PRADIP S. DIXIT,MUMBAI vs. CIT, MUMBAI

This is an appeal filed by the assessee against the order of CIT(A)- 32, Mumbai dated 10/12/2014 for A.Y.2012-13 in the matter of imposition of penalty u/s.221(1) of the IT Act.

Rival contentions have been heard and record perused.

Facts in brief are that the assessee has filed the return for the A.Y. 2012-13 on 29/11/2013. The assessee could not make the payment of Rs. 5139940/- towards the S.A. Tax at the time of filing of return. It was submitted by AR though the assessee is having the Hotel business but he Shri Pradip S. Dixit was in very bad financial position & said position is continuing still today. Due to hypertension and due to bad financial position, the assessee was facing bad health & still he is suffering from bad health. The assessee received the notice u/s. 221(1} dtd. 04/03/2013 on 08/03/2013. The reply was filed with the assessing officer on 21/03/2013 vide letter dtd. 21/03/2013. Without considering the said letter, the learned officer issued one more notice dtd. 02/04/2013 calling the assessee on 10/04/2013. However, the learned A.O. has levied the penalty u/s. 221(1) vide order dtd. 31/03/2013. The intimation of the said order is received by the assessee on 08/04/2013. Hence the penalty is levied before the date of hearing fixed for the explanation.

The penalty so levied was confirmed by CIT(A) against which assessee is in further appeal before us.

We have considered rival contentions and carefully gone through the orders of the authorities below and found from record that the assessee is the proprietor of Hotel Shantiidoot and has closed down the business activity and the Hotel premises is given on rent The assessee has incurred losses in various years, details of which are as under: Assessment year Amount of Loss 2013-14 1,11,70,982/- 2014-15 1,25,42,745/- 2015-16 1,86,50,159/- 2016-17 1,14,05,654/- Shri Pradip S. Dixit 6. The assessee has taken the bank loan of around 10 crore from DNS Bank in the year 2013 to repay the loan taken from Allahabad Bank as the account with Allahabad Bank became NPA. Now account with DNS Bank has become NPA and bank has filed the suit with DRT for recovery of dues. The amount outstanding together with interest is around 13 crore. The DNS Bank had given the notice of balance recovery from Mr. Pradip S. Dixit and Mrs. Sumita P. Dixit in the news paper Loksatta (Marathi) on 08/05/2014.

From the record, we also found that the Chief Metropolitan Magistrate , Mumbai, vide order dated 26/10/2016 , appointed advocate High court Mr. Sanjay Annabhawne as a court commissioner to take possession of the secured assets. On 2 December, 2017 , the bank has taken over the physical possession of the secured assets.

From the order of AO we found that assessee was asked to file reason for not depositing the tax by issuing notice u/s.221 on 10/04/2013, however, before this date AO has passed order on 31/03/2013 i.e., prior to the date assessee was asked to file the justification. Accordingly, assessee was not given proper opportunity to address its case explaining the reason for not levying the penalty. We also observe that assessee has filed various documents in the form of additional evidence, which goes to the root of the issue to substantiate assessee’s claim. Following are the additional evidences:-