M/s. P.R. Associates, Pune V. Addl.CIT, Range-3, Pune, Pune

ITA 1378/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56546 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-09-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 04-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KOLI
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Period of limitation; Initiation of penalty proceedings; Reasonable cause; Reassessment proceedings
• Section: 273B; 143(3); 147; 148; 132

Judgement Text

ITA NO.1378/PN/2009 P.R. ASSOCIATES, PUNE IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 1378 / PN / 20 09 ASSESSMENT YEAR : 1999 - 2000 M/S. P.R. ASSOCIATES PUNE VS. CIT(A) - II PUNE (APPELLANT) (RESPONDENT) PAN NO. AABFP 4863F APPELLANT BY: SHRI SUNIL GANOO, CA RESPONDENT BY: SHRI P.L. KOLI, CIT(DR) DATE OF HEARING: 16. 0 9.2011 DATE OF PRONOUNCEMENT: 14.11.2011 ORDER PER SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER:- THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R OF THE CIT(A) DATED 25.9.2009 ON THE GROUNDS READ AS UNDER: THE FIRM WAS VERY MUCH IN FINANCIAL CRUNCH DUE TO SUCCESSIVE FAILURE IN CONSTRUCTION ACTIVITY AND LAND DEALS AND THEREFORE THERE WAS NO ALTERNATIVE WITH THE FIRM BUT TO ACCEPT THE FINANCE FROM MONEY LENDERS TO MEET THE IMMEDIATE FINANCIAL LIABILITY. WHILE DOING SO THE FIRM WAS INDULGED IN WRONG CIRCLE OF THE FINANCIAL MISMANAGEMENT AND DIF FICULTIES. THE FIRM CONFIRMS THAT THEY HAD ACCEPTED MONEY IN CASH AS TH ERE WAS NO ALTERNATIVE BEFORE THEM AND HENCE CIRCUMSTANCES FORCED TO ACCEP T MONEY IN CASH. 2. DURING THE PROCEEDINGS BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE FILED AN ADDITIONAL GROUND WHICH READS AS FOLLOWS: SINCE THE PENALTY PROCEEDINGS WERE INITIATED AFTER INORDINATE DELAY OF THREE YEARS AND SIX MONTHS FROM THE DATE OF KNOWLEDGE BY THE DEPARTMENT OF THE ALLEGED DEFAULT COMMITTED BY THE APPELLANT ASSESSEE U/S 269SS OF THE I.T. ACT, 1961, THE IMPUGNED PENALTY I S BARRED BY LIMITATION AND BAD IN LAW AND THEREFORE THE SAME MAY PLEASE BE ANNULLED. 3. THE RELEVANT FACTS OF THE CASE ARE THAT THIS IS A CASE WHICH IS COVERED U/S 132 OF THE INCOME-TAX ACT (HEREINAFTER CALLED AS AN `ACT). THE DATE OF SEARCH WAS 29.7.2003. DURING THE SEARCH AND SEIZURE PROCE EDINGS, IT IS MENTIONED THAT THE DEPARTMENT CAME TO KNOW OF THE VIOLATION OF THE PROVISIONS OF SECTION 269SS RELATING TO MODE OF TAKING OR ACCEPTING CERTAIN LOANS AND DEP OSITS . INVESTIGATION WING OF THE INCOME TAX DEPARTMENT SENT THE SAID INF ORMATION TO THE CONCERNED ASSESSING AUTHORITIES (ADDL. CIT CENTRAL RANGE-2) A S PER THE SET PROCEDURE AND THE SAID ADDL. CIT, CENTRAL RANGE 2 INTERN SENT THE RELEVANT INFORMATION TO THE AO OF THE ASSESSEE. AT THIS POINT OF TIME, THE RE-A SSESSMENT PROCEEDINGS WERE INITIATED U/S 148 OF THE ACT THEREAFTER AND THE REA SSESSMENT WAS COMPLETED ON 8.12.2006. SUBSEQUENTLY, ON 23.1.2007, THE PENALTY PROCEEDINGS U/S 271D OF THE ITA NO.1378/PN/2009 P.R. ASSOCIATES, PUNE 2 ACT WERE INITIATED FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT AND THE SAID PENALTY PROCEEDINGS WERE COMPLETED BY PASS ING PENALTY ORDER ON 26.6.2007 LEVYING THE PENALTY OF RS.79,18,000/-. TH E AO GAVE A FINDING THAT THE ASSESSEE HAS NO REASONABLE CAUSE AS REQUIRED UNDER THE PROVISIONS OF SECTION 273B OF THE ACT. 4. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSE SSEE MENTIONED THAT THE BUSINESS OF THE ASSESSEES FIRM WAS CLOSED FOR THE LAST 7 YEARS DUE TO ACUTE FINANCIAL PROBLEMS I.E. ASSESSEE DEFAULTED IN MAKIN G THE LOAN PAYMENTS TO ITS FINANCIERS I.E. SRI SUVARNA SAHAKARI BANK. IN ORDE R TO MEET OUT THE SAID DEMANDS OF THE BANK, THE ASSESSEE HAD TO RESORT TO BORROWALS OF MONEY EVEN IF IT MEETS VIOLATION OF THE PROVISIONS OF SECTION 269 SS CONSIDERING THE PECULIAR CIRCUMSTANCES. IT IS SUBMITTED THAT THE SAID CIRCU MSTANCES CONSTITUTE A REASONABLE CAUSE WITHIN THE MEANING OF THE PROVISIO NS OF SECTION 273B OF THE ACT AND RELIED ON VARIOUS DECISIONS IN THIS REGARD. 5. FURTHER, DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE RAISED A LEGAL ISSUE FOR THE FIRST TIME I.E. THE PENALTY PROCEEDINGS AR E INVALID AS THE SAID PENALTY PROCEEDINGS U/S 271D OF THE ACT WERE INITIA TED AFTER A GAP OF 3 YEARS FROM THE DATE OF KNOWLEDGE OF THE SAID VIOLATION I.E. 29.7.2003, THE DATE OF SEARCH. THE ASSESSEE RELIED ON THE JURISDICTION AL HIGH COURT DECISIONS TO SUPPORT HIS ARGUMENTS. ON RECEIPT OF THE SAID ADDIT ION AND LEGAL ISSUE, THE CIT(A) REMANDED THE LEGAL ISSUE TO THE FILES OF THE A.O. AND CALLED FOR THE REMAND REPORT. AO SUBMITTED THE SAME AND THE CONTE NTS OF THE REPORT ARE AS UNDER: 3. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE I S GIVEN DUE CONSIDERATION. IT MAY BE A FACT THAT THE DEPARTMENT CAME TO KNOW OF THE CASH LOANS ON 29/7/2003 ITSELF. PENALTY PROVISIONS FOR VIOLATIONS OF SECTION 269SS AND SECTION 269T ARE STIPULATED IN SECTION 271 D AND 271 E RESPECTIVELY OF THE INCOME TAX ACT, 1961. NOWHERE, IN THE PROVISIONS STIPULATED IN THE SAID SECTIONS, IS IT MENTIONED TH AT THE PENALTY PROCEEDINGS SHOULD BE INITIATED IMMEDIATELY ON KNOWING THAT THE CASH LOANS ARE RECEIVED. MOREOVER MERE KNOWLEDGE OF THE CASH LOANS WILL NOT SUFFICE SO AS TO INITIATE PENAL PROCEEDINGS. IT IS ONLY AF TER THE SCRUTINY AND AFTER PASSING OF ORDER U/S 143(3) OF THE ACT WILL THE ISSUES REGARDING THE LOANS RECEIVED AND GIVEN BE CRYSTALLI ZED. THEREFORE INITIATION OF PENALTY PROCEEDINGS CAN BE DONE ONLY AFTER COMPL ETION OF THE ASSESSMENT PROCEEDINGS. 4. IN THE INSTANT CASE THIS OFFICE RECEIVED INFORMATION FROM ADDL. CIT , CENTRAL RANGE-2, PUNE ON THE BASIS OF WHICH PROCE EDINGS U/S 147 OF THE ACT WAS INITIATED AND COMPLETED BY THE THEN A.O. ON 8.12.2006 WHEREIN DUE MENTION WAS MADE OF VIOLATION OF PROVIS IONS OF SECTION 269SS AND SECTION 269T. THE MATTER WITH REGARD TO THE VIO LATION OF SECTIONS 269SS AND 269T WAS REFERRED TO THE THEN ADDL. CIT R ANGE-3, PUNE ON 8.12.2006. ACCORDINGLY THE THEN ADDL. CIT INITIATED PENALTY PROCEEDINGS U/S 271D AND 271E OF THE ACT ON 23.1.2007 AND LEVIE D PENALTIES U/S 271D AND 271E ON 26.6.2007. THUS IT IS CLEAR THAT THE IN ITIATION AND SUBSEQUENT LEVY OF PENALTIES WERE ABSOLUTELY IN ORDER AND NOT BARRED BY LIMITATION OF TIME AS CONTENDED BY THE ASSESSEE.' 6. THUS, THE ISSUE IS ABOUT THE TIMING OF THE INITIATION OF THE PENALTY PROCEEDINGS U/S 271D OF THE ACT. AOS STAND INCLUDE S (I) LAW IS SILENT ON THE TIMING OF THE INITIATION OF SUCH PROCEEDINGS; AND ( II) KNOWLEDGE OF INFORMATION ITA NO.1378/PN/2009 P.R. ASSOCIATES, PUNE 3 ON THE VIOLATION IS NOT THE CORRECT TIMING BUT THE END OF THE RELEVANT ASSESSMENT PROCEEDINGS. AO INITIATED ON 23.1.2007 THE IMPUGNED PENALTY PROCEEDINGS U/S 271D OF THE ACT WITHIN 45 DAYS FROM THE END OF THE REASSESSMENT PROCEEDINGS I.E. 08.12.2006. THUS, AS PER THE AO, DELAY SHOULD NOT BE COUNTED FROM THE DATE OF KNOWLEDGE OF THE SAID VIOLATION U/S 269SS OF THE ACT. 7. FURTHER, THE CIT((A) FOUND THAT THE AO ERRED IN QUANTIFYING THE PENALTY AMOUNT AND THEREFORE CORRECTED THE SAID AMOUNT OF P ENALTY LEVIABLE AND DETERMINED THE SAME AT RS.88,18,000/- AND NOT RS.79 ,18,000/- AS DONE BY THE AO. IN THIS REGARD, THE CIT (A) GAVE REQUISITE NOT ICE OF ENHANCEMENT AND TO WHICH ASSESSEE FAILED TO SUBMIT ANY REPLY AS MENTIO NED IN THE IMPUGNED ORDER. EVENTUALLY, THE LEGAL GROUND RAISED BY THE ASSESSEE WAS DISMISSED BY THE CIT(A) AS PER THE CONTENTS OF PARA 3.2 OF THE IMPUG NED ORDER WHICH IS REPRODUCED AS UNDER: 3.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT IN THIS REGARD AND THE COMMENTS GIVEN BY THE AO AND I AM IN AGREEMENT WITH THE COMMENTS OF THE AO . THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 ITSELF WAS PASSED ON 8.12.2006, DURING WHICH TH E FACT OF ACCEPTING LOANS IN CASH WAS VERIFIED FROM THE CASH BOOK AND P ENALTY PROCEEDINGS U/S 271 D AND 271 E WERE ACCORDINGLY INITIATED FOR DEFAULT U/S 269SS AND 269T OF THE I.T. ACT. THE PENALTY ORDER PASSED ON 2 6.6.2007 IS, THEREFORE, WITHIN THE TIME LIMIT OF SIX MONTHS FROM THE END OF THE MONTH DURING WHICH PENALTY PROCEEDINGS WERE INITIATED, AS PRESCR IBED U/S 275(1) OF THE I.T. ACT. THEREFORE, THE APPELLANT'S CONTENTION IS NOT TENABLE IN LAW. IN FACT, THE ASSESSEE HAS CONCEDED THAT THERE WAS NO T IME LIMIT PRESCRIBED FOR INITIATION OF PENALTY U/S 271 D / 271 E. BUT HE RE, IN FACT, IT HAS BEEN INITIATED DURING THE ASSESSMENT ORDER U/S 143(3) R. W.S. 147 AND PENALTY ORDER HAS THEN BEEN PASSED WITHIN THE PRESCRIBED TI ME LIMIT. SO FAR AS THE MENTION OF THE DECISION OF BOMBAY HIGH COURT IS CON CERNED, IN THE CASE OF CHIMANRAM MOTILAL (P) LTD. VS. CIT, 140 ITR 809, MENTIONED BY THE APPELLANT, THE HONBLE BOMBAY HIGH COURT HAS OBSERV ED THAT WHEN NO LIMITATION WAS PRESCRIBED UNDER THE ACT FOR INITIAT ION AND COMPLETION OF PENALTY PROCEEDINGS, EVEN PROCEEDINGS WHICH HAVE BE EN TAKEN AFTER THE APPEAL SPREADING OVER A CERTAIN NUMBER OF YEARS COU LD NOT BE SAID TO BE BAD OR ILLEGAL FOR WANT OF JURISDICTION. FOR THIS D ECISION THE HONBLE BOMBAY HIGH COURT FOLLOWED THE DECISION OF LALTA PR ASAD GOENKA (1980) 122 ITR 399 (BOM.). IN FACT, THE DELAY IN THAT CASE WAS FROM JULY 1961 TO MAY 1967 I.E. ALMOST 6 YEARS, STILL THE HONBLE HIG H COURT REFUSED TO QUASH THE PENALTY ON GROUND OF LONG GAP BETWEEN THE DATE OF ASSESSMENT ORDER AND THE DATE OF IMPOSING PENALTY. FURTHER, IN THAT CASE THE SHOW- CAUSE NOTICE FOR PENALTY WAS ISSUED IN JULY 1961 AN D THE PENALTY WAS LEVIED IN MAY 67. THEREFORE, THE DECISION OF HONBL E BOMBAY HIGH COURT DOES NOT HELP THE APPELLANT AT ALL. THE OTHER CASE CITED BY THE APPELLANT OF CIT VS. HARINAGAR SUGAR MILLS LTD. (1989) 176 ITR 289 RELATED TO INITIATION OF ACTION PROVIDED UNDER THE EXCESS PROFIT TAX ACT 1940, AND THEREFORE, WAS NOT RELATED TO THE MATTER AT HAND AN D WAS THUS DISTINGUISHABLE. 3.5 IN VIEW OF THE ABOVE DISCUSSION, THOUGH PENALTY PROCEEDINGS U/S 271D AND 271E COULD BE INITIATED AT ANY TIME , IN THIS CASE IT WAS INITIATED IN THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 DATED 8.12.2006 AND, THEREFORE, WAS LEVIED WITHIN THE TIME LIMIT PR ESCRIBED U/S 275(1) I.E. ON 26.6.2007. THE APPELLANTS ADDITIONAL GROUND O F APPEAL IS THEREFORE, DISMISSED. ITA NO.1378/PN/2009 P.R. ASSOCIATES, PUNE 4 8. THUS, THE CIT(A) PASSIVELY RELIED ON THE AOS RE ASONING IN THE MATTER. FURTHER, REGARDING THE DELAY OF PERIOD OF 45 DAYS, AS UNDERSTOOD BY US, THE CIT(A) RELIED ON THE CITATIONS QUOTED BY THE ASSESS EE I.E. CHIMANRAM MOTILAL (P) LTD SUPRA . IN THE PROCESS, THE CIT(A) HAS NOT GONE INTO THE ISSUE OF THE TIMING OF THE INITIATION OF PENALTY PROVISIONS U/S 271D OF THE ACT I.E. SHO ULD THE AO INITIATE SOON AFTER THE INCOME TAX DEPARTMEN T, WHICH INCLUDES INVESTIGATION WING, CENTRAL RANGE, ASSESSEES AO ET C, HAS COME TO KNOW OF THE ASSESSEES FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269SS OF THE ACT AND ITS CONTRAVENTION OR SHOULD THE AO INITIATE ONLY DU RING THE PERIOD OF THE POST ASSESSMENT. IN EFFECT THE CIT(A) FAILED TO REACH OU T TO THE ISSUE OF TIMING, WHICH HAS MANY DIMENSIONS. SOME OF THEM ARE: WHAT D OES THE PROVISIONS OF SECTION 271D (DECIDING THE CONTRAVENTION OR FAILURE ) OR269SS (IF THE CASH AMOUNT INVOLVED IS DEPOSIT OR LOAN) OR 273B (REASONABLE CA USE ASPECTS) OF THE ACT SAY? CAN ANY OFFICERS OF INVESTIGATION ARE EMPOWERED TO DECIDE THE SAID CONTRAVENTIONS OR FAILURES OF THE ASSESSEE? WHO IS EMPOWERED TO EXAMINE AND OPINE LEGALLY ON THE EXISTENCE OF REASONABLE CAUSE AND THE ADEQUACY THEREOF? THERE IS NO DISCUSSION ON IF THE SAID INITIATION U/ S 271D CAN BE DONE DURING THE PERIOD OF PRE-ASSESSMENT AND ARE THERE ANY SUCH PRE CEDENTS ON THIS ASPECT. SHOULD SUCH INITIATION OF THE PENALTY PROCEEDINGS A LWAYS SUCCEED THE ASSESSMENT PROCEEDINGS AND THE LOGIC THEREOF? WHY IT SHOULD NO T PRECEDE? THE IMPUGNED ORDER LACKS THE ABOVE. AT THE END, THE CIT(A) DISM ISSED THE JUDGMENT IN THE CASE OF HARINAGAR SUGAR MILLS LTD. (1989) 176 ITR 2 89 RELATED TO INITIATION OF ACTION MENTIONING THAT THE SAID JUDGMENT IS DELIVER ED IN THE CONTEXT OF THE EXCESS PROFIT TAX ACT 1940 AND HENCE INAPPLICABLE. FINALLY, THE PENALTY LEVIED WAS NOT ONLY SUSTAINED BUT ALSO ENHANCED. 