M/S. G M FABRICS P. LTD,MUMBAI vs. DY CIT -9(3)(2), MUMBAI

This appeal is filed by G.M. Fabrics Private Limited (Assessee/ Appellant) against the order passed by the Commissioner of Income tax (Appeals)-16, Mumbai [The LD CIT (A)] on 31 January 2020. By this order penalty levied under Section 221(1) of the Income-tax Act, 1961 (The Act) by the order dated 14th May, 2018 passed by the Dy. Commissioner of

Assessee has raised following grounds of appeal:-

Brief fact of the case shows that assessee is a private limited company engaged in the business of manufacturing of textiles. It filed its return of income on 17th October, 2016, declaring income of ₹24,79,36,350/-. Total tax Liability was computed at Rs 85805812/-, MAT credit was claimed at Rs 49558162/- , total advance tax paid was shown at Rs 37051371 and refund due was claimed at Rs 803721/-.

Assessee did not remove the defect and therefore, the return was declared as invalid on 8 July 2017.

The assessee after consultation found that the credit of MAT claimed was not correctly computed and therefore revise return was to be filed.

On 19/01/2018, assessee filed return under Section 139(4) of the Act at the same total income, however, claimed MAT credit of ₹1,18,34,786/- and balance tax liability was worked out at ₹7,39,71,026/-. Thus, the additional tax liability of ₹3,69,29,000/- was paid on 5th July, 2017 of ₹2,70,00,000/- and on 15th December, 2017, ₹99,20,000/-.

On 24.04.2018, assessee submitted that there is no default as the self-assessment tax as determined in the return of income under Section 139(4) of the Act has been paid.

The learned Assessing Officer rejected the contention of the assessee and on 14 May 2018 passed an order under Section 221(1) of the Act. The learned Assessing Officer held that

Assessee aggrieved with that order preferred an appeal before the learned CIT (A), who confirmed the same by order dated 31 January 2020 and therefore, assessee is in appeal before us.

The learned Departmental Representative supported the orders of the lower authorities. He submitted that originally the assessee has filed return of income claiming wrong minimum alternative tax credit, wherein it was found by the Department that such credit is erroneous, and certain columns were not filled, the notice was given to it as defective return. Assessee did not comply with the same. Subsequently assessee filed different return u/s 139 (4) of the act. It did not pay tax due in the original return. Several notices were issued to the assessee pointing out the defect in return. It was not cured, therefore penalty was levied. He specifically referred to the order of the learned AO where several judicial precedents are considered. Accordingly, he submitted that there is no infirmity in the orders of the lower authorities.

We have carefully considered the rival contention and perused the orders of the lower authorities. The facts show that assessee filed original return of income on 17/10/2016. As per that return admittedly assessee claimed incorrect mat credit. In the return, assessee did not completely fill up particular schedules. Therefore, on 13/2/2017 at the time of processing the return filed by the assessee was found to be defective/incomplete. Assessee was given first reminder on 6/3/2017 to cure the defect and subsequent reminder on 4/4/2017. However, both this reminders to rectify the defect were not responded to by the assessee. Subsequently on 8/7/ 2017, this income tax return was invalidated by filing portal.

Accordingly we find that the penalty levied by the learned assessing officer as per order dated 14/05/2018 u/s 221 (1) of the income tax act of ₹ 1,84,60,000/– is not

No arguments were advanced on Ground no 5 , hence dismissed.

Appeal is partly allowed.