HAMID INDRAPURWALA, MUMBAI V. ITO 19(3)(2), MUMBAI

ITA 1736/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75754 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 06-01-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 13-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: S ATISH CHANDAK
• Section: 246

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . . , . . , BEFORE SHRI B R MITTAL, JM & SHRI B R BASKARAN , AM ./I.T.A. NO.1736/MUM/2012 ( ' ' ' ' ' '' ' / ASSESSMENT YEAR: 2001-02) HAMID INDRAPURWALA 15A DIAMOND PALACE RAMDAS MARG BANDRA (W) MUMBAI 50I / VS. THE INCOME TAX OFFICER 19(3)(2), MUMBAI ./PAN :AACP19369N ( % /APPELLANT ) ( &'% / RESPONDENT ) % ( / APPELLANT BY : SHRI SATISH CHANDAK &'% ( / RESPONDENT BY : SHRI SURENDRA KUMAR, DR ( + /DATE OF HEARING : 26.02.2014 ( + / DATE OF PRONOUNCEMENT : 28 FEB 2014 / O R D E R PER B R BASKARAN, AM : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 9.12.2011 PASSED BY THE LD CIT(A)-30 MUMBAI AND IT RELATES TO THE AY 2001-02. THE ASSESSEE IS QUESTIONING THE VALIDITY OF THE PENALTY ORDER PASSE D U/S 271B OF THE ACT. 2 THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E PENALTY ORDER PASSED BY THE AO U/S 271B OF THE ACT IS BARRED BY LIMITATION. HE SUBMITTED THAT THE AO ISSUED NOTICES TWO TIMES U/S 271B OF THE ACT. THE FIRST NO TICE ISSUED ON 6.10.2003 AND THE SECOND NOTICE WAS ISSUED ON 9.2.2004. HOWEVER, THE AO PASSED THE PENALTY ORDER SOMETIME AFTER 3.3.2006. HE SUBMITTED THAT THE PEN ALTY ORDER PASSED BY THE AO DOES NOT CONTAIN THE DATE; BUT IT SHOWS THAT THE AO SOUG HT APPROVAL FROM THE ADDL. CIT ON HAMID INDRAPURWALA 2 3.3.2006. INVITING OUR ATTENTION TO THE PROVISIONS OF SEC. 275(1)( C) OF THE ACT, THE LD AR SUBMITTED THAT THE PENALTY ORDER CANNOT BE PASSE D AFTER EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHI CH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED, OR SIX M ONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED , WHICHEVER PERIOD EXPIRES LATER. THE LD AR SUBMITTED THAT EVEN IF WE RECOGNIZE THE DATE OF SECOND NOTICE I.E. 9.2.2004, THE PENALTY ORDER SHOULD HAVE BEEN PASSED ON OR BEFORE 31.8.2004. SINCE PENALTY ORDER HAS BEEN PASSED BY THE AO ONLY IN 2006, THE LD AR S UBMITTED THAT IT IS BARRED BY LIMITATION. 3. ON THE CONTRARY, THE LD DR PLACED STRONG RELIANC E ON THE ORDER PASSED BY THE LD CIT(A). 4. WE HAVE HEARD THE RIVAL CONTENTION AND CAREFULLY PERUSED THE RECORDS. IN THE INSTANT CASE, THE FIRST NOTICE U/S 271B OF THE ACT WAS ISSUED ON 6.10.2003 AND THE SECOND NOTICE WAS ISSUED ON 9.2.2004 . HOWEVER, THE IMPUGNED PENALTY ORDER HAS BEEN PASSED AFTER 3.3.2006 I.E. ALMOST AFTER EXPIRY OF TWO YEARS FROM THE DATE OF 2ND NOTICE. WE NOTICE THAT THE AO HAS FURNISHED A REMA ND REPORT TO LD CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS, WHEREIN IT IS STAT ED THAT THE ASSESSMENT ORDER WAS PASSED ON 09-02-2003. THE ADDL. CIT, WHO FORWARDED THE REMAND REPORT, HAS EXPRESSED THE VIEW THAT THE PENALTY PROCEEDING IS N OT BARRED BY LIMITATION U/S 275(1)(A) OF THE ACT, SINCE IT WAS TAKEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD CIT(A) ALSO TOOK THE VIEW THAT THE PENALTY P ROCEEDINGS INITIATED U/S 271B IS LINKED WITH THE ASSESSMENT PROCEEDINGS AND SINCE TH E ORDER OF LD CIT(A) ON THE HAMID INDRAPURWALA 3 QUANTUM PROCEEDINGS WAS PASSED ON 8.3.2005, THE PEN ALTY PROCEEDINGS GET REVIVED AFTER THE RECEIPT OF APPELLATE ORDER OF LD CIT(A) I N QUANTUM PROCEEDINGS. ACCORDINGLY, HE HAS UPHELD THE PENALTY ORDER PASSED BY THE AO. 5. THE LIMITATION FOR IMPOSING PENALTY IS PRES CRIBED U/S 275 OF THE ACT. CLAUSE (A) AND CLAUSE (C) OF SEC. 275(1) OF THE ACT WHICH READ S AS UNDER: 275(1) NO ORDER IMPOSING A PENALTY UNDER THIS CHAP TER SHALL BE PASSED:- (A) IN A CASE WHERE THE RELEVANT ASSESSMENT O RDER OR OTHER ORDER IS SUBJECT MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) U NDER SECTION 246 OR SECTION 246A OR AN APPEAL TO THE APPELLATE TRIBUNAL UNDER SECTION 253, AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCE EDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITI ATED, ARE COMPLETED OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE APPELLATE TRI BUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER, WHICHEVER PERIO D EXPIRES LATER. (B). (C) IN ANY OTHER CASE, AFTER THE EXPIRY OF THE FINA NCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED, OR SIX MONTHS FROM T HE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED , WHICHEVER PERIOD EXPIRES LATER. IN OUR CONSIDERED VIEW, THE PENALTY PROCEEDING U/S 271B IS NOT ARISING OUT OF ASSESSMENT PROCEEDINGS AND IT CAN BE INITIATED INDE PENDENT OF ASSESSMENT PROCEEDINGS. HENCE, IN OUR VIEW, THE APPLICABLE PR OVISION IS ONLY CLAUSE (C) OF SEC. 275(1) OF THE ACT, AS PER WHICH THE PENALTY ORDER I S REQUIRED TO BE PASSED BEFORE THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDIN GS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE C OMPLETED, OR SIX MONTHS FROM THE HAMID INDRAPURWALA 4 END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES LATER. 4 IN THE INSTANT CASE, THE PENALTY PROCEEDINGS HAVE BEEN INITIATED ON 06.10.2003 AND ALSO AGAIN ON 09.02.2004. BUT THE PENALTY ORDE R HAS BEEN PASSED ONLY AFTER 03.03.2006 AND HENCE THE IMPUGNED PENALTY ORDER IS BARRED BY LIMITATION. EVEN, IF IS CONSIDERED FOR A MOMENT THAT THE PROVISIONS OF CLAU SE (A) IS APPLICABLE, THEN ALSO THE IMPUGNED ORDER IS BARRED BY LIMITATION, SINCE IT WA S PASSED AFTER EXPIRY OF ABOUT ONE YEAR FROM THE DATE OF THE ORDER OF LD CIT(A) PASSED IN THE QUANTUKM PROCEEDINGS. 5. ACCORDINGLY, WE FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT IT IS BARRED BY LIMITATION. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY ORDER PASSED U/S 271B OF THE ACT . 6 IN THE RESULT, THE APPEAL OF THE ASSESSES IS ALLO WED. / '/ ( ( ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEB 2014 . ( 28TH, FEB 2014 ( SD/- SD/- ( B R MITTAL ) ( B R BASKARAN ) / JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI; 6 DATED 28 TH , FEB 2014 . . ./ RAJ , SR. PS HAMID INDRAPURWALA 5 ( (( ( &7 &7 &7 &7 87 87 87 87 /COPY OF THE ORDER FORWARDED TO : 1. % / THE APPELLANT 2. &'% / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. 7 & , , / DR, ITAT, MUMBAI 6. ' / GUARD FILE. / BY ORDER, '7 & //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI