GOYAL KNITWEARS PVT. LTD.,LUDHIANA vs. DCIT, CC-II, LUDHIANA

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH

BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.29/Chd/2018 (Assessment Year : 2009-10) Goyal Knitwears Pvt. Ltd., Vs. The D.C.I.T., B-XXIX, 101-8A, Sherpur Chowk, Central Circle-II, G.T. Road, Ludhiana. Ludhiana. PAN: AABCG0964F (Appellant) (Respondent)

Appellant by : Shri Parveen Jindal, Adv. Respondent by : Shri Manjit Singh, Sr.DR Date of hearing : 22.05.2018 Date of Pronouncement : 11.07.2018

ORDER PER ANNAPURNA GUPTA, AM:

This appeal has been preferred by the assessee against

the order of learned Commissioner of Income Tax (Appeals)-

5, Ludhiana (hereinafter referred to as CIT(Appeals)) dated 4.10.2017 relating to assessment year 2009-10.

penalty u/s 221(1) of the Income Tax Act, 1961 (in short

‘the Act’),for non-deposit of self-assessment tax before filing of return of income,.

due on the income returned, by Rs.4,53,530/-, the same

remaining unpaid even upto filing of return of income. The Assessing Officer therefore treated the assessee as an

assessee in default as per the provisions of section 140A(3)

of the Act and accordingly, levied penalty of Rs.4,53,530/-

u/s 221(1) of the Act.

that in the present case all the conditions stipulated

under the Act for levy of penalty u/s 221 r.w.s 140A(3) of

the Act, were fulfilled.

appeal before us.

ground No.4, which reads as under:

“4. That the show cause notice u/s 221(1) of the Income Tax Act, 1961 stated to be issued on 18/10/2013 fixed for 06/11/2013 was not served on the appellant and as such the assessee was not given reasonable opportunity of being heard before the levy of penalty u/s 221(1) of the Act as the default in depositing the tax u/s 140A of the Act was due to good and sufficient reasons.” 7. The Ld. counsel for assessee stated that it had good

and sufficient reason for not depositing the self

assessment tax. It was contended that the assessee had

initially inadvertently failed to pay the same and the

default went undetected even during assessment

proceedings conducted u/s 143(3) of the Act, when

addition was made to the income of the assessee and

demand raised on account of the same by notice u/s 156

of the Act on 23.12.2011. The said demand was deposited

on 18.10.2012. Even then it was pointed out ,the self

assessment tax remained undeposited and it was only

thereafter when proceedings u/s 221 of the Act were

initiated and order passed levying penalty on 31.12.2013

that the assessee became aware of its fault and deposited

the self assessment tax on 17.2.2014. The Ld. counsel

for assessee contended that even the penalty order was

passed without affording any opportunity to the assessee

being passed within two months of issue of the show

cause notice which was issued on 6.11.2013 and penalty

order passed on 31.12.2013. Therefore, as soon as the

assessee became aware of its default on receipt of penalty

order, the self assessment tax was deposited.

contentions of the assessee but stated that it was a fit

case for levy of penalty u/s 221(1) of the Act as all

conditions stated therein were fulfilled in the present

case.

orders of the authorities below. We agree with the

Ld.Counsel for the assessee that the assessee had a

reasonable cause for not depositing the self assessment

tax with the return of income. The explanation of the

assessee that it was an inadvertent omission on the part

of the assessee is a plausible and reasonable enough

explanation in the light of the facts demonstrated by the

assessee and which have not been disputed by the

Revenue. Evidently the non-payment of self assessment

tax continued, remaining undetected even after scrutiny

proceedings u/s 143(3) were completed on the assessee

and was paid immediately after being detected by the

revenue. It is difficult to believe that the assessee took

the risk all along of not paying the taxes even when

subjected to scrutiny by the department, which is a huge

risk by any standards since the chances of escaping the

scrutiny and not being detected is very slim, almost

impossible. Therefore the explanation of the assessee that

it was an inadvertent omission, is a plausible

explanation, which is strengthened by the fact that

immediately on detection the taxes were paid by the

assessee.

of self assessment tax ,was an inadvertent omission on

the part of the assessee, they were good and sufficient

reasons for the default. No penalty u/s 221(1) of the Act

was therefore leviable and the same is, directed to be

deleted.

Order pronounced in the Open Court.

Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 11th July, 2018 *Rati*

Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR

Assistant Registrar, ITAT, Chandigarh