PERFECT VITAMINS PVT. LTD.,MUMBAI vs. DCIT RANGE 1(2), MUMBAI

सुनवाई क" तार"ख /Date of Hearing : 12-04-2017 घोषणा क" तार"ख /Date of Pronouncement : 20-04-2017 आदेश / O R D E R

PER RAMIT KOCHAR, Accountant Member

ITA 2282/Mum/2016 2

The appellant objects to the order dated 12.01.2016 received on 29.02.2016 passed by the Commissioner of Income Tax (Appeals) -2 (hereinafter referred to as CIT(A) Mumbai), in an appeal against an order u/s 271(l)(c) of the Income Tax Act, 1961("The Act") on the following ground of appeal.

1. The learned CIT(A) has erred in confirming the penalty under section 271(1)(c) of the Act without appreciating the fact that the assessee has furnished full and accurate particulars of its income.

2. The learned CIT(A) erred in confirming the penalty without looking into the facts that the expenses claimed by the appellant were genuine expenses and same is accepted by the learned AO. The AO has levied penalty in respect of the said amount merely because said claim of the appellant was disallowed u/s 40(a)(ia) of the Act as the appellant failed to pay the TDS deducted to the credit of the central government.

3. The finding of learned AO that appellant has not disclosed that TDS has not paid is wrong and without looking into the facts that same is reported in Annexure-D of tax audit report u/s 44AB.

5. Without prejudice to above, the learned CIT(A) & AO has erred in not considering the alternate plea that in appellant case, the tax sought to be evaded was NIL as the appellant has not claimed carry forward of loss due to belated return.

6. The appellant could not attend the bearings of CIT (A) fixed on 09/02/2016 due to ill health of Authorised Representative, consequently he could not represent his case before learned CIT(A), therefore the Appellant prays for natural justice and request for one more opportunity of being heard be granted.

General Ground:

ITA 2282/Mum/2016 3

S Particulars TDS amount TDS amount Additions on No. opening current year part of non- payment of TDS. 1 TDS on interest 20,765/- 2,07,650/- payable 2 TDS on Contractor 3,20,229/- 5,89,723/- 1,31,08,255/- (Capital addition item on A/c of fixed assets) 3 TDS on salary 1,06,036/- 10,60,360/- 4 TDS on contractor 1,31,086/- 65,54,300/- Total 2,09,30,565/- The A.O. while passing the assessment order dated 27-03-2014 u/s 143(3) of 1961 Act had made disallowance of Rs. 2,09,30,565/- as per provisions of Section 40(a)(ia) of 1961 Act for non-deposit of tax deducted at source with Central Government . The AO also initiated penalty proceedings against the assessee u/s 271(1)(c) of the Act for filing inaccurate particulars of income. Accordingly show cause notice was also issued to the assessee asking for the explanations. The assessee submitted that the additions have been made in the assessment order for non-deposit of TDS with Government although the ITA 2282/Mum/2016 4 said taxes were duly deducted at source by the assessee as per provisions of the Act. It was submitted that the assessee deducted the tax at source within the prescribed time as stipulated in section 40(a)(ia) of the Act, however, could not deposit the TDS amount on time with Government due to financial crisis. It was submitted that the assessee had filed belated return of income u/s 139(5) of the Act with a loss of Rs. 3,82,13,262/- which was not allowed to be carry forward to be set off against future year profits in accordance with provisions of 1961 Act. The A.O. rejected the contentions of the assessee and observed that non-payment of TDS to the credit of Central Government is not reflected by the assessee in the computation of income filed by the assessee with the Revenue as well in the audit report u/s 44AB of 1961 Act . It was also observed by the AO that the assessee wrongly claimed that tax deducted at source was paid to the credit of Central Government within the prescribed time as per section 40(a)(ia) of the Act. The A.O. observed that the assessee had deducted the tax at source but did not deposit the tax to the credit of Central Government and assessee was using the government’s funds for its business purposes, hence, the AO levied the penalty u/s 271(1)(c) of the Act being 100% of the tax sought to have been concealed to the tune of Rs. 62,79,110/-, vide penalty orders dated 23-09-2014 passed by the AO u/s 271(1)(c) of 1961 Act.

4. Aggrieved by the penalty order dated 23-09-2014 passed by the A.O. u/s 271(1)(c) of 1961 Act, the assessee carried the matter in appeal before the ld. CIT(A). Before the ld. CIT(A), none appeared on behalf of the assessee despite issue of notices by learned CIT(A) fixing the appeal for hearing from time to time nor the assessee filed any written submissions before learned CIT(A). The ld. CIT(A) after considering the material available on record, confirmed the penalty of Rs. 62,79,110/- levied by the A.O. u/s 271(1)(c) of 1961 Act in an ex-parte proceedings by holding that the assessee consciously and intentionally furnished inaccurate particulars of income and also evaded the ITA 2282/Mum/2016 5 deposit of tax deducted at source to the credit of Central Government, vide appellate order dated 12-01-2016.

7. We have considered the material on record including orders of the authorities below and heard the arguments of learned DR. We have observed that the A.O. levied the penalty u/s 271(1)(c) of the Act to the tune of Rs. 62,79,110/- vide his order dated 23rd September, 2014 passed u/s 271(1)(c) of 1961 Act , which was later confirmed by the ld. CIT(A) in his ex-parte appellate order dated 12-01-2016. Before the ld. CIT(A), none appeared during appellate proceedings despite service of notices by learned CIT(A). The penalty was levied by the AO u/s 271(1)(c) of 1961 Act due to non-deposit of tax deducted at source with the Central Government and also non disclosure of particulars of non-deposit of tax deducted at source with Central Government in the computation of income filed with the Revenue in the return of income filed as well in tax-audit report u/s 44AB of 1961 Act. The assessee has claimed that it had deducted the tax at source but failed to pay the same in the Government’s account due to financial difficulties faced by the assessee. In the appellate proceedings before the ld. CIT(A), the assessee did not make any appearance and the averment of the assessee as contained in Ground No. 6 filed with the tribunal was that because of the illness of its authorized representative , the assessee could not make representation before the ld. CIT(A) and it is prayed that one more opportunity be provided to the ITA 2282/Mum/2016 6 assessee to present its case on merits. Keeping in view of the factual matrix of the case and in the interest of justice, we are of the considered view that the matter needs to be set aside and restored back to the file of the ld. CIT(A) for de-novo adjudication of the issue on merits by learned CIT(A) . The ld. CIT(A) is directed to give one more opportunity to the assessee to represent the case before him and the ld. CIT(A) shall adjudicate the issue de-novo on merits after considering the submissions/explanations of the assessee in the light of evidences filed by the assessee. The assessee is directed to produce all necessary and relevant evidences and explanations before the ld. CIT(A) to substantiate its claim in its defense which shall be admitted by the ld. CIT(A) in the interest of justice. Needless to say that proper and adequate opportunity of being heard shall be provided by the ld. CIT(A) to the assessee in accordance with principles of natural justice in accordance with law. In case the assessee do not co-operate in de-novo proceedings before learned CIT(A), then the learned CIT(A) will be free to adjudicate the issues on merits based on material on record in accordance with provisions of law . We order accordingly.