M/s Agro Tech Cold Storage Private Limited , Bellary V. Addl.Commissioner of Income Tax Bellary Rang e, Bellary

ITA 110/BANG/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2812 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 17-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAMASUBRAMANYAM
• Keywords: Search and seizure; Period of limitation; Initiation of penalty proceedings

Judgement Text

ITA.110/BANG/2017 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'A', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.110/BANG/2017 (ASSESSMENT YEAR : 2006-07) M/S. AGRO TECH COLD STORAGE P. LTD, PLOT NO.22, KIADB STAGE-II, MUNDARGI INDL. AREA, BELLARY .. APPELLANT PAN : AACCA5466F V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 1, BELLARY .. RESPONDENT ASSESSEE BY : SHRI. RAMASUBRAMANYAM, CA REVENUE BY : SHRI. VIKRAM SURYAVAMSHI, ADDL. CIT HEARD ON : 20.02.2019 PRONOUNCED ON : 28.02.2019 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT (A), GULBARGA, DT.31.10.2016, FOR THE ASSES SMENT YEAR 2006-07. ITA.110/BANG/2017 PAGE - 2 02. FOLLOWING GROUNDS ARE FILED BY THE ASSESSEE : 03. THE LD. AR HAD DRAWN OUR ATTENTION TO THE ADDIT IONAL GROUND RAISED BEFORE US, WHICH READS AS UNDER : FOR THE REASON MENTIONED IN THE APPLICATION FOR ADM ISSION OF THE ADDITIONAL GROUND, WE ADMIT THE ADDITIONAL GROUND U RGED BEFORE US. 04. THE LD. AR FOR THE ASSESSEE HAD SUBMITTED THAT IN THE PRESENT CASE, REFERENCE WAS MADE BY THE AO FOR VIOLATION OF SECTION 269AA FOR IMPOSITION OF PENALTY U/S.271D TO THE JCIT ON 2 5.03.2009 AND FINALLY ORDER WAS PASSED BY THE JCIT ON 25.11.2009 U/S.271D. 05. IT WAS THE SUBMISSION OF THE LD. AR THAT THE OR DER WAS PASSED AFTER THE STATUTORY PERIOD OF SIX MONTHS PROVIDED U /S.275(1)(C) OF THE ACT. IT WAS SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE ITA.110/BANG/2017 PAGE - 3 MATTER OF PCIT V. JKD CAPITAL & FINLEASE LTD [378 I TR 614] AND PCIT V. MAHESH WOOD PRODUCTS P. LTD [394 ITR 312] H AD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND HELD THAT T HE INITIATION OF PROCEEDINGS WOULD INITIATE, WHEN THE REFERENCE WAS MADE BY THE AO TO THE JCIT. OUR ATTENTION WAS DRAWN TO PARA 9 IN THE MATTER OF MAHESH WOOD PRODUCTS P. LTD (SUPRA) TO THE FOLLOWIN G EFFECT : 9. HOWEVER, THIS QUESTION CAME UP FOR CONSIDERATION IN PRINCIPAL CIT V. JKD CAPITAL AND FINLEASE LTD. (SUP RA). THE DATE ON WHICH THE ASSESSING OFFICER RECOMMENDED THE INITIATION OF PENALTY PROCEEDINGS WAS TAKEN TO BE T HE RELEVANT DATE AS FAR AS SECTION 275(1)(C) WAS CONCERNED. THE RE WAS NO EXPLANATION FOR THE DELAY OF NEARLY FIVE YEARS IN T HE ADDITIONAL COMMISSIONER OF INCOME-TAX ACTING ON THE SAID RECOMMENDATION. THE COURT HELD THAT THE STARTING PO INT WOULD BE THE 'INITIATION' OF PENALTY PROCEEDINGS. GIVEN T HE SCHEME OF SECTION 275(1)(C), IT WOULD BE THE DATE ON WHICH TH E ASSESSING OFFICER WROTE A LETTER TO THE ADDITIONAL COMMISSION ER OF INCOME-TAX RECOMMENDING