Sh. P.R. Gupta, Delhi V. JCIT, New Delhi

ITA 1176/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3742 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 29-06-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 07-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VK SABHARWAL
• Keywords: Opportunity of being heard; Period of limitation; Time period of passing order
• Section: 147; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 1176/DEL /2012 ASSESSMENT YEAR: 2001-02 SHRI P.R. GUPTA, FLAT NO. 61-B, JHANG APTT., PLOT NO. 40, SECTOR 13, ROHINI, DELHI-110085 (PAN: AAOPG4645H) VS JOINT COMMISSIONER OF INCOME TAX, RANGE-37, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.K. SABHARWAL, ADVOCATE RESPONDENT BY: SHRI ATIQ AHMAD, SR. DR DATE OF HEARING : 14.09.2017 DATE OF PRONOUNCEMENT: 31.10.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XXVIII, NEW DELHI WHEREIN VIDE ORDER DATED 28/12/20 11, THE LD. CIT (APPEALS) HAS CONFIRMED PENALTY OF RS. 21,50,00 0/- IMPOSED UNDER SECTION 271D OF THE INCOME TAX ACT, 1961. THE APPEAL PERTAINS TO ASSESSMENT YEAR 2001 02. ITA NO. 1176/DEL/2012 ASSESSMENT YEAR 2001-02 2 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT FOR ASSESSMENT YEAR 200102 IN THE CASE OF ONE SH. ASHO K ARORA WAS COMPLETED UNDER SECTION 147/143 (3) OF THE INCOME T AX ACT, 1961 ON 26 TH OF DECEMBER 2008. THE PROCEEDINGS UNDER SECTION 14 7 OF THE INCOME TAX ACT, 1961 WERE INITIATED IN THE CASE OF SH. ASHOK ARORA ON THE BASIS OF A TAX EVASION PETITION WHEREI N IT WAS ALLEGED THAT SH. ASHOK ARORA HAD ADVANCED CASH LOAN OF RS. 21,50,000/- TO SH. P.R. GUPTA, THAT IS, THE ASSESSE E AND IN SOME INSTANCES HAD RECEIVED POST DATED CHEQUES FROM THE ASSESSEE. SUBSEQUENTLY, SH. P.R. GUPTA WAS ASKED TO SHOW CAUS E AS TO WHY PENALTY MAY NOT BE IMPOSED UNDER SECTION 271D OF TH E INCOME TAX ACT, 1961 FOR FAILURE TO COMPLY WITH THE PROVIS IONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961. IN RESPONSE, THE ASSESSEE STATED THAT THERE WERE ONGOING LITIGATIONS WITH SH. ASHOK ARORA AND IT WAS ALSO CONTENDED THAT SH. ASHOK ARORA HAD BEEN FORGING DOCUMENTS AND CHEQUES. IT WAS ALSO SUBMITTED THAT S H. ASHOK ARORA HAD MALA FIDE INTENTION AGAINST HIM AND THAT THE ASSESSEE HAD NEVER TAKEN OR ACCEPTED ANY LOAN IN CASH FROM S H. ASHOK ARORA DURING THE YEAR UNDER CONSIDERATION. HOWEVER, THE SUBMISSION DID NOT FIND FAVOUR WITH THE AO AND HE P ROCEEDED TO IMPOSE PENALTY OF RS. 21,50,000/- WHICH WAS, ON APP EAL, ITA NO. 1176/DEL/2012 ASSESSMENT YEAR 2001-02 3 CONFIRMED BY THE LD. CIT (APPEALS). NOW THE ASSESSE E IS IN APPEAL BEFORE THE ITAT AND HAS CHALLENGED THE IMPOSITION O F THE PENALTY BY RAISING THE FOLLOWING GROUNDS OF APPEAL 1. THAT THE LEARNED ASSESSING AUTHORITY HAS GROSS LY ERRED AND MISTAKEN UNDER LAW AND ACCORDING TO THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE IN IMPOSING PE NALTY U/S 271D. 2. THAT ON THE MATTER OF FACT AND IN THE CIRCUMSTA NCES OF THE CASE, NO ADEQUATE OPPORTUNITY OF BEING HEARD IN PERSON HAS BEEN GIVEN TO ME BY THE LEARNED ASSESSIN G AUTHORITY. 