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TMI Blog2015 (11) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... e totality of the facts and circumstances as noted above, we hold that 20 per cent. of the penalty of outstanding demand was excessive, unreasonable and therefore, we modify the orders of the authorities below and direct the Assessing Officer to restrict the penalty under section 221(1) of the Act by restricting the penalty at 7.5 per cent. of the outstanding self-assessment tax of ₹ 8.14 crores and the Assessing Officer shall rework the penalty amount accordingly. The orders of the authorities below levying the penalty at 20 per cent. is thus, set aside and modified to the extent of 7.5 per cent. - Decided partly in favour of assessee. - I. T. A. No. 348 /CHD/ 2013 and C. O. No. 23 /CHD/ 2014 (assessment year 2010-11). - - - Dated:- 30-6-2015 - BHAVNESH SAINI (Judicial Member) and T. R. SOOD (Accountant Member) Sudhir Sehgal for the Respondent Dr. Amarveer Singh for the Appellant ORDER The order of the Bench was delivered by 1. Bhavnesh Saini (Judicial Member).-The appeal of the assessee as well as the cross-objection by the Revenue-Department are directed against the order of the learned Commissioner of Income-tax (Appeals) (Central) Gurgaon dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax could not be paid on time because of the following compelling reasons : (i) The financial position was extremely difficult as the debts including the export proceedings had not been received. (ii) Dip in the sale figure recorded in the audited balance-sheet. (iii) The bank accounts of the assessee-company had been heavily over drawn and no further limit was available. (iv) Downward rating issued by CRISIL on review of the assessee's financial affairs. 4. The assessee also relied upon the decision of the Kerala High Court in the case of CIT v. Chembara Peak Estates Ltd. [1990] 183 ITR 471 (Ker) in which it was held that the assessee proved non-payment of tax stating paucity of funds and financial stringency due to unavoidable financial position. Therefore, penalty was cancelled. The assessee also relied upon the decision of the Calcutta High Court in the case of CIT v. Indo American Electricals Ltd. [1985] 155 ITR 63 (Cal) in which financial stringency was also considered good reason for cancelling the penalty. The learned Commissioner of Income-tax (Appeals), however, did not accept the contention of the assessee and dismissed the appeal of the assessee. His ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e refund arose for the assessment year 2007-08. It was adjustable against the demand of assessment year 2006-07 and not from the self-assessment tax. It was further inti mated to the assessee by this letter that refund of ₹ 6,99,35,000 determined for the assessment year 2007-08 had been adjusted against the demand of assessment year 2006-07 which was outstand ing at ₹ 10,68,68,165. The assessee was therefore, requested to pay the outstanding amount immediately.' Thus it is apparent that the Assessing Officer had duly considered the assessee's request and has also explained its position. 4.1 The assessee during the appellate proceedings has put forth financial constraints as reasons why the tax could not be paid on time. These reasons were not placed before the Assessing Officer for his consideration. Be that as it may, as rightly stated in the impugned order, the recovery of self-assessment tax is not a consequence of any order passed by the Department but was a consequence to the return filed voluntarily under section 139(1). It is clear from section 140A that it is the duty of the assessee to self assess his income and pay the tax so calculated together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cross-objection. The learned Departmental representative submitted that the learned Commissioner of Income-tax (Appeals) should not have entertained the appeal unless the self-assessment taxes on returned income have been deposited. 8. On the other hand, learned counsel for the assessee submitted that the Revenue-Department has not explained any sufficient cause for not filing the cross-objection within the period of 30 days from the receipt of the notice in appeal of the assessee. Therefore, cross-objection is time barred. He has relied upon the decision of the Kerala High Court in the case of Silver Star Engineers v. ITO [2004] 266 ITR 376 (Ker) in which it was held as under (headnote) : Held, dismissing the appeal, that it was true that there was a delay of only six days in filing the appeal before the Tribunal. However, before the first appellate authority the assessee had not chosen to produce any documents to show that the profit in the busi ness was less than 5 per cent. Neither the assessee nor any authorized representative appeared before the appellate authority though the hearing of the appeal was adjourned on many occasions. The Tribu nal after considering al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. These facts clearly disclosed that prior to March 28, 2014, no steps had been taken by the Revenue-Department for filing the cross-objection in the matter despite the Revenue was aware of the filing of the appeal of the assessee at least on July 4, 2013 when Shri Manjit Singh, Departmental representative appeared for the Assessing Officer and the Revenue-Department before the Tribunal in the appeal of the assessee. 11. The hon'ble Supreme Court in the case of Office of the Chief Post Master General v. Living Media India Ltd. [2012] 348 ITR 7 (SC) held as under (headnote) : Held, dismissing the applications, the Department had itself mentioned in its affidavit and was aware of the date of the judgment of the Division Bench of the High Court as September 11, 2009. Even, according to the deponent, its counsel had applied for the certified copy of the judgment only on January 8, 2010, and the copy was received by the Department on the very same day. There was no explanation for not applying for certified copy of the judgment on September 11, 2009, or at least within a reasonable time. The fact remains that the certified copy was applied for only on January 8, 2010, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cross-objection from July 4, 2013 to March 28, 2014. In the absence of any explanation for non-action in the matter, it is difficult to believe that the Revenue-Department has any sufficient cause for not presenting the cross-objection within the period of limitation. The cross-objection of the Revenue is thus dismissed being time barred. 13. Now we take up the appeal of the assessee for levy of the penalty under section 221(1) of the Act. This provision provides for penalty payable when tax in default. When an assessee is in default or is deemed to be in default in making payment of tax, he shall, in addition to the amount of arrears and the amount of interest payable under section 220(2), be liable by way of penalty, to pay such amount as the Assessing Officer may direct and in case of default, further amount or amounts as the Assessing Officer may from time to time direct so, however that total amount of penalty would not exceed the amount of tax in arrears. The second proviso to this provision provides that where the assessee proves to the satisfaction of the Assessing Officer that the default was for good and sufficient reasons, no penalty shall be levied under this se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e head Current asset which led to paucity of funds available for payment of self-assessment tax. Even the assessee had to borrow more and more funds from the banks and others to cope up with the situation as the secured and unsecured loans which were to the tune of ₹ 751.66 crores as on March 31, 2010 had gone up to ₹ 996.22 crores as on March 31, 2011, thereby increasing the liability by approximately 33 per cent. It would prove paucity of the funds in the case of the assessee. 16. Learned counsel for the assessee also submitted that these circumstances ultimately led to dip in the credit rating as is evident from pages 8 and 9 of the paper book which had also worsened financial condition of the assessee. Due to paucity of the funds and steep fall in the profit during the financial year 2010-11, during which self-assessment tax was to be paid, due to paucity of funds the taxes could not be paid. The profit during the financial year 2009-10 was ₹ 118.94 crores which reduced to ₹ 77.48 crores during the financial year 2010-11. Learned counsel for the assessee, therefore, submitted that due to above reasons, the self-assessment taxes could not be paid on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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