Heramec Limited,, Hyderabad vs Department Of Income Tax

ITA No.1472/Hyd/2014 : Asst. Year 2008-09 ITA No.1473/Hyd/2014 : Asst. Year 2009-10

Dy. Commissioner of Income- V/s. M/s. Heramec Limited, Hyderabad tax, Circle 14(2), Hyderabad

( PAN - AABCH 3529 B )

(Appellant) (Respondent)

Appellant by : Shri Rajat Mitra

Respondent by : Shri P.Ravi Seshagiri Rao

Date of Hearing 19.01.2015 Date of Pronouncement 19.01.2015

ORDER

Per D.Manmohan, Vice President

Penalty levied under S.221 of the Income-tax Act, 1961, having been cancelled by the Commissioner of Income-tax(Appeals), Revenue is in appeal before us.

2. Penalty of Rs.10,00,000 for each year was levied by the Assessing Officer on the ground that the assessee defaulted in making payment of tax without any reasonable cause. Before the CIT(A), it was submitted that the Assessing Officer failed to appreciate that there was a reasonable and sufficient cause for non-payment; in fact, the assessee cannot be treated as an 'assessee in default'. It deserves to be noticed that during the course of penalty proceedings, the assessee submitted 2 ITA No.1472-1473/Hyd/2014 M/s. Heramec Limited, Hyderabad

that the order passed by the Assessing Officer treating the assessee as in default under S.201/201(1A) was challenged before the CIT(A), but the Assessing Officer did not consider the same as a reasonable cause in view of the fact that the CIT(A) has already passed the order by the time of completion of penalty proceedings under S.221 of the Act. Subsequent thereto, the matter was taken before the Income Tax Appellate Tribunal, Hyderabad Benches. Vide order dated 4.6.2014 (ITA No.1342 &1343/Hyd/2013), the Tribunal deleted the additions made by the Assessing Officer under S.201/201(1A). Since the quantum appeal is decided in favour of the assessee by the ITAT, the learned CIT(A) held that the very basis for the levy of penalty does not exist. He, therefore, cancelled the penalty levied under S.221 of the Act.

3. Despite the findings of the learned CIT(A), Revenue preferred appeals before the Tribunal contending, inter alia, that the Commissioner (A) erred in not holding the assessee in default. At the time of hearing, the learned counsel appearing on behalf of the assessee placed before us, copy of the order of the ITAT, 'A' Bench, for the assessment years under consideration to submit that the demand raised by the Assessing Officer, which is the basis for levy of penalty under S.221 no longer subsist and the said order of the Tribunal has been confirmed by the Hon'ble High Court of Judicature at Hyderabad (ITTA No.677 of 2014 dated 27.11.2014). Learned Departmental Representative, on the other hand, relied on the order passed by the Assessing Officer.

4. Having regard to the circumstances of the case, we are of the view that the order passed by the learned CIT(A) does not call for any interference. We, therefore, confirm the order of the CIT(A) and dismiss the appeals filed by the Revenue.

3 ITA No.1472-1473/Hyd/2014 M/s. Heramec Limited, Hyderabad

5. In the result, Revenue's appeals are dismissed.

Order pronounced in the Court on 19th January, 2015

Sd/- Sd/- (B.Ramakotaiah) (D.Manmohan) Accountant Member Vice President

Dt/- 19th January, 2015

Copy forwarded to:

1. M/s. Heramec Limited, , 2nd Floor, V.V.Mansion, Door No.6-3-885/7/B/4, Somajiguda, Hyderabad 500 482.

2. Dy. Commissioner of Income-tax Circle 14(2) TDS, Hyderabad

3. Commissioner of Income-tax(Appeals)-II , Hyderabad

4. Commissioner of Income-tax I, Hyderabad

5. Departmental Representative, ITAT, Hyderabad.

B.V.S