3. THAT NO ANNEXURES FROM 1 TO 9 AS MENTIONED IN THE PENALTY ORDER HAS BEEN GIVEN TO ME EARLIER WHICH IS LATER ON ATTACHED WITH THE PENALTY ORDER. 4. THAT EVEN AFTER REMANDING BACK OF MY CASE TO THE ASSESSING AUTHORITY, THE ASSESSING AUTHORITY AGAIN HAS NOT GIVEN ME THE OPPORTUNITY OF BEING HEARD IN PERSON. 5. THAT ANY ADDITIONAL GROUND MAY BE TAKEN AT THE TIME OF HEARING OF THE APPEAL. 3. AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE PENALTY ORDER DATED 16/11/2009 AND PASSED UNDER SECTION 271D OF THE INCOME TAX ACT, 1961 WAS BARRED BY LIMITATION. IT WAS SUBMITTED THAT THE SHOW CAUSE NO TICE ISSUED UNDER SECTION 269SS OF THE INCOME TAX ACT WAS DATED 23/01/2009 AND, THEREFORE, AS PER THE PROVISIONS OF SECTION 275 (1) (C), THE PENALTY ORDER SHOULD HAVE BEEN PASSED LATEST BY ITA NO. 1176/DEL/2012 ASSESSMENT YEAR 2001-02 4 30/09/2009. IT WAS SUBMITTED THAT DUE TO THE PENALT Y ORDER HAVING BEEN PASSED BEYOND THE LIMITATION PERIOD, TH E PENALTY ORDER WAS LIABLE TO BE QUASHED AT THE VERY THRESHOL D ITSELF. 4. IN RESPONSE, THE LD. SENIOR DR, THOUGH SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES, COULD NOT CONTROVE RT THE FACT THAT THE IMPUGNED NOTICE WAS ISSUED ON 23/01/2009 AND TH AT THE IMPUGNED ORDER WAS PASSED ON 16/11/2009. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE MATERIAL ON RECORD. IT IS SEEN THAT THIS ISSUE IS N O LONGER RES INTEGRA. THE HONBLE DELHI HIGH COURT HAS HELD IN CIT VS. WORLDWIDE TOWNSHIP PROJECTS LTD. IN ITA NO.232/2014 THAT PENALTY ORDER U/S 271D OF THE INCOME TAX ACT, 1961 HAS TO BE PASSED IN TERMS OF SECTION 275(1)(C) OF THE ACT WHI CH PROVIDES THAT THE PENALTY ORDER HAS TO BE PASSED IN THE FINA NCIAL YEAR IN WHICH THE PROCEEDINGS FOR IMPOSING THE PENALTY ARE INITIATED OR WITHIN SIX MONTHS OF THE INITIATION OF SUCH PROCEED INGS, WHICHEVER IS LATER. THE HONBLE DELHI HIGH COURT FU RTHER HELD THAT THE LIMITATION PERIOD FOR PASSING THE ORDER U/S 271 D WILL NOT BE GOVERNED BY SECTION 275(1)(A) OF THE ACT. SUBSEQUEN T TO THE JUDGMENT OF THE HONBLE DELHI HIGH COURT, THE CBDT HAS ALSO ITA NO. 1176/DEL/2012 ASSESSMENT YEAR 2001-02 5 ISSUED CIRCULAR NO.10/2016 DATED 26-4-2016 ON THE I SSUE CLARIFYING THAT THE TIME LIMIT FOR PASSING PENALTY ORDER U/S 271D OR 271E IS GOVERNED BY SECTION 275(1)(C). THE SAID CIRCULAR IS REPRODUCED HERE-IN-UNDER FOR A READY REFERENCE- THE ISSUE WHETHER THE LIMITATION FOR IMPOSITION OF PENALTY UNDER SECTIONS 271D AND 271E OF THE INCOME-TAX ACT, 1961, (HEREINAFTER REFERRED TO AS THE ACT) IS DETERMINED UNDER SECTION 275(1)(A) OR SECTION 275(1)(C) OF THE ACT, HAS GIVEN RISE TO CONSIDERABLE LITIGATION. 