Dialnet Communication Ltd.,, v. ITO, TDS Ward-49(4),,

TDS 55/DEL/2004 | 2003-2004
Pronouncement Date: 24-09-2010 | Result: Allowed

Appeal Details

RSA Number 5520121 RSA 2004
Assessee PAN EMBER2002T
Bench Delhi
Appeal Number TDS 55/DEL/2004
Duration Of Justice 6 year(s) 7 month(s) 8 day(s)
Appellant Dialnet Communication Ltd.,,
Respondent ITO, TDS Ward-49(4),,
Appeal Type TDS Appeal
Pronouncement Date 24-09-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 24-09-2010
Date Of Final Hearing 18-08-2010
Next Hearing Date 18-08-2010
Assessment Year 2003-2004
Appeal Filed On 16-02-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I : NEW DELHI BEFORE SHRI A.D.JAIN JM AND SHRI R.C.SHARMA AM TDS A.NOS.35/DEL/2004 & 55/DEL/2004 ASSESSMENT YEARS : 2002-03 & 2003-04 M/S DIALNET COMMUNICATIONS LIMITED 94 OLD ISHWAR NAGAR 2 ND FLOOR SHAMBHU DAYAL BAGH NEW DELHI 110 020. TAN NO.M-3993-D(C). VS. INCOME TAX OFFICER TDS WARD-49(4) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY WADHWA CA. RESPONDENT BY : MS.ANUSHA KHURANA DR. ORDER PER R.C.SHARMA AM : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE ORDER OF CIT(A) DATED 9.12.2003 AND 6.1.2004 FOR THE AY 2002-03 & 2 003-04 RELEVANT TO THE FY 2001-02 & 2002-03 RESPECTIVELY IN THE MATTER OF PE NALTY LEVIED U/S 221 OF THE IT ACT. 2. IN BOTH THE YEARS ASSESSEE IS AGGRIEVED FOR LEV Y OF PENALTY U/S 221(1) OF THE ACT IN RESPECT OF DELAY IN PAYMENT OF TDS. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THERE WAS A SURVEY U/S 133A AT THE ASSESSEES BUSINESS PREMISES OF ASSESSEE ON 20.12.2002 DURING WHICH IT WAS FOUND THAT ASSESSEE HAD DEFAULTED IN DEDUCTION AND PAYMENT OF TAX AT SOURCE. IT WAS EXPLAINED BY THE ASSESSEE THAT COMPANY WAS IN GREAT FINANCIAL CRISES THEREFORE PAYMENT OF TDS COULD NOT BE MADE IN TIME. IT WAS FURTHER SUBMITTED THAT POST DATED CHEQUES FROM DECEMBER 2002 TO MAY 2003 WERE HANDED OVER TO THE SURVEY PARTY IN SATISFACTIO N OF THE TOTAL TAX LIABILITY TDS-35 & 55/DEL/2004 2 INCLUDING INTEREST THEREON AND THE AO HAS ACCEPTED THE PAYMENTS IN INSTALLMENTS INASMUCH AS HE RAISED NO OBJECTION IN RESPECT OF TH E SAME AND TOOK THE CHEQUES. HOWEVER THE AO DID NOT AGREE WITH THE ASSESSEES C ONTENTION AND LEVIED PENALTY U/S 221 FOR DELAY IN PAYMENT OF TDS. BY THE IMPUGN ED ORDER CIT(A) GAVE PART RELIEF AND THE ASSESSEE IS IN FURTHER APPEAL BEFORE US WITH RESPECT TO THE BALANCE OF THE PENALTY RETAINED BY THE CIT(A). HOWEVER THE D EPARTMENT IS NOT IN APPEAL WITH REGARD TO PORTION OF THE PENALTY DELETED BY THE CIT (A). 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THERE WAS A DELAY IN DEDUCTION AND PAYMENT OF TAX AT SOURCE. WHEN IT WAS FOUND DURING THE COURSE OF SURVEY THE ASSESSEE HANDED OVER CHEQUES FOR CLEARANCE OF DUES IN INSTALLMENT. POST DATED CHEQUES OF RS.4 LAKHS EACH WERE HANDED OVER FROM DE CEMBER 2002 TO MAY 2003 TOTAL SUM OF RS.24 LAKHS WHICH WAS SUFFICIENT TO CO VER THE TOTAL TAX LIABILITY INCLUDING INTEREST THEREON. THE AO ACCEPTED THE CH EQUES HANDED OVER BY THE ASSESSEE. THE PAYMENT WAS MADE NOT ONLY TOWARDS SH ORTFALL IN TDS BUT ALSO INTEREST THEREON FOR THE PERIOD OF DELAY. BEFORE T HE AO WHILE LEVYING PENALTY U/S 221 THE MAIN CONTENTION OF ASSESSEE WAS THAT IT WA S IN FINANCIAL CRISIS THEREFORE COULD NOT PAY THE TDS IN TIME. A LETTER DATED 8.2. 2002 WAS ALSO HANDED OVER TO THE AO HIGHLIGHTING THE FACT OF INABILITY TO PAY E VEN THE RENT FOR DELHI AND MUMBAI OFFICES OF THE ASSESSEE AND ALSO SALARY OF M D AND DIRECTOR ELECTRICITY BILLS ANNUAL MAINTENANCE CONTRACT INSURANCE ETC. COULD NOT BE PAID BY ASSESSEE DUE TO LIQUIDITY PROBLEM AND FINANCIAL CRISIS THUS COMPLETE EVIDENCE OF FINANCIAL CRISES WAS FILED BEFORE THE AO WHICH IS PLACED AT P AGES 39 TO 56 OF THE PAPER BOOK. WE HAVE CAREFULLY GONE THROUGH ALL THESE DOCUMENTS WHICH ARE IN THE FORM OF LETTER TO THE PRIMA VET CARE PVT.LTD. REGARDING CES SATION OF THE CENTRE DATED 30.10.2002 LETTER OF PRIMA VET CARE PVT.LTD. REGAR DING CESSATION OF THE CENTRE DATED 26.11.2002 DUE TO NON PAYMENT OF SERVICE CHAR GES ELECTRICITY CHARGES SOCIETY CHARGES ETC. LETTER OF GOYAL TIN & GENERAL INDUSTRIES DATED 5.9.2002 AMITY INTERNATIONAL SCHOOL SAKET ALONGWITH REMINDE R FOR PAYMENT OF FEE DATED TDS-35 & 55/DEL/2004 3 28.10.2002 LETTER FROM PUNJAB & SIND BANK DATED 24 .9.2002 REGARDING BANK CREDITS AVAILED BY THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE LETTER WRITTEN BY NATIONAL INSURANCE COMPANY DATED 24.9.2003 ACCORDIN G TO WHICH UNDER POLICY NO.3101800 7502140 3102226 AND 7502 THE RENEWAL PREMIUM WAS NOT PAID THEREFORE THESE POLICIES WERE NOT RENEWED WITH THE RENEWAL PERIOD THEREFORE INSURANCE WAS NOT CONTINUED THEREAFTER. THERE WAS ALSO REMINDER FOR PAYMENT OF RENT AND ELECTRICITY CHARGES FOR THE MONTH STARTING FROM MAY 2002 TO DECEMBER 2002. THROUGH THIS LETTER IT WAS THREATENED THAT I F THE PAYMENT IS NOT MADE WITHIN A FORTNIGHT THE LANDLORD WILL BE LEFT WITH NO OPTI ON BUT TO GET THE PROPERTY VACATED AS PER THE TERMS AND CONDITIONS OF THE AGREEMENT FO R VACATION OF PROPERTIES. THERE WAS ALSO LETTER FROM MTNL DATED 23.7.2002 FOR PAYME NT OF USB LOCK TELEPHONE CHARGES. WE ALSO FOUND THAT THERE WAS HUGE OUTSTAND ING OF ELECTRICITY BILL AND EVEN THE INSTALLMENT ALLOWED BY THE BSES POWER RAJDHANI LIMITED COULD NOT BE PAID. THERE WAS ALSO LETTER OF REMINDER REGARDING PAYMENT BY MTNL RELATING TO OUTSTANDING WHICH IS PLACED AT PAGES 54 & 56 OF TH E PAPER BOOK. ALL THESE DOCUMENTS LOUDLY SPEAK OF THE FINANCIAL CRISIS UNDE R WHICH ASSESSEE IS GOING ON WHICH CONSTITUTED A REASONABLE CAUSE FOR DELAY IN P AYMENT OF TDS. LEVY OF PENALTY U/S 221 FOR DELAY IN PAYMENT OF TDS IS NOT AUTOMATIC BUT IS SUBJECT TO THE REASONABLE CAUSE IF ANY SHOWN BY THE ASSESSEE WHICH BONA-FIDELY CAUSED DELAY IN THE PAYMENT OF TDS. UNDISPUTEDLY THE ASSESSEE HAS PAID THE TDS AMOUNT AS WELL AS INTEREST THEREON AND DEPARTMENT HAS ALSO ALLOWED INSTALLMENTS FOR SUCH PAYMENT OF TDS CHEQUES WITH RESPECT TO THE SAME WERE ALSO HANDED OVER TO THE DEPARTMENT. THE AO(TDS) HAS ALSO ALLOWED THE AMOUN T TO BE PAID IN INSTALLMENTS OVER A PERIOD OF TIME. IN THE CASE OF AVADHESH KUM AR 117 TTJ 137 WHERE AO HIMSELF HAS DIRECTED THE ASSESSEE TO PAY THE TAX IN CLUDING THE INTEREST IN INSTALLMENTS AND THE AMOUNT OF TAX EXCLUDING THE IN TEREST WAS PAID BEFORE THE FINAL DATE OF INSTALLMENT PAYABLE AS DETERMINED BY THE AO IT WAS HELD THAT ASSESSEE COULD NOT BE HELD TO BE ASSESSEE IN DEFAULT THEREF ORE NO PENALTY CAN BE LEVIED U/S 221. HON'BLE DELHI HIGH COURT IN THE CASE OF RAUNA Q & CO. 140 ITR 407 HELD THAT WHERE THE TRO AFTER EXAMINING THE FINANCIAL PO SITION OF THE ASSESSEE ALLOWED TDS-35 & 55/DEL/2004 4 HIM TO PAY DEMAND IN INSTALLMENTS IMPOSITION OF PE NALTY U/S 221 WAS HELD TO BE NOT JUSTIFIED PARTICULARLY WHEN INSTALLMENTS HAD BE EN GRANTED FOR PAYMENT THOUGH BY ANOTHER AUTHORITY. IN THE INSTANT CASE BEFORE U S THE AO HIMSELF HAS ALLOWED THE TDS AMOUNT TO BE PAID IN INSTALLMENTS OVER A PERIOD OF TIME THUS THERE IS NO JUSTIFICATION FOR IMPOSITION OF PENALTY U/S 221. I N THE CASE OF R.V.SHAH 32 TTJ 140 THE MUMBAI BENCH OF TRIBUNAL HELD THAT WHERE A SSESSEE HAD BEEN GRANTED INSTALLMENTS BY THE CIT(A)/AO HE COULD NOT BE HELD TO BE IN DEFAULT U/S 221 OF THE ACT ON THIS COUNT ALONE PENALTY U/S 221 WAS HELD TO BE NOT IMPOSABLE. HON'BLE SUPREME COURT IN THE CASE HINDUSTAN STEELS 83 ITR 26 OBSERVED THAT PENALTY WILL NOT BE IMPOSED MERELY BECAUSE IT WAS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTOR Y OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIO USLY AND ON CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF MINIMUM PENALT Y IS PRESCRIBED THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED I N REFUSING TO IMPOSE THE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE P ROVISIONS OF THE ACT OR WHERE A BREACH FLOWS FROM A BONA-FIDE BELIEF THAT THE OFFEN DER IS NOT LIABLE TO ACT IN A MANNER PRESCRIBED BY THE STATUTE. IN THE INSTANT C ASE AS PER MATERIAL PLACED ON RECORD WE FOUND THAT BONA-FIDE EXPLANATION HAS BEE N FURNISHED BY THE ASSESSEE FOR DELAY WHICH CONSTITUTED A REASONABLE CAUSE FOR DELA Y IN DEPOSIT OF TDS THERE IS NO JUSTIFICATION FOR LEVY OF PENALTY U/S 221 OF THE AC T ACCORDINGLY AO IS DIRECTED TO DELETE THE PENALTY SO IMPOSED U/S 221 OF THE ACT. 5. IN THE RESULT THE APPEALS OF THE ASSESSEE FOR B OTH THE YEARS ARE ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER 2010. SD/- SD/- (A.D.JAIN) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24.09.2010. VK. TDS-35 & 55/DEL/2004 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR