXPERIENCING FINANCIAL CRUNCH IN THE SAID PERIOD AND THAT IS WHY IT IS NOT AB LE TO PAY THE AMOUNT OF TDS DEDUCTED BY IT TO THE GOVERNMENT IN TIME. THE ASSESSING OFFICER HAS NOT AFFORDED THE ASSESSEE PROPER AND REASONABLE OPPORTUNITY TO SUBSTANTIATE ITS STAND AS THE PENALTY ORDER ITSELF CLEARLY SAYS THAT ONLY ONE HEARING WAS MADE ON 9.4.2008. THAT APART THE LEARNED CIT(A) AFTER HEARING THE ASSESSEES APPEAL AGAINST THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER HAS NOT PROPERLY APPRECIATED THE JUDICIAL PRONOUNCEMENTS THAT WERE RELIED ON BY THE ASSESSEE. SO ALSO HE HAS NOT PROPERLY APPRECIATED THE UNDISPUTED FACTS MORE SO THE ASPECT OF GIVING ONLY ONE OPPORTUNITY TO THE ASSESSEE AT THE TIME OF HEARING. THE DEPARTMENT IS NOT ABLE TO MAKE OUT ANY MATERIAL CONTRADICTING THE STAND OF THE ASSESSEE WHICH IS EXPERIENCING FINANCIAL CRUNCH D URING THE PERIOD UNDER CONSIDERATION DUE TO WHICH ONLY THERE IS DELAY IN DEPOSIT OF THE TDS AMOUNT MADE BY IT. THE JUDICIAL PRONOUNCEMENT S RELIED ON BY THE ASSESSEE IN THE CASES OF CIT V. CHEMBARA PEAK ESTATES LTD [183 ITR 471 (KER)] BRAMHA BAZAZ INNS (PLTD. V. JCIT [79 TTJ (PUNE) 342] AND INCOME - TAX OFFICER V. U.PVT. LTD [9 TTJ (PUNE) 374] CLEARLY LAID DOWN THAT IF THE ASSESSEE HAS SHOWN THAT DUE TO SUFFICIENT REASON IT WAS UNABLE TO CARRY OUT ANY OBLIGATION NO PENALTY IS 4 LEVIABLE A GAINST SUCH AN ASSESSEE. THE DEPARTMENT IS CONTENDING THAT ALL THESE DECISIONS HAVE NOT ON THE ASPECT OF DEPOSITS OF TDS AMOUNT. THEREFORE THEY ARE NOTHING BUT MISPLACED BY THE ASSESSE AND THAT IS WHY THE LEARNED CIT(A) HAS NOT AT ALL CONSIDERED THE SAME IN THE IMPUGNED ORDER. HOWEVER THE PAYMENT OF TAX IS THE ASPECT INVOLVED IN THE PRESENT CASE AS WELL AS THE ABOVE JUDICIAL PRONOUNCEMENT S RELIED ON BY THE ASSESSEE. THEREFORE THE SAME ANALOGY THAT IS AVAILABLE IN THE CASE OF PAYMENT OF TAX IS EQUALLY APPL ICABLE IN THE CASE OF TDS AMOUNT. THEREFORE UNDER THESE PECULIAR FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY OF 1 00 000 LEVIED U/S.221(1) OF THE I.T.ACT IS HEREBY CANCELLED BY ALLOWING THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 9 TH NOVEMBER 2011 H.K.PADHEE SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: AYUSH HOSPITALS AND TRAUMA CARE PVT. LTD. PLOT NO.13 & 14 BHOI NAGAR ACHARYA VIHAR BHUBANESWAR 2. THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX (TDS) BHUBANESWAR. 3. THE CIT 4. THE CIT(A) 5. THE DR CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY.