M/s SSS Projects Limited, Bangalore v. DCIT, Bangalore

ITA 408/BANG/2010 | 2008-2009
Pronouncement Date: 14-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 40821114 RSA 2010
Bench Bangalore
Appeal Number ITA 408/BANG/2010
Duration Of Justice 11 month(s) 19 day(s)
Appellant M/s SSS Projects Limited, Bangalore
Respondent DCIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 14-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 14-03-2011
Date Of Final Hearing 09-03-2011
Next Hearing Date 09-03-2011
Assessment Year 2008-2009
Appeal Filed On 26-03-2010
Judgment Text
PAGE 1 OF 6 ITA NO.408/BANG/2010 1 IN THE INOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE DR. O K NARAYANAN VICE PRESIDENT AND SMT. P MADHAVI DEVI J.M. ITA NO.408/BANG/2010 (ASST. YEAR 2008-09) M/S SSS PROJECTS LIMITED #4 SHIRDI SAI KRUPA COMPLEX III FLOOR NAGAPPA STREET SHESHADRIPURAM BANGALORE. -APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-12(3) BANGALORE. - RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI MANOJ KUMAR ADDL. CIT O R D E R PER P MADHAVI DEVI : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE CIT-III BANGALORE DATED 09.02.2010 FO R THE ASST. YEAR 2008-09. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE PENAL TY OF RS.15 LAKHS U/S 221 OF THE I T ACT AGAINST THE LEVY OF PENALTY OF RS.50 LAKHS U/S 221(1) OF THE ACT BY THE AO IN ADDITION TO THE A RREARS AND THE AMOUNT OF INTEREST PAYABLE U/S 220(2) OF THE I T ACT . PAGE 2 OF 6 ITA NO.408/BANG/2010 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY FILED ITS RETURN OF INCOME FOR THE RELEVANT ASST. YE AR ON 31/10/2007 DECLARING A TOTAL INCOME OF RS.17 12 60 100/- AND DETERMINING THE TAX PAYABLE AT RS.4 23 69 912/-. TH E SAID RETURN WAS REVISED ON 15.11.2007 WHERE THE TAX PAYABLE WAS REDUCED TO RS.4 15 05 228/- WHICH WAS PAYABLE U/S 140A AT THE T IME OF FILING OF THE RETURN. HOWEVER THE ASSESSEE DID NOT MAKE THE PAYMENT AS DETERMINED U/S 140A AT THE TIME OF FILING OF ORIGIN AL RETURN OR THE REVISED RETURN OF INCOME. THE AO THEREFORE ISSUED A NOTICE U/S 221(1) TO THE ASSESSEE ON 16/10/2008 CALLING UPON T HE ASSESSEE TO PAY THE TAX AS DETERMINED WITHOUT ANY FURTHER DELAY. THE SAID NOTICE WAS SERVED ON THE ASSESSEE ON 21/10/2008. A S THERE WAS NO RESPONSE FROM THE ASSESSEE A LETTER WAS ISSUED ON 19/11/2008 TO SHOW CAUSE AS TO WHY PENALTY PROCEEDINGS SHOULD NOT BE COMPLETED WITHOUT REFERRING TO THE ASSESSEE ANY FURTHER. IN RESPONSE TO THE SAME THE ASSESSEE VIDE LETT ER DATED 25/11/2008 REQUESTED FOR PAYMENT OF TAX IN SUI TABLE INSTALMENTS AND UNDERTOOK TO PAY RS.4 15 05 228/- IN FOUR INSTALMENTS STARTING FROM 20 TH DECEMBER 2008 TO MARCH 2009. HOWEVER TILL THE DATE OF THE ORDER U/S 221 I.E. DA TED 9/2/2009 THE ASSESSEE HAS NOT PRODUCED BEFORE THE ASSESSING AUTHORITY ANY PROOF OF PAYMENTS OF TAX IN INSTALMENTS AS UNDERTAKE N IN THE LETTER DATED 24/11/2008. HOWEVER VIDE LETTER DATED 25/11 /2008 THE ASSESSEE MENTIONED THAT DUE TO FINANCIAL CRISIS AND REAL ESTATE SLUMP IN THE MARKET THEY WERE NOT IN A POSITION TO PAY SELF PAGE 3 OF 6 ITA NO.408/BANG/2010 3 ASSESSMENT TAX FOR AY 2007-08 AT THE TIME OF FILING OF THE RETURN OF INCOME AND PROMISED THAT THEY WOULD PAY TAX BY MARC H 2009 AND HENCE NO PENALTY SHOULD BE LEVIED U/S 221(1). THE ASSESSING AUTHORITY OBSERVED THAT THE ASSESSEE IS NOT HONOURIN G ITS OWN COMMITMENTS AND THEREFORE HE SUMMONED THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY VIDE LETTER DATED 7/7/2008 A ND HIS STATEMENT WAS RECORDED U/S 131 OF THE IT ACT ON 23/ 7/2008. IN THE SAID STATEMENT THE MANAGING DIRECTOR STATED TH AT HE WAS EXTREMELY SORRY THAT THE ASSESSEE HAS NOT PAID THE T AXES AND HE WILL DISCHARGE THE ENTIRE TAX LIABILITY WITHIN 30 DA YS FROM 23/7/2008 AND THAT HE WILL UNDERTAKE TO PAY A SUM OF RS.1 CRORE BY 31/7/2008 RS.1 CRORE BY 11/8/2008 AND THE BALANCE B Y 25/8/2008 ALONG WITH THE INTEREST. AFTER OBSERVING THAT THOU GH THE ASSESSEE HAS COMMITTED VARIOUS DATES FOR PAYMENT OF THE SELF ASSESSMENT TAX HAS NOT PAID THE SAME AND THE REASON GIVEN BY T HE ASSESSEE THAT THERE WAS SLUMP IN THE REAL ESTATE MARKET COU LD NOT BE ACCEPTED. HE ALSO OBSERVED FROM THE REVISED RETURN FILED ON 15/11/2007 THAT THE ECONOMY WAS ON GROWTH TRACK AND REAL ESTATE BUSINESS WAS DOING VERY WELL AND THEREFORE THE ASSE SSEES CONTENTION CANNOT BE ACCEPTED. HE THEREFORE LEVIED PENALTY OF RS.50 LAKHS IN ADDITION TO THE ARREARS AMOUNT OF IN TEREST PAYABLE U/S 220(2) OF THE I T ACT. 4. AGGRIEVED BY THE SAME THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT THE NON PAYMEN T OF SELF ASSESSMENT TAX AT THE TIME OF FILING OF THE RETURN OF INCOME WAS PAGE 4 OF 6 ITA NO.408/BANG/2010 4 DUE TO TREMENDOUS FINANCIAL STRAIN AND CONSTRAINT A ND THAT IT WAS PREVENTED BY SUFFICIENT CAUSE. 5. AFTER CONSIDERING THE SAME AND ALSO THE VARIOUS JUDICIAL PRECEDENTS RELIED UPON BY THE LEARNED COUNS EL FOR THE ASSESSEE THE CIT(A) OBSERVED THAT THE ASSESSEE IS NOT WILLFULLY AVOIDING THE TAX OR REFUSING TO PAY THE SAME. BUT S INCE THE ASSESSEE HAD NOT FULFILLED ITS COMMITMENTS OF PAYING TAX INSTALMENTS INSPITE OF SPECIFIC UNDERTAKING GIVEN B Y THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY ON OATH ON 23.7.200 8 THE CIT(A) DECIDED TO SUSTAIN A PART OF THE PENALTY AND GAVE PA RTIAL RELIEF BY REDUCING THE PENALTY TO RS.15 LAKHS AGAINST THE PEN ALTY OF RS.50 LAKHS LEVIED BY AO U/S 221(1) OF THE I T ACT. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) SUSTAINING A PART OF THE PENALTY THE ASSESSEE IS IN SECOND APPEAL BE FORE US. 7. AFTER HEARING THE LEARNED DR AND HAVING CONSIDE RED THE MATERIAL ON RECORD AND WE FIND THAT THE PENALTY U/S 221(1) IS FOR A DEFAULT OF THE ASSESSEE IN MAKING A PAYMENT OF TAX IN ADDITION TO THE AMOUNT OF THE ARREARS AND THE AMOUN T OF INTEREST PAYABLE UNDER SUB-SECTION 2 OF SECTION 220. THE ASS ESSEE IS LIABLE FOR LEVY OF PENALTY AND HAS TO PAY SUCH AMOUNT AS THE AO MAY DIRECT AND IN THE CASE OF A CONTINUING DEFAULT SUC H FURTHER AMOUNT OR AMOUNTS AS THE AO MAY FROM TIME TO TIME DIRECT SO HOWEVER THAT THE TOTAL AMOUNT OF PENALTY DOES NOT EXCEED TH E AMOUNT OF TAX IN ARREARS. THE FIRST PROVISO PROVIDES THAT BEFORE LEVYING OF PAGE 5 OF 6 ITA NO.408/BANG/2010 5 PENALTY THE ASSESSEE SHALL BE GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD. THE SECOND PROVISO PROVIDES THAT WHER E THE ASSESSEE PROVES TO THE SATISFACTION OF THE AO THAT THE DEFAU LT WAS FOR GOOD AND SUFFICIENT REASONS NO PENALTY SHALL BE LEVIED U NDER THIS SECTION. THUS IT CAN BE SEEN THAT THE QUANTUM OF PENALTY TO BE LEVIED BY THE AO U/S 221(1) IS NOT FIXED NOR IS NOT IN ANY WAY RELATABLE TO THE AMOUNT OF TAX PAYABLE BY THE ASSESSE E. IT IS WITHIN THE DISCRETIONARY POWERS OF THE ASSESSING AUTHORITY T O DECIDE THE QUANTUM OF PENALTY TO BE LEVIED ON THE DEFAULT COMMI TTED. IN THE CASE ON HAND THE ASSESSEE IS CLEARLY IN DEFAULT IN MAKING THE PAYMENT OF SELF ASSESSMENT TAX ALONG WITH THE ARREAR S AND INTEREST. THE ASSESSEE HAS GIVEN COMMITMENTS ON VARIOUS OCCAS IONS TO MAKE THE PAYMENTS BUT HAS NOT FULFILLED THE SAID COMMITME NTS. WE FIND THAT THE CIT(A) HAS TAKEN INTO CONSIDERATION THE AS SESSEES CONTENTION OF FINANCIAL CONSTRAINTS AND HAS DEALT W ITH THE ISSUE IN DETAIL BEFORE RESTRICTING THE PENALTY TO RS.15 LAKHS . AS THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE EVEN BEFORE T HE CIT(A) THAT IT HAS PAID THE TAXES DUE WE ARE OF THE OPINI ON THAT THE CIT(A) HAS BEEN MORE THAN REASONABLE IN RESTRICTING THE PENALTY TO RS.15 LAKHS. HOWEVER KEEPING IN VIEW THE FINANCIA L CONSTRAINTS OF THE ASSESSEE AND THE PRESENT SLUMP IN THE REAL ESTA TE MARKET WE DEEM IT NECESSARY TO RESTRICT THE PENALTY TO RS.10 L AKHS PROVIDED THE ASSESSEE HAS PAID THE TAX BEFORE THIS DAY. PAGE 6 OF 6 ITA NO.408/BANG/2010 6 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ORDER PRONOUNCED ON MONDAY THE 14 TH DAY OF MARCH 2011 AT BANGALORE. SD/- SD/- (DR. O K NARAYANAN) (P MADHAVI DE VI) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1) THE ASSESSEE (2) THE REVENUE (3) THE CIT(A) CONCERNED. (4) THE CIT CONCERNED. (5) THE DR (6) GUARD FILE. MSP/11.3. BY ORDER ASST. REGISTRAR ITAT BANGALORE.