DCIT 17(2), MUMBAI vs. PRASHANT R. SAMDANI, MUMBAI

This appeal u/s 253 of the Income-tax Act (‘Act’) is directed by Revenue against the order of Ld. Commissioner of Income-tax-29 (for short ‘the CIT(A)-29), Mumbai dated 13.12.2013 for Assessment Year (AY) 2012-13. Though the Revenue has raised as many as four grounds of appeal but as per our considered opinion only substantial ground is that “Whether ld. CIT(A) erred in reducing the quantum of penalty u/s 221(1) from 100% to 10%.”

We have noticed that the C.O. filed by assessee is beyond 61 days of period of limitation. The assessee along with C.O. filed application for condonation of delay which is further supported by an affidavit of Prashant R. Samdani. In the application, the assessee contended that assessee received notice of appeal by Revenue on 07.07.2015. The assessee could file his C.O. till 06.08.2015. The 3 & C.O.161/M/15 Prashant R. Samdani assessee filed his objection only on 30.09.2015. Thus, there is delay of 60 days in filing the C.O. The contents of the affidavit further disclosed that assessee approached Shri Pradip N. Kapasi, C.A. in the first week of August 2015 and after advice of C.A. assessee decided to file C.O.

On application for condonation of delay, we have heard ld. AR of the assessee and ld. DR for the Revenue and perused the contents of application under affidavit filed in support of condonation of delay application. The ld. AR of the assessee argued that assessee has good case on merit and there is likelihood to succeed the assessee on merit. There was no intentional delay on the part of assessee. Main delay occurred due to forming of opinion and consulting legal grounds. It was further argued that though the assessee approached his CA in First week of August 2015, but the C.O. could be filed only on 30th September 2015. It was argued that the main cause of delay in filing of CO was in framing the opinion. The ld AR further argued that assessee has sufficiently explained the delay in filing the C.O. and prayed that lenient view may be taken. On the other hand, ld. DR for Revenue strongly objected for condoning the delay and would further argue that the assessee is not following the due process of law and is always casual following the provisions of law.

We have considered the rival contention of the parties. The assessee has explained in his affidavit that he approached his C.A. in first week of August 2015, though his consultant advised him to file C.O. in third week of August 2015. We have noticed that the conduct of assessee in explaining the delay is casual, the ground which is disclosed before us is not sufficient. Though the ld AR for assessee has fairly admitted that the delay was on the part of CA of the assessee. Though we are not satisfied with the ground of condonation of delay. However, keeping in view the principle of natural justice, we deem it appropriate to condone the delay in filing C.O. and to decide the same on merit. Hence, the application for condonation of delay in filing the C.O. is allowed.

We have heard the ld. Departmental Representative (DR) for Revenue and Authorized Representative (AR) of the assessee and perused the material available on record. The Ld. DR for the Revenue argued that assessee failed to pay due tax before filing the return of income. The assessee further failed to pay the amount of 4 & C.O.161/M/15 Prashant R. Samdani due tax despite the notice of initiation of penalty. The assessee was casual in following the provisions of law. The AO before levying the penalty issued a show- cause notice and the penalty was levied after giving the opportunity and considering the contentions of the assessee. The ld. DR for the Revenue prayed that order of AO be restored by setting-aside the order passed by ld. CIT(A). On the other hand, ld. AR for assessee argued that on receipt of notice from AO u/s 221(1), the assessee requested vide his application dated 12.11.2012 and prayed that assessee would make entire due outstanding for assessment year 2012-13 maximum by 31.12.2012. The ld. AR of the assessee further argued that assessee has made the payment of substantial amount before 31st December 2012 and the AO failed to refer in his order about the deposit of the tax, while passing the order of penalty. It was further argued that assessee has paid the entire liability before passing the order by ld. AO. The Ld. AR of the assessee would argue that assessee’s partnership firm is engaged in manufacturing of School Bags, the assessee supplied order of MCGM worth Rs. 16 Crore which was blocked by them. The assessee made constraint communication with the officer of MCGM. The assessee also supplied certain material to Maharashtra State Consumer Cooperative Federation (MSCCF). The MSCCF also blocked the payment of assessee for long time, though initially deducted TDS. Due to non-payment by the Government Agencies, the assessee was facing severe financial crisis and was not in a position to pay the self-assessment tax. The assessee during the penalty proceedings assured the AO that he would pay the amount by 31.12.2012. The assessee also had shown the statement of his Bank Account wherein there was no sufficient cash balance. Ld. AR of the assessee would argue that assessee sufficiently explained the circumstances before the AO in the penalty proceedings and the same was sufficiently explained as per 2nd proviso to section 221(1) of the Act. The ld. CIT(A) considered the circumstances and granted the partial relief to the assessee. The assessee is not liable to pay the amount of liability saddled upon him. There was no intentional or deliberate default on the part of assessee. In support of Cross Objections it was argued by the ld. AR of the assessee the 10% penalty sustained by ld. CIT (A) may also be deleted.