9. AGGRIEVED WITH THE ABOVE DECISION OF THE CIT(A), THE ASSESSEE FILED THE PRESENT APPEAL. DURING THE PROCEEDINGS BEFORE US, T HE ASSESSEE MADE THE FOLLOWING ARGUMENTS: ACCORDING TO THE LD. D.R., THE IMPUGNED PENALTY P ROCEEDINGS U/S 271D ARE TO BE INITIATED DURING THE COURSE FOR REAS SESSMENT PROCEEDINGS AND THE ALLEGED DEFAULT CAME TO THE KNOWLEDGE OF TH E DEPARTMENT ONLY DURING REASSESSMENT PROCEEDINGS WHICH WERE COMPLET ED ON 8.12.2006. IMMEDIATELY THEREAFTER THE LEARNED ADDITIONAL CIT I NITIATED PENALTY PROCEEDINGS VIDE NOTICE DATED 23.1.2007 AND THE SAM E WERE COMPLETED WITHIN PRESCRIBED STATUTORY TIME LIMIT. THE APPELL ANT SUBMITS THAT THE ARGUMENTS PUT FORWARD BY THE LD. D.R. ARE LEGALLY N OT SUSTAINABLE FOR FOLLOWING REASONS: I. IT IS A WELL SETTLED LAW THAT PENALTY PRO CEEDINGS U/S 271D ARE INDEPENDENT OF ASSESSMENT PROCEEDINGS AND THE SAME NEED NOT BE INITIATED DURING ASSESSMENT PROCEEDINGS (PLEASE REF ER DECISION OF HON. RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HI SSARIA BROTHERS REPORTED IN 291 ITR PAGE 244) II. THE KNOWLEDGE OF THE DEPARTMENT AS ONE UNIT IS IMPORTANT AND NOT KNOWLEDGE OF THE CONCERNED ASSESSING OFFICER HAVING JURISDICTION OVER THE CASE OF THE ASSESSEE. THE OFFICER ACQUIRING TH E KNOWLEDGE OF THE ITA NO.1378/PN/2009 P.R. ASSOCIATES, PUNE 5 ALLEGED DEFAULT IS DUTY BOUND TO IMMEDIATELY COMMUN ICATE THE SAME TO THE OFFICER HAVING JURISDICTION OVER THE CASE OF THE DEFAULTER. III. EVEN IN REMAND REPORT SUBMITTED BY THE LD. ASS ESSING OFFICER TO THE LEARNED CIT(A) DURING THE APPELLATE PROCEEDINGS, A CONCESSION WAS MADE BY THE LD. ASSESSING OFFICER THAT IT MAY BE A FACT THAT THE DEPARTMENT CAME TO KNOW OF THE CASH LOANS ON 29.7.2 003 [PLEASE REFER PAGE NO.3 OF THE IMPUGNED ORDER PASSED BY THE LD. CIT(A)] IV. WITHOUT PREJUDICE TO ABOVE, IT IS PERTINENT TO NOTE THAT IN THE PAPER BOOK SUBMITTED BY THE DEPARTMENT ON 16.9.2011 A COP Y OF LETTER DATED 24.3.2006 WRITTEN BY THE LD. ADDITIONAL CIT CENTRAL RANGE 2 PUNE TO ITO WARD-3(2) PUNE IS FILED WHEREIN IT HAS BEEN MEN TIONED IN FIRST TWO LINES THAT THE ADDL. CIT CENTRAL RANGE 2 PUNE HAD D ISCUSSION ABOUT CASH LOANS WITH ADDL. CIT RANGE 3 PUNE [WHO IS THE OFFICER WHO HAS ISSUED THE SHOW CAUSE NOTICE AND LEVIED THE IMPUGNE D PENALTY]. IN THE CIRCUMSTANCES EVEN ACCORDING TO THE RECORDS PRO DUCED BY THE DEPARTMENT, THE LEARNED ADDITIONAL COMMISSIONER WHO LEVIED THE IMPUGNED PENALTY GOT KNOWLEDGE OF THE ALLEGED DEFAU LT ON OR BEFORE 24.3.2006 AND HENCE THERE IS DELAY OF ABOUT TEN MON THS IN ISSUING THE SHOW CAUSE NOTICE FROM THE DATE OF KNOWLEDGE BY THE LEARNED ADDITIONAL COMMISSIONER OF INCOME TAX WHO LEVIED TH E IMPUGNED PENALTY. V. BY APPLYING THE RATIO OF THE DECISION OF THE HON . DELHI HIGH COURT IN THE CASE OF KAREEMUL HAJAZI VS. STATE OF NCT OF DELHI R EFERRED ABOVE, THE TIME LIMIT OF SIX MONTHS AS PRESCRIBED IN SECTION 2 75[1][C] OF THE I.T. ACT 1961 SHOULD BE TAKEN AS THE REASONABLE PERIOD F OR ISSUANCE OF SHOW CAUSE NOTICE, FROM THE DATE OF KNOWLEDGE OF TH E ALLEGED DEFAULT COMMITTED BY THE ASSESSEE. IN THE CIRCUMSTANCES TH E SHOW CAUSE NOTICE ISSUED BY THE LEARNED ADDITIONAL CIT RANGE 3 PUNE ON 23.1.2007 IS BEYOND THE REASONABLE PERIOD AS IT IS ISSUED BEYOND SIX MONTHS FROM THE DATE OF KNOWLEDGE OF THE DEFAULT, A ND HENCE THE IMPUGNED PENALTY IS WITHOUT JURISDICTION AND BAD IN LAW. 10. FURTHER, THE SRI GANOO, LD COUNSEL FOR THE ASSE SSEE MADE VARIOUS SUBMISSIONS PASSIONATELY AND QUOTED VARIOUS SUBMISS ION TO MAKE OUT HIS POINT THAT THE DEPARTMENT IS ONE AND THE INVESTIGATION WI NG, CENTRAL RANGES, OTHER ASSESSMENTS WINGS ARE PART OF IT,. FURTHER, HE IS O F THE OPINION, THE LEFT HAND MUST KNOW WHAT RIGHT DOES AND AS ALL OF THEM ARE CREATED FOR A COMMON PURPOSE, THE REVENUE COLLECTION. FURTHER, HE IS THE VIEW THAT TH ERE IS NO JUSTIFICATION FOR INITIATION OF THE IMPUGNED PENALTY PROCEEDINGS AFTE R THE LAPSE OF 3 YEARS OF DELAY. THE ORDERS OF THE REVENUE DO NOT CONTAIN THE LEGALLY SUSTAINABLE EXPLANATION FOR SUCH AN INORDINATE DELAY. HE FILED VARIOUS LEGAL CITATIONS DETAILED IN LATER PARTS OF THE ORDER TO DEMONSTRATE THAT THE DELAY IN QUESTION IS INORDINATE AND NOT CONDONABLE IN FAVOUR OF THE REVENUE. 