2. THE HON'BLE DELHI HIGH COURT IN THE CASE OF COMM ISSIONER OF INCOME TAX V. WORLDWIDE TOWNSHIP PROJECTS LTD., VIDE ITS ORDER DATED 21-5-2014 IN ITA NO. 232/2014, CONSIDER ED THE ISSUE AND OBSERVED THAT, 'IT IS WELL SETTLED THAT A PENALTY UNDER THIS PROVISION IS INDEPENDENT OF THE ASSESSME NT. THE ACTION INVITING IMPOSITION OF PENALTY IS GRANTING O F LOANS ABOVE THE PRESCRIBED LIMIT OTHERWISE THAN THROUGH B ANKING CHANNELS AND AS SUCH INFRINGEMENT OF SECTION 269SS OF THE ACT IS NOT RELATED TO THE INCOME THAT MAY BE ASSESS ED OR FINALLY ADJUDICATED. IN THIS VIEW SECTION 275(1)(A) OF THE ACT WOULD NOT BE APPLICABLE AND THE PROVISIONS OF SECTI ON 275(1)(C) WOULD BE ATTRACTED.' THE JUDGMENT HAS BEE N ACCEPTED BY THE CENTRAL BOARD OF DIRECT TAXES. 3. IN VIEW OF THE ABOVE, IT IS A SETTLED POSITION T HAT THE PERIOD OF LIMITATION OF PENALTY PROCEEDINGS UNDER SECTIONS 271D AND 271E OF THE ACT IS GOVERNED BY THE PROVISIONS OF SE CTION 275(1)(C) OF THE ACT. THEREFORE, THE LIMITATION PER IOD FOR THE IMPOSITION OF PENALTY UNDER THESE PROVISIONS WOULD BE THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDIN GS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALT Y HAS BEEN INITIATED, ARE COMPLETED, OR SIX MONTHS FROM THE EN D OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES LATER. THE LIMITATION PERI OD IS NOT DEPENDENT ON THE PENDENCY OF APPEAL AGAINST THE ASSESSMENT OR OTHER ORDER REFERRED TO IN SECTION 27 5(1)(A) OF THE ACT. ITA NO. 1176/DEL/2012 ASSESSMENT YEAR 2001-02 6 4. ACCORDINGLY, NO APPEALS MAY HENCEFORTH BE FILED ON THIS GROUND BY THE OFFICERS OF THE DEPARTMENT AND APPEAL S ALREADY FILED, IF ANY, ON THIS ISSUE BEFORE VARIOUS COURTS/TRIBUNALS MAY NOT BE PRESSED UPON. 5. THE ABOVE MAY BE BROUGHT TO THE NOTICE OF ALL CO NCERNED. 5.1 IT IS UNDISPUTED THAT IN THE PRESENT APPEAL, TH E PENALTY PROCEEDINGS WERE INITIATED ON 23/01/2009 AND, THERE FORE, IN TERMS OF SECTION 275(1)(C), THE PENALTY ORDER SHOUL D HAVE BEEN PASSED LATEST BY 30/09/2009, BEING SIX MONTHS FROM THE END OF THE FINANCIAL YEAR. HOWEVER, THE ORDER WAS PASSED O N 16/11/2009 WHICH WAS BEYOND THE LIMITATION PERIOD. ACCORDINGLY, WITHOUT GOING INTO THE MERITS OF THE C ASE, WE DEEM IT FIT TO QUASH THE PENALTY ORDER AS BEING BARRED BY L IMITATION. 6. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31ST O CTOBER, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 31ST OCTOBER, 2017 GS ITA NO. 1176/DEL/2012 ASSESSMENT YEAR 2001-02 7 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR