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Narayan Ram Chhaba vs Ito, Ward-I, Nagaur on 13 July, 2005
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Income Tax Appellate Tribunal - Jodhpur
Shripuna Ram Godara , Bikaner vs Assessee on 14 June, 2013
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            IN THE INCOME TAX APPELLATE TRIBUNAL
                 JODHPUR BENCH, JODHPUR

      BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER
         AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER

                         ITA No. 447 & 448/Jodh/2012
                         Assessment year : 2008-09
                           PAN: AJOPG 7067Q

Shri Puna Ram Godara      vs.                The ITO
P/o M/s Anoopa Ram Godara                          Ward- 1(3)
VPO Nagrasar, Shrikolayat                          Bikaner
(Appellant)                                  (Respondent)


                         ITA No. 445 & 446/Jodh/2012
                         Assessment year : 2008-09
                           PAN: AJOPG 7063L

Shri Radhey Shyam Godara              vs.         The ITO
P/o M/s Anoopa Ram Godara                         Ward- 1(3)
VPO Nagrasar, Shrikolayat                         Bikaner
(Appellant)                                  (Respondent)

                   Appellant by             : Shri S.L. Harsh
                   Department by            : Shri R.H. Gohel


                   Date of hearing           : 14-06-2013
                   Date of pronouncement      : 14-06-2013

                                ORDER

PER R.C. SHARMA , A.M.

ITA No.447/Jaipur/2012 - Puna Ram Godara This is an appeal filed by the assessee against the order of the ld. CIT(A), Bikaner dated 30-10-2012 for the assessment year 2008-09, in the matter of levy of penalty u/s 221(1) of the Act amounting to Rs. 50,967/- 2 2.1 Rival contentions have been heard and records perused. In the penalty order, the Assessing Officer stated that the assessee filed his return of income on 30-03-2010 declaring an income of Rs. 3,38,990/-. As per return, a tax of Rs. 50,697/- was payable as self assessment tax. The assessee did not give any explanation to the show cause notice issued before the imposition of penalty. In the absence of the same, the Assessing Officer levied the impugned penalty. By impugned order, the ld. CIT(A) confirmed the action of the Assessing Officer against which the assessee is in further appeal before us. 2.2 Shri S.L. Harsh, appeared on behalf of the assessee and contended that the assessee is a partner of M/s Anoopa Ram Godara, Village and Post Nagrasar, Shri Kolayat,Distt. Bikaner. His share in profit of firm is 10% apart from profit assessee is getting remuneration and interst on capital. Accordingly, in the year under reference, he got a sum of Rs. 3,38,830/- as income. The assessee does not have any other source of income. The firm is carrying on civil contract work of Road and Building of various Govt. Department. In absence of liquidity, the assessee was unable to pay due tax to file his return in time. A refund of income tax Rs. 19,72,850/- was due from income tax for the year under reference but it was not isud till 31-03-2010 but issued on 08-02-2011. In these circumstances the due return was filed on 31- 03-2010 which was also very late but that too without payment of tax due as per Section 140A. The above return was processed by Assessing Officer u/s 143(1) on 11-06-2010 and created a demand of Rs. 78,680/- (Tax Rs. 50,697/-, 3 cess Rs. 1,521/- and interest Rs. 26,466/-) The demand was recovered by the Department from the refund of next year but in the meantime penalty of Rs. 50,697/- has been imposed u/s 140A(3) read with Section 221, hence this appeal.

2.3 In view of the above, it was submitted that return was filed without payment of due tax under stringent financial conditions and to avoid non-filing of return. The return was accepted as correct and processed u/s 143(1) and a demand notice for a higher amount was released. The due tax u/s 140A(3) was merged in demand notice which has been paid by the assessee. It is pertinent to mention that return was filed with the note of request that due tax may kindly be adjusted against due refund of the firm. This was not given cognizance by the Assessing Officer but initiated penalty proceedings. The assessee was under bona fide belief that his note of request will be considered genuinely as it was considered in the last year. The action of penalty proceedings is very hard and excessive more particularly when assessee belongs to that class of person from villages who are not well known about the tax laws. For the default, assessee paid heavy interest as evident from demand notice .

2.4 On the other hand, the ld. DR relied on the orders of the authorities below and contended for upholding the penalty imposed by the Assessing Officer .

4

2.5 Rival contentions have been considered and records perused. We found that the return was filed without payment of due tax under stringent financial conditions and to avoid non-filing of return. A refund of Rs. 19,72,850/- in favour of firm in which assessee was partner, was due from the Department for the year under consideration but the same was not issued till 31-03-2010 and it was issued on 08-02-2011. The Hon'ble Bombay High Court in the case of CIT vs Bikaji Ramchandra, 183 ITR 478 held that default in payment of advance tax due to financial inability was sufficient cause for condoning the penalty imposed u/s 221(1) of the Act. In the case of M/s Jugal Kishore Ganeshi Lal vs DCIT, ITAT Jodhpur (2000) 109 Taxman it was held that financial stringency is a reasonable cause for non-payment of due tax. Similar view was taken in Dr. Narrotam Shah vs DCIT (196) 59 ITD 657 ITAT, Mumbai. Also in the case of CIT vs Bikaji Ramchandra (1990) 183 ITR 478, Hon'ble (Bom), it was held that the assessee was prevented from paying the advance tax because of financial inability. In Barmer travel vs ITO (2004), 2 SOT 392 , Jodhpur ITAT , it was held whether assessee having already paid much more than finally assessed tax alongwith interest is not liable to be treated as assesee's in default.

2.6 In view of the above discussions, there is no merit in levy of penalty u/s 221(1) of the Act. The Assessing Officer is directed to delete the same. 2.7 In the result, the appeal of the assessee is allowed 5 ITA No. 445/Jodh/2012 - Radhey Shaym Godara 3.1 This appeal by the assessee is filed against the order of the ld. CIT(A) , Bikaner dated 30-10-2012 for the assessment year 2008-09 in the matter of imposition of penalty of Rs. 5,000/- u/s 271F of the Act. 3.2 Rival contentions have been heard and record perused. In the penalty order, the Assessing Officer stated that for the assessment year 2008-09, the assessee was to file his return of income on or before 31-03-2009 but was filed on 31-03-2010. Despite several opportunities being given, the assessee failed to file any explanation for the delay in filing the return of income. In the absence of any explanation, much less a satisfactory explanation the Assessing Officer concluded that without any reasonable cause the assessee failed to file his return in time and proceeded to levy the impugned penalty. 3.3 Before the ld. CIT(A), it was contended by the assessee was a resident of village Nagrasar and most of time he remained on site because of which he could not file the return of income in time and also could not respond to the notice issued to him before levy of penalty. The assessee's main source of income was share of profit from the firm M/s Anoopa Ram Godara. The assessee was regular in filing his returns of income in the past but during the year under consideration due to facts stated above could not file the return of income in time. The lapse on the part of the assessee was not intentional and was only due to ignorance of law. It was submitted that the default was only a 6 technical and venial breach of law of which penalty need not be levied. In this regard, the ld AR placed reliace on the decision of Supreme Court in the case of Hindustan Steel Ltd. vs State of Orissa,(83 ITR 36), the decision of Rajasthan High Court in the case of CIT vs Dep. Housing Company (133 Taxman 93) and the case of CIT vs Supdt. Engineer, Udiapur (260 ITR 641) and the case reported at 22 TW 213. It was requested that the penalty levied may be deleted.

3.4 However, the ld. CIT(A) did not accept the assesee's explanation and confirmed the action of the Assessing Officer against which the assessee is in further appeal before us.

3.5 We have considered the rival contentions and carefully gone through the orders of the authorities below and found that there was a reasonable cause for delay in filing the return of income. Applying the proposition of law as laid down and the judicial pronouncements cited by the Ld. AR as referred above to the facts of the instant case, we do not find any merit in the order of the Assessing Officer for imposing penalty when there was a reasonable cause for marginal delay in filing the return of income. Accordingly , the Assessing Officer is directed to delete the penalty of Rs. 5,000/- imposed u/s 271F of the Act. Thus, the appeal of the assessee is allowed.

ITA No. 446/Jodh/2012 - Radhey Shaym Godara 7 4.1 This appeal by the assessee is filed against the order of the ld. CIT(A) , Bikaner datd 30-10-2012 for the assessment year 2008-09 in the matter of imposition of penalty of Rs. 50,949/- u/s 221(1) of the Act. 4.2 Rival contentions have been heard and records perused. In the penalty order, the Assessing Officer stated that the assessee filed his return of income on 31-03-2010 declaring an income of Rs. 3,89,830/-. As pr the return a tax of Rs. 50,949/- was payable as self assessment tax. The assessee did not give any explanation to the show cause notice issued before imposition of the penalty. In the absence of the same, the Assessing Officer levied the impugned penalty. 4.3 Before the ld. CIT(A), the contention of the assessee was that the main source of assesee's income was share of profit, interest and remuneration from the firm M/s Anopa Ram Godara. As per the return of income of the firm for assessment year 2008-09 wherein huge amount of TDS was refundable. The assessee had filed his return of income for the assessment year 2008-09 on 31- 03-2010 whereby the net tax payable was Rs. 50,949/-. It was requested that the same be adjusted from the refundable amount of the firm as was done in the earlier years and also due to paucity of liquid funds with the assessee. This constituted a reasonable cause on the part of the assessee for not depositing the self assessment tax. The Ld. AR further submitted that the assessee as deposited Rs. 79,093/- including tax Rs. 50,949/- on 12-11-2011. It was also submitted that the adjustment being done properly by the Assessing Officer, there would have been no case for penalty. In this regard, the Ld. AR placed 8 reliance on several judicial decisions. It was pleaded that the penalty levied maybe cancelled.

4.4 However, the ld. CIT(A) confirmed the action of the Assessing Officer against which the assessee is in further appeal before us. 4.5 We have considered the rival contentions and found from the record that the assessee was a partner in M/s Anopa Ram Godara. In the return of income for the assessment year 2008-09, there was a huge amount of TDS which was claimed as refundable. In the return field by the assessee as a partner, there was a net tax payable of Rs. 50,949/- and it was submitted that tax demand be adjusted from the refundable amount of the firm as was done in earlier years and the financial stringencies was also stated for not depositing of due tax . In view of the discussions made by us in the matter of Punaram Godara in ITA No 447/Jodh/2012, we do not find any merit in the action of the Assessing Officer for levy of penalty u/s 221(1) of the Act. Following the same reasoning as given in para 2.5 hereinabove, we direct the Assessing Officer to delete the penalty.

ITA No. 448/Jodh/2012 - Poona Ram Godara 5.1 The facts and circumstances in this case are similar to the facts in the case of Radhey Shyam Godara in ITA No. 46/Jodh/2012 pertaining to imposition of penalty of Rs. 5,000/- u/s 271F of the Act wherein we have deleted the penalty imposed by the Assessing Officer. Hence following the decision made in the case of Radhey Shyam Godara (supra), the same shall 9 apply mutatis-mutandis in the case of Poona Ram Godara. Thus the appeal of the assessee is allowed.

3.0 In the result, the appeals of the assessee are allowed (Order Pronounced in the Open Court on this 14-06-2013.) Sd/- Sd/-

(HARI OM MARATHA)                                  (R.C. SHARMA)
JUDICIAL MEMBER                                  ACCOUNTANT MEMBER

      Dated:        14th June, 2013

      Mishra
      Copy to:-
      1.The Appellant
      2. The Respondent
      3. The ld. CIT
      4. The ld. CIT(A)
      5. The DR
      6. The Guard File

                                                           Assistant Registrar
                                                               ITAT, Jodhpur