DEWAN ENGINEERING WORKS V. CIT, PATIALA AND ANR.

ITA/938/2008

AI Insights

The case involves M/s Dewan Engineering Works, the appellant, contesting a penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 1986-87. The penalty was challenged on the grounds of being beyond the stipulated period of limitation under section 275 of the Act. The Income Tax Appellate Tribunal upheld the penalty, rejecting the assessee's claim of limitation, which led to this appeal. The main legal questions revolved around the interpretation of the limitation period for imposing penalties under the Income Tax Act, particularly in relation to the timing of the Tribunal's decision and the assessee's request to defer penalty proceedings.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 746398 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 14-10-2009
• Assessment Year: misc
• Other Referred Cases: Computwel Systems Limited v. W.Husan and another, Mela Ram & Sons v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RAJESH KATOCH
• Assessee Lawyers: RAJIV SHARMA
• Keywords: Income tax appellate tribunal; Limitation; Penalty; Reassessment; Search and seizure
• Section: 271(1)(c); 260A; 275(1)(A)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No.938 of 2008(O&M) Date of decision: 14.10.2009 M/s Dewan Engineering Works Sirhind -----Appellant Vs. The Commissioner of Income Tax, Patiala and another. ----Respondents CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE GURDEV SINGH Present:- Mr. Rajiv Sharma, Advocate for the appellant. Mr. Rajesh Katoch, Advocate for the respondents. Adarsh Kumar Goel,J. 1. The assessee has preferred this appeal under section 260A of the Income Tax Act, 1961 (in short, ‘the Act’) against the order dated 18.8.2008 passed by the Income Tax Appellate Tribunal, Chandigarh ‘A’ Bench in M.A No.158/Chd/2007 arising out of its own order dated 9.4.2007 in ITA No.766/Chd/2007, for the assessment year 1986-87, proposing to raise following substantial questions of law:- “i) Whether, on the facts and in the circumstances of the case, the Tribunal has fallen in error in holding that the penalty imposed by the AO has not become barred by time limitation despite there being bar under section 275(1)(a) of Income Tax Act, 1961 that no penalty can be imposed after the expiry of six months from the end of the month in which the order of the CIT(A) is received by the CIT? ii) Whether, on the facts and in the circumstances of the case, the Tribunal has fallen in error in holding that since the quantum appeal was pending before the Tribunal, the ITA No.938 of 2008 (O&M) limitation period for imposing penalty had not yet expired, despite the fact that as per the ratio of the judgment of Hon’ble Supreme Court in the case of Computwel Systems Limited v. W.Husan and another, reported in 260 ITR 86 (SC), the appeal could be regarded as pending only if the delay had been condoned?” 2. Reassessment proceedings were taken against the assessee in the light of material found during search and in the light of facts that were revealed, proceedings for penalty were also initiated. The levy of penalty was challenged by the assessee on the ground that it was beyond the stipulated period of limitation under section 275 of the Act i.e. six months from the date of receipt of order of the appellate authority. This plea was rejected by the CIT(A) and the said order has been upheld by the Tribunal. The Tribunal held as under:- “We have considered the submissions. The learned CIT(A) has dealt with the issue in para 4 of its order wherein the assessee submitted that it could not file the appeal before the Tribunal against the order dated 25.2.1998 in time and belated appeal was filed on 24.8.1998 which was late by 108 days. The delay was declined to be condoned by the Tribunal vide order dated 26.6.2003. The relevant assessment folder has been considered by the learned CIT(A). The Assessing Officer issued the notice dated 8.7.1998 as to why the penalty should not be imposed under section 271(1)(c) to which the assessee vide its letter dated 16.7.1998 requested the Assessing Officer to drop the penalty proceedings till the finalization of appeal. In response to this letter, the Assessing officer 2 ITA No.938 of 2008 (O&M) vide letter dated 22.7.1998 asked the assessee to submit supporting evidence of filing the appeal before the Tribunal, which was followed by another reminder, dated 31.7.1998 issued to the assessee. Thereafter, the assessee vide its letter dated 24.8.1998 mentioned that assessee filed the appeal on 24.8.1998 for the assessment years 1986-87, 1990-91 to 1992-93 before the Tribunal and requested to keep the penalty proceedings in abeyance till the decision of the Tribunal. In such a situation, we are not in agreement with the argument of the assessee that it is barred by limitation because firstly the period of six months from the end of the month in which CIT(A)’s order was received, still time was there and secondly, the matter was got delayed by the assessee himself with a request that the penalty proceedings may be kept in abeyance in such a situation, now the Assessing Officer cannot blame the department, it is pertinent to mention here that the Tribunal dismissed the appeal the assessee and delay was also not condoned. It is also a fact that as on 24.8.1998 the appeal against the order of the learned CIT(A) was pending before the Tribunal. Therefore, we have not found any merit in the contention of the assessee. The conclusion of the learned CIT(A) is upheld.” 3. We have heard learned counsel for the parties and perused the record. 4. Learned counsel for the appellant submits that since the order of the CIT(A) was dated 22.1.1998, limitation for passing order of penalty commenced from the receipt of the said order. The Tribunal 3 ITA No.938 of 2008 (O&M) wrongly held that the limitation will commence from the date of receipt of order of the Tribunal as the appeal filed before the Tribunal was beyond limitation and delay was not condoned. In these circumstances, the filing of appeal and pendency thereof had to be ignored. Reliance has been placed on judgment of the Hon’ble Supreme Court in Computwel (supra). 5. Learned counsel for the revenue opposes this submission and points out that the judgment relied upon is distinguishable, the same being in relation to proceedings under the Scheme known as ‘Kar Vivad Samadhan’, introduced by Finance Act No.2 of 1998. As per the said scheme, the assessee sought to exclude time taken in pursuing the revision petition under section 264 of the Act which was barred by limitation and delay was not condoned. The Hon’ble Supreme Court held that the revision petition having been filed beyond delay which was never condoned could not be treated as pending. The said analogy cannot be applied for limitation under section 275 of the Act. He relies upon judgment of the Hon’ble Supreme Court in Mela Ram & Sons v. CIT, (1956) 29 ITR 607. The issue considered therein was in the context of limitation for further appeal. Appeal before the lower appellate court was beyond time. It was held that date of order dismissing the appeal as time barred was the date from which the limitation was to commence. 6. In the present case, the assessee filed appeal before the Tribunal and also wrote a letter seeking deferment of penalty proceedings till the appeal was decided. On the request of the assessee, 4 ITA No.938 of 2008 (O&M) the proceedings were deferred and penalty proceedings were initiated after order of the Tribunal. Even if delay was not condoned and the assessee filed time barred appeal and on that ground sought deferment of penalty proceedings, the assessee could not be heard to say that filing of appeal should be ignored. No one can take advantage of his own wrong.The judgment in Computewel (supra) being in different context is distinguishable. 7. No substantial question of law arises. 8. The appeal is dismissed. (Adarsh Kumar Goel) Judge October 14, 2009 (Gurdev Singh) ‘gs’ Judge 5 "