THE ISSUANCE OF THE SHOW-CA USE NOTICE. WHILE IT IS TRUE THAT THE ADDITIONAL COMMIS SIONER OF INCOME-TAX HAD THE DISCRETION WHETHER OR NOT TO ISS UE THE SHOW-CAUSE NOTICE, IF HE DID DECIDE TO ISSUE A SHOW -CAUSE NOTICE, THE LIMITATION WOULD BEGIN TO RUN FROM THE DATE OF LETTER OF THE ASSESSING OFFICER RECOMMENDING 'INITIATION' OF THE PENALTY PROCEEDINGS. ON THE BASIS OF THE ABOVE IT WAS SUBMITTED THAT AS THE ORDER WAS PASSED BEYOND THE PERIOD OF SIX MONTHS THEREFORE TH E PROCEEDINGS ARE REQUIRED TO BE QUASHED AND THE RELIEF BE GRANTE D TO THE ASSESSEE. 06. PER CONTRA, THE LD. DR RELIES UPON THE ORDER OF THE LOWER AUTHORITIES AND SOUGHT TO CONVINCE THAT THERE IS A DISTINCTION BETWEEN THE INITIATION OF PROCEEDINGS AS MENTIONED U/S.271D R.W.S.275(1)(C). THE PROCEEDINGS CAN BE SAID TO BE INITIATIVE ONLY W HEN THE NOTICE IS ISSUED BY THE AUTHORITY COMPETENT TO ISSUE NOTICE I N LAW. THEREFORE ITA.110/BANG/2017 PAGE - 4 IT WAS SUBMITTED THAT THE NOTICE WAS ISSUED BY THE JCIT ON 14.05.2009 AND THE ORDER WAS ISSUED ON 25.11.2009 A ND THE ORDER PASSED BY THE ADDL. CIT WAS WITHIN THE PERIOD OF LI MITATION. 07. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. AT THE OUTSET, WE MAY MENTION THAT FROM THE BARE P ERUSAL OF THE FINDING RECORDED BY THE HONBLE DELHI HIGH COURT IN PARA 9 OF THE JUDGMENT IN THE MATTER OF MAHESH WOOD PRODUCTS P. L TD (SUPRA) SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. HOWEVER WE FEEL THAT THERE IS DEFINITELY A DISTINCTION BETWEEN THE INITIATION OF THE PROCEEDINGS AND REFERENCE OF PROCEEDINGS BY THE OFF ICER ON 25.03.2009. IN OUR VIEW THE INITIATION OF PENALTY U/S.271D WOULD ONLY COMMENCE WHEN THE OFFICER IS EMPOWERED TO LEVY PENALTY APPLIES HIS MIND AND THEREAFTER ISSUE THE NOTICE. BUT IN THE ABSENCE OF AVAILABILITY OF ANY DECISION CONTRARY TO THE JUD GMENT OF THE HONBLE HIGH COURT OF DELHI, WE ARE AFRAID THAT THO UGH THE CONTENTION OF THE REVENUE SEEMS TO BE PLAUSIBLE. H OWEVER, BEING THE SUB-ORDINATE TRIBUNAL , WE ARE BOUND TO FOLLOW THE DECISION OF THE HONBLE DELHI HIGH COURT. IN FACT THE REVENUE HAS NOT BROUGHT TO OUR NOTICE ANY CONTRARY DECISION AND THEREFORE R ESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE DELHI HIGH CO URT AND ALSO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE VE GETABLE PRODUCTS [1973] 88 ITR 192 (SC) , WE HAVE NO OTHER OPTION BUT TO ALLOW THE APPEAL OF THE ASSESSEE. SINCE WE ARE HOL DING THAT THE ORDER PASSED BY THE AUTHORITY IS BEYOND THE PERIOD OF LIMITATION, HENCE THE ORDERS PASSED BY LOWER AUTHORITIES WERE L ACKING ITA.110/BANG/2017 PAGE - 5 JURISDICTION, BEING PASSED BEYOND STATUTORY PERIOD, NULL AND VOID. THEREFORE, WE ARE NOT ADJUDICATING ANY OTHER GROUND ON MERIT. 08. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH THE DAY OF FEBRUARY, 2019. SD/- SD/- (A. K. GARODIA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 28.02.2019 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.