SONU SYNTHETIC LTD,MUMBAI vs. DCIT 8(3), MUMBAI

The assessee has raised the following grounds:-

The other point which has been raised by the departmental representative is that the appeal filed by the assessee is time barred by 63 days. The assessee filed an application along with an affidavit stating that the assessee did not carry out any business activity since F.Y.2005-06. The assets of the company were auctioned and company closed its business operations in A.Y.2006-07. The company did not have the qualified staff or proper professional services who would look after its financial and tax matters. Due to lack of qualified staff or professional advice the company was unable to file the present appeal within the stipulated time. In view of the reasons recorded above as well as considering the fact that the main appeal filed by the revenue is yet to be decided, therefore, we are of 2 A.Y. 2006-07 the view that there are sufficient and reasonable ground on record to condone delay in filing the appeal, hence application for condonation of delay is filed is hereby allowed.

The brief fact of the case are that the assessee filed the return of income on 29.11.2006 declaring total loss to the tune of Rs.1,92,78,249/-. Order u/s.143(3) of the Income Tax Act, 1961 ( in short “the Act”) was passed on 19.12.2008 without making any variation in the returned income. Subsequently, the case of the assessee was reopened u/s.147 of the Act due to the following reasons:-

Accordingly, notice u/s.148 of the Act was issued on 26.03.2010 and served upon the assessee on 27.03.2010. The assessee sought the reason by virtue of letter dated 28.04.2010 which was given to the assessee by virtue of letter dated 11.05.2010. Thereafter, the notice u/s.148 of the Act was issued. However, no reply was given. Since the entire assets of the company was sold through auction for a consideration of Rs.19,25,00,000/- and the assessee recorded the entries in its books of accounts and had written off the entire of assets, the income on sale of such assets was chargeable to tax as per the provisions of section 50 of the Act. Therefore, the Assessing Officer computed the Short Term Capital Gain arising on transfer of such assets to the tune of Rs.10,15,21,034/-. Since the assessee did not offer the said amount of tax, therefore notice u/s.271(1)(c) of the Act was issued and penalty to the tune of Rs.3,41,71,980/- was levied which was confirmed by the CIT(A), Mumbai by virtue of order in question, therefore the assessee has filed the present appeal before us.

We have heard the arguments advanced by the learned representative of the parties and perused the record. The sole contention of the assessee is that the order dated 25.10.2013 in question wherein the penalty levied by the Assessing Officer is not liable to be sustainable in the eyes of law specifically in the circumstances when the quantum order has been set aside by the 4 A.Y. 2006-07 Tribunal by virtue of order dated 21.11.2014. However, on the other hand the learned Departmental Representative has supported the order passed by the CIT(A) in question. The copy of order in in the assessee’s own case for the A.Y.2006-07 is on the file in which it is quite clear that the Hon’ble ITAT has set aside the quantum of order dated 20.12.2012. In the said circumstances the base order on the basis of which the penalty was levied has been ordered to be set aside. Therefore, in view of the said circumstances the present penalty is not liable to be sustainable in the eyes of law. Accordingly, we set aside the order passed by the CIT(A) in question for confirming the penalty u/s.271(1)(c) of the Act and delete the same.

In the result, the appeal filed by the assessee is hereby Allowed.