11. PER CONTRA , ON THE LEGAL ISSUE IN RESPONSE TO THE ASSESSEES SUBMISSIONS, THE LD. D.R. FOR THE REVENUE ARGUED STATING THAT TH E DATE OF KNOWLEDGE OF THE SAID VIOLATION OF SECTION 269SS SHOULD NOT BE THE S TARTING POINT FOR COUNTING THE DELAY IN INITIATION OF THE PENALTY PROCEEDINGS. IN THIS REGARD, HE READ OUT THE CONTENTS OF THE REMAND REPORT CITED ABOVE. AS PER THE DR, THE DELAY IF ANY, SHOULD START ONLY FROM THE DATE OF COMPLETION OF TH E RE-ASSESSMENT PROCEEDINGS DURING THE TIME THE SATISFACTION OF THE A.O. BECOME S CONCLUSIVE WITH REGARD TO THE SAID ALLEGED VIOLATION. IN TERMS OF INITIATION, THE PENALTIES BELONGS THE ITA NO.1378/PN/2009 P.R. ASSOCIATES, PUNE 6 POSTERITY OF THE ASSESSMENT. THEREFORE, THE RE-ASSE SSMENT WAS COMPLETED ON 18.12.2006 AND INITIATION OF THE PENALTY PROCEEDING S U/S 271D OF THE ACT ON 26.6.2007 ARE IN ORDER. THE VERY FACT THAT THIS PE NALTY PROCEEDINGS WERE COMPLETED WITHIN THE TIME PRESCRIBED IN CLAUSE (C) OF THE SECTION 275(1) OF THE ACT. THEREFORE, THE SAME IS IN ORDER. 12. WE HEARD BOTH THE PARTIES, PERUSED THE ORDERS O F THE REVENUE AND THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEES COUNSEL BEFORE US. WE TAKE UP THE ISSUES RAISED IN THE ADDITIONAL GROUND FIRST. THE SAID ISSUE RELATES TO IF THE DELAY OF 3 YEARS IN MATTERS OF INITIATION OF THE PENALT Y PROCEEDINGS U/S 271D OF THE ACT CONSTITUTES ORDINARY DELAY; AND THERE EXISTS LE GALLY SUSTAINABLE EXPLANATION FROM THE DEPARTMENT FOR THE SAID DELAY. ANCILLARY TO THE SAME, WE NEED TO DECIDE IF THE IMPUGNED PENALTY ORDER IS INVALID AND THEREF ORE, IT SHOULD BE QUASHED. TO ANSWER THE ABOVE, WE NEED TO EXAMINE THE LEGAL PROV ISIONS AND THE SETTLED LEGAL PROPOSITIONS ON THE MATTER. FIRST WE TAKE UP THE RE LEVANT LAW ON THE ISSUE AND FOR THIS WE PERUSED THE PROVISIONS OF SECTIONS 269SS, 2 71D AND 273B OF THE ACT. THEY ARE AS FOLLOWS. 269SS: NO PERSON SHALL,, TAKE OR ACCEPT FROM ANY OTHER PERSON () ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT, IF,- (A) THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGRE GATE AMOUNT OF SUCH LOAN AND DEPOSIT (B) . (C) IS TWENTY THOUSAND RUPEES OR MORE:.. 271D (1) IF A PERSON TAKES OR ACCEPTS ANY LOAN OR DEPOSIT IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS, HE SHALL BE LIABLE TO PAY, BY WAY OF PENALTY, A SUM EQUAL TO THE AMOUNT OF THE LOAN OR DEPOSIT SO T AKEN OR ACCEPTED; (2) ANY PENALTY IMPOSABLE UNDER THE SUB SECTION (1) SHALL BE IMPOSED BY THE JOINT COMMISSIONER . 273B NOTWITHSTANDING ANYTHING CONTAINED IN THE PR OVISIONS OF CLAUSE SECTION271D, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, ., FOR AN Y FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONA BLE CAUSE FOR THE SAID FAILURE 13. THE ABOVE PROVISIONS ARE CLEAR ON SOME OF THE I SSUES DISCUSSED IN THE PRECEDING PARAGRAPHS I.E. WHO SHALL IMPOSE THE PENA LTY, WHO SHALL DETERMINE THE CONTRAVENTION, WHAT CONSTITUTES THE CONTRAVENTIONS ETC. THE SAID PROVISIONS ARE CAPABLE OF THROWING LIGHT ON THE TIMING OF INITIATI ON OF THE IMPUGNED PENALTY. BUT UNFORTUNATELY, THE IMPUGNED ORDER IS NOT SPEAKING I N NATURE. THUS, THE IMPUGNED ORDER LACKS NOT ONLY THE DETERMINATION OF THE ISSUE BUT ALSO THE ADJUDICATION BY WAY OF SPEAKING ORDER IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (6 ) OF THE SECTION 250 OF THE ACT . 14. FURTHER, WE HAVE EXAMINED THE VARIOUS CITATIONS BROUGHT TO OUR NOTICE DURING THE HEARING PROCEEDINGS. SOME OF THE ARE NAR RATED AS UNDER. ITA NO.1378/PN/2009 P.R. ASSOCIATES, PUNE 7 1. IN GOVT. OF INDIA V. CITEDAL FINE PHARMACEUTICALS, MADRAS AND OTHERS REPORTED IN (1989) 3 SCC 483 = (2002-TIOL-68 0-SC-CX) RULED THAT IN THE ABSENCE OF ANY PERIOD OF LIMITATION IT IS SETTLED THAT EVERY AUTHORITY IS TO EXERCISE THE POWER WITHIN A R EASONABLE PERIOD. WHAT WOULD BE REASONABLE PERIOD, WOULD DEPEND UPON THE FACTS OF EACH CASE ..(PARA 6) 2 . ACIT (INV.) VS. KUM. A.B. SHANTHI 255 ITR 258 (SC): 13. IT IS IMPORTANT TO NOTE THAT ANOTHER PROVISION , NAMELY, S. 273B WAS ALSO INCORPORATED WHICH PROVIDES THAT NOTWITHSTANDI NG ANYTHING CONTAINED IN THE PROVISIONS OF S. 271D, NO PENALTY SHALL BE I MPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILUR E REFERRED TO IN THE SAID PROVISION IF HE PROVES THAT THERE WAS REASONABLE CA USE FOR SUCH FAILURE AND IF THE ASSESSEE PROVES THAT THERE WAS REASONABL E CAUSE FOR FAILURE TO TAKE A LOAN OTHERWISE THAN BY ACCOUNT-PAYEE CHEQUE OR ACCOUNT-PAYEE DEMAND DRAFT, THEN THE PENALTY MAY NOT BE LEVIED. THEREFORE, UNDUE HARDSHIP IS VERY MUCH MITIGATED BY THE INCLUSION OF S. 273B IN THE ACT. IF THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND IF FOR ANY REASON THE TAXPAYER COULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT-PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BONA FIDE REASONS, THE AUTHORITY VESTED WITH THE POWER TO IMPOSE PENALTY HAS GOT DISCRETION ARY POWER. IN THAT VIEW OF THE MATTER, WE DO NOT THINK THAT S. 269SS OR 271D OR THE EARLIER S. 276 DD IS UNCONSTITUTIONAL ON THE GROUND THAT IT WAS DRACONIAN OR EXPROPRIETORY IN NATURE. 3 . CHIMANRAM MOTILAL (P) LTD. VS. CIT 140 ITR 809 (BOM ): HOWEVER, WHETHER DELAY IN A GIVEN CASE IS INORDINA TE OR NOT AND WHETHER THE DELAY HAS BEEN PROPERLY EXPLAINED OR NOT WILL B E QUESTIONS OF FACT TO BE DETERMINED BY THE APPROPRIATE AUTHORITIES BEFORE WHOM THE CONTROVERSY FALLS FOR CONSIDERATION. THE QUESTIONS WHICH, THER EFORE, WILL HAVE TO BE DECIDED WHEN THE PENALTY PROCEEDINGS ARE CHALLENGED ON THE GROUND OF INORDINATE DELAY ARE, FIRSTLY, WHETHER THE DELAY IS INORDINATE , AND SECONDLY, WHETHER THERE IS ANY EXPLANATION TENDERED BY THE RE VENUE EXPLAINING THE INORDINATE DELAY. THEN IT APPEARS TO BE WELL ESTABLISHED THAT EVEN THOUGH THERE IS NO PRESCRIBED PERIOD OF L IMITATION, THE DELAY CAN ONLY BE A VERY RELEVANT FACTOR TO BE TAKEN INTO CON SIDERATION WHEN THE PROPRIETY OF THE ORDER OF PENALTY IS CALLED INTO QU ESTION. BISHESHWAR LALS CASE (1970) 76 ITR 653 (ALL) EXPLAINED & FOLLOWED; KRISHNA BHATTA VS. AGRL. ITO & ORS. (1981) 23 CTR (KER) 142: (1981) 13 2 ITR 21 (KER): TC 50R 600 RELIED ON. 4. KAREEMUL HAJAZI VS. STATE OF NCT OF DELHI & ORS. CRL. MA NO.13541/2010 IN CRL. A.NO.940/2010 DECIDED ON JAN 7, 2011 THIS BRINGS US TO THE POINT WHERE WE HAVE TO DECIDE AS TO WHETHER THE DELAY OF 23 DAYS OUGHT TO BE CONDONED OR NOT. WE F EEL THAT BECAUSE NO PERIOD OF LIMITATION HAD BEEN PRESCRIBED BY THE LEG ISLATURE AND THAT IT IS ONLY BY VIRTUE OF THIS DECISION THAT WE ARE INFERRI NG A REASONABLE PERIOD OF LIMITATION OF 60 DAYS FROM THE DATE OF THE ORDER AP PEALED FROM, IT WOULD NOT BE FAIR AND JUST IF THE VICTIMS APPEAL IS THROWN O UT ON THE POINT OF LIMITATION. THERE WAS SUFFICIENT REASON FOR THE AP PELLANT TO BE CONFUSED WITHIN REGARD TO THE PERIOD OF LIMITATION. APART F ROM ANYTHING ELSE, THIS GROUND ITSELF IS SUFFICIENT FOR US TO CONDONE THE D ELAY OF 23 DAYS IN THE FILING OF THIS APPEAL. AS A RESULT THIS APPLICATIO N IS ALLOWED. 5. STATE OF JHARKHAND & ORS ETC VS. SHIVAM COKE IND USTRIES, DHANBAD, ETC. 2011-TIOL-79-SC-MISC JHARKHAND VAT LIMITATION JUST BECAUSE THE STATU TE DID NOT PROVIDE FOR LIMITATION, PROVISIONS OF THE LIMITATION ACT CANNOT BE MADE APPLICABLE HOWEVER NO INDEFINITE PERIOD FOR DEMAND: IT IS A S ETTLED POSITION OF LAW THAT WHILE INTERPRETING A STATUTE, NOTHING COULD BE ADDED OR SUBTRACTED ITA NO.1378/PN/2009 P.R. ASSOCIATES, PUNE 8 WHEN THE MEANING OF THE SECTION IS CLEAR AND UNAMBI GUOUS. IF THE LEGISLATURE INTENDED TO PROVIDE FOR ANY PERIOD OF L IMITATION OR INTENDED TO APPLY THE SAID PROVISION OF ARTICLE 137 INTO SECTIO N 46(4), THE LEGISLATURE WOULD HAVE SPECIFICALLY SAID SO IN THE ACT ITSELF. WHEN THE LANGUAGE OF THE LEGISLATURE IS CLEAR AND UNAMBIGUOUS, NOTHING COULD BE READ OR ADDED TO THE LANGUAGE, WHICH IS NOT STATED SPECIFICALLY. TH EREFORE, SECTION 46(4) OF THE BFT ACT. IT IS TRITE THAT IF NO PERIOD OF LIMI TATION HAS BEEN PRESCRIBED, STATUTORY AUTHORITY MUST EXERCISE ITS JURISDICTION WITHIN A REASONABLE PERIOD. WHAT, HOWEVER, SHALL BE THE REASONABLE PER IOD WOULD DEPEND UPON THE NATURE OF THE STATUTE, RIGHTS AND LIABILIT IES THERE UNDER AND OTHER RELEVANT FACTORS. THREE YEARS PERIOD CANNOT BE SAID TO BE A VERY LONG PERIOD AND THE POWER WAS EXERCISED WITHIN A REASONA BLE PERIOD OF TIME. CIT VS. HARINAGAR SUGAR MILLS LTD. 176 ITR 289 (BOM ): ALTHOUGH THE INCOME-TAX PROCEEDINGS WERE EARLIER CO MPLETED, THEY WERE REOPENED AND THESE PROCEEDINGS (AFTER REOPENING) WE RE ALSO COMPLETED IN DECEMBER 1962. THEREAFTER, EXCESS PROFITS TAX ASSE SSMENT WAS SOUGHT TO BE REOPENED IN JULY 1976. THIS 13 TO 14 YEARS DELAY HAS NOT BEEN SATISFACTORILY EXPLAINED . THE EXPLANATIONS OFFERED HAVE NOT FOUND FAVOUR WITH THE TRIBUNAL AND DO NOT APPEAL TO US AL SO. IT IS TRUE THAT THERE IS NO PERIOD OF LIMITATION FIXED BY THE STATUTE BY THE APPROACH OF THIS COURT, ALTHOUGH INDICATED IN A MATTER INVOLVING PENALTY, M AY ALSO APPLY TO REOPENING OF EXCESS PROFITS TAX ASSESSMENTS. EXCES S PROFITS TAX IS A CHARGE DIFFERENT FROM THE ORDINARY RATE OF TAX. THE DIFFICULTIES WHICH MAY BE FACED BY AN ASSESSEE BY REASON OF SUCH DELAY CAN BE EASILY VISUALIZED. APART FROM THE TWO JUDGEMENTS OF THE BOMBAY AND KER ALA HIGH COURTS REFERRED TO BY THE TRIBUNAL IN ITS ORDER, SHRI DAST UR HAS ALSO DRAWN OUR ATTENTION TO SOME OBSERVATIONS IN BHARAT STEEL TUBE S LTD. VS. STATE OF HARYANA (1988) 3 SCC 478. THESE OBSERVATIONS ALSO SEEM TO SUGGEST THAT EVEN WHERE NO LIMIT IS PRESCRIBED FOR TAKING R ECOURSE TO A STATUTORY PROVISION, DELAY OR RATHER INORDINATE DELAY MAY BE AN ASPECT WHICH THE COURT CAN CONSIDER FOR QUASHING THE PROCEEDINGS. T HUS, THE APPROACH AS WELL AS THE FINAL CONCLUSION OF THE TRIBUNAL ARE IN ORDER AND DO NOT CALL FOR A REFERENCE. 15. THUS, TO SUM UP THE ISSUE, THE ASSESSEE STARTED COUNTING THE DELAY IN INITIATION OF THE PROCEEDINGS FROM THE DATE OF SEAR CH I.E. 29.7.2003, THE DATE ON WHICH DEPARTMENT HAS COME TO THE KNOWLEDGE OF THE V IOLATION OF THE PROVISIONS OF SECTION 269SS. THE A.O. REASONED OUT SAYING THA T PENALTY PROCEEDINGS CANNOT BE INITIATED MERELY FROM THE DATE OF KNOWLED GE OF THE SAID VIOLATION UNLESS THE SAID ALLEGATION OF VIOLATION IS PROPERLY SCRUTINIZED DURING THE RE- ASSESSMENT PROCEEDINGS, WHICH WAS COMPLETED ONLY ON 8.12.2006. THE INITIATION OF THE SAID PROCEEDINGS AFTER THE GAP OF 45 DAYS I. E. ON 23.1.2007, WILL NOT CONSTITUTE INORDINATE DELAY. ON THE OTHER HAND, TH E CIT(A) DID NOT GO INTO THIS ASPECT THAT FROM WHICH DATE THE INORDINATE DELAY SH OULD BE COMPUTED. HE MERELY EXPANDED THE PROVISIONS OF SECTION 275(1) AN D HELD THAT THE PENALTY PROCEEDINGS BE COMPLETED WITHIN THE PERIOD OF 6 MON THS AS PER THE STATUTE IS IN ORDER. FOR THIS HE RELIED ON THE JURISDICTIONAL HI GH COURT DECISION IN THE CASE OF CHIMANRAM MOTILAL PVT. LTD. VS. CIT 149 ITR 809 (BO M) FOR THE PROPOSITION THAT THE DELAY OF 6 YEARS FROM THE INITIATION TILL THE C ONCLUSION OF THE SAID PROCEEDINGS IS FOUND VALID. IN THE PROCESS, HE IMPOSED THE ISS UE FOR DETERMINATION AND DID ITA NO.1378/PN/2009 P.R. ASSOCIATES, PUNE 9 NOT ADJUDICATE THE LEGAL GROUND RAISED BY THE ASSES SEE IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION 6 OF THE SECTION 250 OF T HE ACT. 16. FROM THE ABOVE EXTRACTS FROM VARIOUS CITATIONS, IT IS CLEAR THAT, IN THE CIRCUMSTANCES OF NO EXPRESS PROVISION FOR PROCEEDIN GS TO COMMENCE, MORE SO WHEN THE TAXPAYERS IS HIT ADVERSELY, THERE IS A REQ UIREMENT OF FIXING OF REASONABLE PERIOD AND THE LENGTH OF THE PERIOD IS O UGHT TO BE CASE SPECIFIC AND IT DIFFERS FROM ONE CASE TO AS HELD BY THE APEX COURT. THERE IS NO DISPUTE ON THE FACT THAT THERE ARE NO EXPRESS PROVISIONS FOR INITIATION OF THE PROCEEDINGS U/S 271D OF THE ACT IN THE INSTANT CASE. FURTHER, IT I S ALSO CLEAR FROM THE ABOVE, THERE IS NEED FOR EXPLANATION FOR THE SAID DELAY IF IT CO NSTITUTES DELAY OR INORDINATE DELAY AND SUCH EXPLANATION HAS TO BE GIVEN BY THE PERSON OR AUTHORITY RESPONSIBLE FOR THE DELAY/INORDINATE DELAY. WHEN THIS IS THE SETTLE D LAW AT THE LEVEL OF THE APEX COURT, WE HAVE PERUSED THE ORDERS OF THE REVENUE FO R DETAILS OF DELAY OR INORDINATE DELAY OR EXPLANATION OF THE REVENUE ETC. THE REVENUE AUTHORITIES IN GENERAL, THE CIT(A) IN PARTICULAR HAS NOT DETERMINE D THE ISSUES PROPERLY AS CAN BE MADE OUT FROM THE IMPUGNED ORDER. CIT(A) CONSIDE RED THE DELAY FROM THE DATE OF INITIATION OF THE PENALTY PROCEEDINGS AND T HE CONCLUSION OF THE SAID PROCEEDINGS LEAVING THE CONTENTIOUS ISSUE OF WHY IN ITIATION IS NOT DONE FROM THE DATE OF SEARCH. THUS, THE CIT(A) SUSTAINED THE PENA LTY ERRONEOUSLY DETERMINED THE ISSUE AND ADJUDICATED THE SAME RELYING ON THE J UDGMENTS OF THE JURISDICTIONAL HIGH COURT REPORTED IN THE CASE OF CHIMANRAM MOTILA L (P) LTD. VS. CIT (SUPRA) AND LALTA PRASAD GOENKA 20 ITR 399 (BOM). THESE DE CISIONS RELATE TO THE DELAY BETWEEN THE INITIATION OF THE PENALTY PROCEED INGS AND LEVY OF PENALTY FINALLY. THESE DECISIONS DOES NOT RELATE TO THE ISSUE OF WHY NOT INITIATED AT THE TIME SEARCH ITSELF. TO THAT EXTENT, ORDER OF THE CIT(A) IS DEFICIENT AND NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 256 OF TH E ACT WHICH SAYS AS UNDER: THE ORDER OF THE COMMISSIONER (A) DISPOSING OF AN APPEAL SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION , THE DECISION THERE ON AND THE REASONS FOR THE DECISION. 17. THUS, IN OUR OPINION, THE CIT(A) HAS NOT DETERM INED OR ADJUDICATED THE ISSUE RAISED BEFORE HIM IN ACCORDANCE WITH THE ABOV E SAID PROVISIONS. IN SUCH CIRCUMSTANCES, THE IMPUGNED ORDER CANNOT BE DESCRIB ED AS A SPEAKING ONE. REGARDING THE NEED FOR A SPEAKING ORDER, IT IS A SE TTLED LAW THAT EACH AND EVERY APPEALABLE ORDER HAS TO BE A SPEAKING AND REASONED ORDER; SO THAT THE REASONS FOR TAKING A PARTICULAR DECISION OR DERIVING A PART ICULAR CONCLUSION ARE KNOWN. THE REASON IS THE SOUL OF THE LAW, IT BRINGS CLARITY IN THE ORDER AND GIVING REASONS IS A PART OF THE PRINCIPLES OF NATURAL JUSTICE. IT IS I MPERATIVE TO INTRODUCE THE REASONS IN THE ORDER AS HELD BY THE APEX COURT IN THE CASE OF SUGA RAM (8 SCC 641)(SC)(2008) AND ADOPTED BY THE JURISDICTIONAL HI GH COURT IN THE CASE OF M/S SHIVSAGAR VEG. RESTAURANT (ITA NO 144 OF 2006)(BOM) . IT IS ALSO EVIDENT FROM THE CONTENTS OF PARA 3.4 & 3.5 OF THE IMPUGNED ORDE R AND ALSO ORDERS OF THE ASSESSING OFFICER THAT THEY ARE DEFICIENT ON THE EX PLANATION FOR THE DELAY OF 3 ITA NO.1378/PN/2009 P.R. ASSOCIATES, PUNE 10 YEARS, IF DATE OF SEARCH IS CONSIDERED AS A STARTIN G POINT FOR COUNTING SUCH DELAY, OR 45 DAYS, IF DATE OF COMPLETION OF RE-ASSESSMENT IS CONSIDERED AS A STARTING POINT. IN EITHER CASE, THE ORDERS OF THE REVENUE D O NOT CONTAIN EXPLANATION FOR INITIATION. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT LEGAL ISSUES MUST BE SET ASIDE TO THE FILES OF THE CIT(A) WITH THE DI RECTION TO HIM TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING THE ABOVE REFERRED CITED D ECISIONS. THE CIT(A) SHALL ENDEAVOR TO BRING IN ANY EXPLANATIONS FOR THE SAID DELAY OF BOTH THE KINDS BEFORE PASSING A SPEAKING ORDER. ACCORDINGLY, THE LEGAL I SSUE IS SET ASIDE TO THE FILES OF THE CIT(A). 18. REGARDING THE MERITS OF THE REASONABLE CAUSE AN D THE SUSTAINING OF THE PENALTY IMPOSED BY THE AO, WE REFRAIN FROM ADJUDICA TING THE SAME AT THIS POINT OF TIME, WHERE THE LEGAL ISSUE IS STILL UNDER ADJUDICA TION. REASONS FOR THE SAME INCLUDE THE NEXUS OF THE OUTCOME ON THE SAID LEGAL ISSUE TO THAT OF THE MERITS OF THE IMPUGNED REASONABLE CAUSE AND ITS EFFECTS OF S USTAINING OF THE PENALTY. IN TOTO, WE SET ASIDE ALL THE ISSUES RAISED IN ALL THE GROUNDS/ADDITIONAL GROUNDS TO THE FILES OF THE CIT(A) FOR FRESH PROCEEDINGS. HE SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEES IN ACCO RDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, THE GROUNDS/ADDITION AL GROUNDS ARE SET ASIDE. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 4.11.2011. SD/- SD/- ( I.C. SUDHIR ) JUDICIAL MEMBER (D. K ARUNAKARA RAO ) ACCOUNTANT MEMBER PUNE, DATED THE 14 TH NOVEMBER, 2011 COPY OF THE ORDER IS FORWARDED TO : 1. THE M/S. P.R. ASSOCIATES, 594, SADASHIV PETH, PU NE-411 030 2. THE ACIT, CIRCLE(3), PUNE 3. THE CIT(A)II, PUNE 4. THE CIT CONCERNED 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE