IN INCOME TAX APPELLATE TRIBUNAL "F" Bench, Mumbai Before Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain, Judicial Member ITA No. 7157/Mum/2014 (Assessment Year: 2012-13) Shri Vinay Vikram Oberoi Income Tax Officer-22(3)-4 22, Punit Chambers Tower 6, 3rd Floor Plot 769-C, Sector 18 Vs. Vashi Railway Station Complex Turbhe, Vashi Vashi, Navi Mumbai 400703 Navi Mumbai 400705 PAN - AAAPO2816L Appellant Respondent Appellant by: None Respondent by: Shri Purushottam Kumar Date of Hearing: 15.09.2016 Date of Pronouncement: 21.09.2016 ORDER Per Jason P. Boaz, A.M. This appeal by assessee is directed against order of CIT(A)- 33, Mumbai dated 01.09.2014 upholding levy of penalty of `2,44,943/- under section 221(1) of Income Tax Act, 1961 (in short 'the Act') by Assessing Officer s order dated 28.01.2013. 2. This appeal was fixed for hearing on number occasions, but neither anyone was present for assessee nor was any adjournment sought on his behalf. Even notice for hearing issued by RPAD could not elicit compliance thereto or response in this regard. On day Bench did not function, case was adjourned and notice of next date of hearing was informed through Notice Board and by issue of notice to parties. On 15.09.2015, when case was called for hearing, none was present for assessee, but learned D.R. for Revenue was present and ready to argue case for Revenue. In these circumstances, as mentioned above, we are of considered opinion that assessee is not interested in pursuing this appeal seriously and therefore proceed to dispose 2 ITA No. 7157/Mum/2014 Shri Vinay Vikram Oberoi same with assistance of learned D.R. for Revenue and material on record. 3.1 grounds raised by assessee in this appeal are as under: - 1. Learned Officer Shri K. V. Sreenivas has erred in passing order U/s. 221(1) of Income Tax Act, 1961 dated 28.01.2013 despite fact that remarks of "None Attended" cannot withstand facts of case; 2. It is important to note sequence of events, which are described hereunder: a. scrutiny for Asst. Year 2010-2011 was carried out between September 2012 to December' 2012 before same learned officer, Shri K. V. Sreenivas; b. assessment was made U/s. 143(3) of Income Tax Act, 1961 and order dated 31.12.2012 was delivered to us accordingly by hand through our same Authorised Chartered Accountant, who had been there since past several years; c. learned officer was orally requested that some few days be granted to make payment of Rs. 11,530/- so demanded for AY 2010-2011 as undersigned assessee was passing through bad financial crunch; d. assessment order for AY 2010-2011 disclosed demand of Rs. 11,530/-, which was paid on 17th January 2013. said challan was also produced before same learned officer on 18th January 2013 so that he can update his records at his end; e. request to provide some time was also discussed during our various meetings pertaining to outstanding tax payment of Rs. 244,943 relevant to Asst. Year 2012- 2013; f. We had requested Officer on basis of fact that although Bank had set up Cash Credit limit for us, however Drawing powers were curtailed to less than original limit leading to financial crunch; g. same learned officer in his order dated 28.01.2013 for Asst. Year 2012-2013 levied penalty of Rs. 244,943/- U/s. 221(1) of Income Tax Act, 1961 on ground that we never attended before him; h. CIT Appeals XXXIII has, in their order dated 01.09.2014 disagreed with us and claimed that Scrutiny proceedings are different from penalty proceeding U/s. 221(1); i. When Assessee, Assessing Officer, Authorised Chartered Accountant all were same for both years in question, it would be unreasonable to believe that both cases would not be discussed at same meeting especially when dates 3 ITA No. 7157/Mum/2014 Shri Vinay Vikram Oberoi coincided with each other so frequently so often; ] j. Probably Hon'ble CIT-Appeals 33 wanted us to have 2 different meetings on same day for both different assessment years to prove veracity of our case; k. It is hereby honestly disclosed that we had met same learned officer several times and it would be very unreasonable to think that since scrutiny case (Asst. Year 2010-2011) was being discussed and disposed, no talks were ever carried out for Asst. year 2012-2013 although all dates coincided with dates mentioned by learned officer when Order U/s. 221(1) was passed by him. 3. One of other reasons for non-payment of taxes was that we were expecting refund, which however could not be realized since claim was disputed by Department and same is pending before CIT Appeals-10 at Earnest House, Nariman Point. status of refunci.dues for relevant years have been disclosed as under: 4. As can be seen from above, that total refund expected to be released from Department of Income Tax was approximately to tune of Rs. 390,000/-. Since total liability for Fin Year 2011-2012 stood at Rs. 244,943/- we were expecting refund to get credited. refund was badly awaited to curtail our financial crunch, however unfortunately it dint go way we planned; 5. Since refunds were already expected; and since this was FIRST YEAR of payment of Self-Assessment Tax (previous years being cases for refund), delay in payment of taxes should be condoned; 6. Moreover, department had rightly exempted Transporters from deduction of TDS and hence accumulation of funds to make payment of taxes (this being first year of Payment of self- assessment tax) became unexpectedly difficult; 7. We seek relief on ground that in one cases appealed before Tribunal, latter had rightly stated that "Penalty will not ordinarily be imposed unless party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform statutory obligation is matter of discretion of authority to be exercised judicially and on consideration of all relevant circumstances. Even if minimum penalty is prescribed, authority competent to impose penalty will be justified in refusing to impose penalty, when there is technical or venial breach of provisions of Act or where breach flows from bonafide belief that offender is not liable to act in manner prescribed by statute." 4 ITA No. 7157/Mum/2014 Shri Vinay Vikram Oberoi 8. order of CIT Appeal was delivered to us on 30.09.2014, hence this appeal is filed within time limits set forth. We request your Excellency to allow our Appeal on grounds stated hereinabove. All earlier cases were refund cases, and hence this being FIRST YEAR for payment of Self Assessment Tax, your Hon'ble Excellency is requested to take lenient view and allow our appeal, for which undersigned shall remain obliged and always pray. 3.2 Though assessee has raised eight grounds in this appeal, however sole issue on which appeal is preferred is in respect of levy of penalty under section 221(1) of Act for A.Y. 2012-13. 4. learned D.R. was heard and he places strong reliance on orders of authorities below in levying and confirming levy of penalty under section 221(1) of Act. According to learned D.R., learned CIT(A), after considering submissions put forth by assessee vide letter dated 23.02.2013 (recorded at para 2.3 of impugned order) and order of Assessing Officer (AO) levying said penalty of `2,44,943/- under section 221(1) of Act, observed that uncontroverted fact in case on hand was that assessee did not pay due taxes before filing return of income of A.Y. 2012-13, wherein admittedly tax liability was determined at `2,44,943/-. It is submitted that learned CIT(A) was of view that in assessee s submissions, assessee has failed to demonstrate or explain that circumstances that led to this default was beyond his control or due to poor financial position, etc. or as to why assessee had paid self assessment tax due under section 140A(3) of Act only after passing of penalty order levying penalty under section 221(1) of Act. It was further submitted that learned CIT(A) had also observed that AO had levied said penalty for good and sufficient reasons and after affording assessee opportunity of being heard which could not be controverted by assessee and in this view of matter, upheld levy of penalty under section 221(1) of Act. It is contended by learned D.R. that since grounds raised by assessee (supra) are all arguments put forth before authorities below in course of penalty proceedings and which has been considered by them while passing of orders, and nothing has 5 ITA No. 7157/Mum/2014 Shri Vinay Vikram Oberoi been brought on record by assessee to controvert findings in impugned order, assessee s appeal is liable to be dismissed. 5.1 We have heard learned D.R. for Revenue and perused and carefully considered material on record. Though several grounds have been raised by assessee in this appeal (supra) only issue on which this appeal has been preferred is for consideration and adjudication in respect of penalty of `2,44,943/- levied under section 221(1) of Act for A.Y. 2012-13. submissions of assessee on this issue and finding of learned CIT(A) at para 2 to 2.8 of impugned order, after consideration thereof, is as under: - 2. appellant has taken as much as five grounds of appeal, however crux of issue revolves around levy of penalty u/s. 221(1) of Act. 2.1 In this case return of income was filed on 29.09.2012 for year under consideration. A.O on perusal from ITD system noticed that appellant did not pay self assessment tax amounting to Rs.2,44,943/- as claimed in return of income filed. A.O subsequently requested appellant to furnish proof of payment of self assessment tax and also issued show cause notice as to why penalty u/s. 221(1) of I.T. Act, 1961 should not be imposed on appellant for default in not making payment of self assessment tax. Since there was no response to said show cause notice, A.O further issued show cause notice dated 07.01.2013 asking appellant to furnish explanation. However, same remained unattended. Consequently A.O having been satisfied that appellant had committed default u/s.221(1) of I.T. Act, 1961, levied penalty of Rs.2,44,943/-. 2.2 Aggrieved by said action of A.O., appellant is in appeal, before me. 2.3 In appeal proceedings, appellant vide his letter dated 23.2.2013, has submitted as under: At outset, let me state that undersigned runs transport agency in proprietary capacity under name and style of M/s SPEED CARGO CARRIERS. self assessment tax for Ast. Year 2012-13 to tune of Rs.244,943/ - (Rupees Two Lacs Forty Four Thousand Nine Hundred & Forty Three Only) was payable by us, however due to circumstances beyond our control and due to financial vulnerability, we orally sought time for payment of taxes before end of financial year. It is to be noted that Scrutiny requirements for Asst. Year 2010-2011 were regularly fulfilled before Learned Officer for his satisfaction in order to 6 ITA No. 7157/Mum/2014 Shri Vinay Vikram Oberoi ensure appropriate passing of order u/s 143(3) of Income-tax Act, 1961. It is to be further noted that said order was passed on 31.12.2012 after several hearings in month of December, 2012. Further, payment of Rs. 11,530/- was made on 17.01.2013, which was determined to be payable by us vide said asst. order dated 31.12.2012 passed by same learned Officer. date mentioned by Learned Officer u/s 221(1) of Income-tax Act, 1961 corresponds with period of hearing carried out for disposal of scrutiny assessment for Asst. year 2010-2011 and hence his remark that "None Attended" is misconceived and far from reality. Further, notices mentioned by him were never received by us till we obtained order u/s 221(1) dated 28.01.2013. Due to aforesaid reason, we would request your excellency to grant us stay on said demand raised by learned officer u/s 156 of Income-tax Act, 1961. aforesaid reasons justify that we were not aware that such notices as mentioned in Learned Officers Order u/s 221(1) were ever issued to us Further, we had attended several dates during said period as mentioned in his order u/s 221(1) for disposal of scrutiny case for Asst. Year 2010-2011, and hence it is not true that we committed default u/ s 221(1) of Income- tax Act, 1961. undersigned requests your goodself to grant stay to avoid undue hardship. Kindly condone any delay (if any) which may have been cause at our end. undersigned or his representative shall attend each dates as provided by Hon'ble Authority to ensure quick disposal of case filed before your Excellency. 2.4 Penalty order of A.O and submission made by appellant have been considered. Undisputed fact of case is that assessee did not pay due taxes before filing of return wherein admitted tax liability was determined at Rs.2,44,943/-. appellant contended that due to circumstances beyond his control and due to financial crunch he could not pay self assessment tax while filing return of income. However, on perusal of submission made before me, I am of opinion that instead of demonstrating or explaining situations or poor financial position which prevented him to pay taxes, he went on alleging that though his ld. A.R. was attending various hearings with same A.O. for scrutiny proceedings in appellant's own case for A.Y. 2010-11, A.O. has wrongly noted in his order that no one attended in penalty proceedings. In my view, appellant has failed to appreciate fact that scrutiny proceedings and penalty proceedings are two separate and independent proceedings and, thus, attendance in scrutiny proceedings cannot be construed as attendance in response to notices issued in penalty proceedings and that too for different assessment years. appellant further contended that time for payment of taxes was orally sought. From statement of appellant, it appears that fact of non-payment of self assessment tax was apprised of to appellant by A.O. It is also apt to note that, on completion of scrutiny assessment for A.Y.2010-11 on 31.12.2012, demand raised was entirely paid on 17.1.2013 whereas S.A. tax for year under consideration was paid only after passing of penalty order and prior to filing appeal before me. 7 ITA No. 7157/Mum/2014 Shri Vinay Vikram Oberoi 2.5 Provisions of Sec.140A(3)r.w.s.221(1)of Act are very clear. Section 140A(3) stipulates that if any assessee fails to pay whole or any part of such tax or interest or both in accordance with provisions of sub-section (1), he shall, be deemed to be assessee in default in respect of tax or interest or both remaining unpaid, and all provisions of this Act shall apply accordingly. Section 221(1) comes in to play once it is found that default has been committed by any assessee in payment of tax. 2.6. Assessing Officer has levied penalty after issuing show- cause notice to assessee and thereby followed mandate of Act. appellant alleged that said notices were never issued by him. On perusal of record with A.O. it is observed that notices were sent on address of assessee which was available in PAN database. Even when opportunities were granted and availed of in appellate proceedings, appellant failed to buttress his claim with documentary evidence like bank pass book or cash book to show that he was suffering with financial crunch. 2.7 As per provisions of section 221(1), penalty is not to be levied if assessee proves, to satisfaction of AO, that default was for good and sufficient reasons. Second condition for levying penalty is that before levying any such penalty assessee has to be given reasonable opportunity of being heard. As far as first condition is concerned, onus is on assessee to prove existence of good and sufficient reason. appellant has not brought even iota of evidence on record to indicate why he could not pay taxes as per provisions of Act. On other hand, AO has to establish that he afforded reasonable opportunity of hearing to assessee. In case before me, it is found that AO had levied penalty after issuing show cause notice to assessee. Thus, as far as AO is concerned, he has followed mandate of Act. In my opinion, appellant has not discharged his onus as he failed to produce any good or sufficient reason as to why he could not pay taxes as per provisions of Act. Hence advancement of statement that due to financial crisis he could not pay taxes, that too without any documentary evidence in mere statement which cannot be entertained. 2.8 Hence, I do not find any infirmity in action of A.O. in levying penalty u/s. 221(1) of Act. 5.2 On perusal of finding rendered in order of learned CIT(A) (supra), we find that learned CIT(A) has judiciously considered issue, AO s view and assessee s submissions before upholding levy of said penalty of `2,44,943/- under section 221(1) of Act. Admittedly, undisputed fact, in case on hand, is that assessee did not pay due taxed before filing of return of income for A.Y. 2012-13; wherein tax liability to be paid under section 140A(3) of Act was determined by 8 ITA No. 7157/Mum/2014 Shri Vinay Vikram Oberoi assessee himself at `2,44,943/-. In light of submissions of assessee put forth before authorities below and facts on record, we concur with view of learned CIT(A) that assessee has failed to establish with any material evidence that it was due to circumstances beyond his control and due to financial crunch that he was prevented from paying determined/admitted tax liability of `2,44,943/-. We also find that, as observed by learned CIT(A), AO had levied said penalty only after issue of show cause notice, affording assessee opportunity of being heard in matter; which is in accordance with procedure laid down in Act. In our view, on appreciation of orders of authorities below, we find that assessee, except for putting forth claims, has failed to discharge onus upon him to prove existence of good and sufficient reasons that prevented him from paying said taxes of `2,44,934/- as per provisions of Act. In factual and legal matrix of case, as discussed above, wherein assessee has failed to bring on record material evidences to controvert findings of authorities below in respect of levy of penalty of `2,44,943/- under section 221(1) of Act, we uphold orders of authorities below in levying said penalty. Consequently, assessee s grounds of appeal are dismissed. 5. In result, assessee s appeal for A.Y. 2012-13 is dismissed. Order pronounced in open court on 21st September, 2016. Sd/- Sd/- (Sandeep Gosain) (Jason P. Boaz) Judicial Member Accountant Member Mumbai, Dated: 21st September, 2016 Copy to: 1. Appellant 2. Respondent 3. CIT(A) -33, Mumbai 4. CIT - 22, Mumbai 5. DR, F Bench, ITAT, Mumbai By Order //True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p. Vinay Vikram Oberoi v. Income Tax Officer-22(3)-4, Navi Mumbai