MOHINDER TARNEJA, MUMBAI V. ITO 20(2)(2), MUMBAI

ITA 2286/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83870 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-10-2014
• Assessment Year: 1990-1991
• Appeal Filed On: 22-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Assessee Lawyers: S K MUTSADDI
• Keywords: Period of limitation; Competent authority; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI .. , , BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA , AM SR. NO. . / ITA NOS. / A.Y. 1. 2286/MUM/2011 1990-91 2. 2287/MUM/2011 1991-92 3. 2288/MUM/2011 1992-93 4. 2289/MUM/2011 1995-96 5. 2290/MUM/2011 1990-91 6. 2291/MUM/2011 1993-94 7. 2292/MUM/2011 1996-97 8. 2293/MUM/2011 1997-98 9. 2294/MUM/2011 1998-99 10. 2295/MUM/2011 1999-00 MOHINDER TARNEJA 102, CHETANA BUILDING, J. P. ROAD, ANDHERI (W), MUMBAI-400 058 / VS. ITO-20(2)(2), PIRAMAL CHAMBERS, PAREL, LALBAUG, MUMBAI-400 012 ./ ./PAN/GIR NO. AAAPT 2617 C ( /APPELLANT ) : ( !' / RESPONDENT ) # $ / APPELLANT BY : SHRI S. K. MUTSADDI !' # $ / RESPONDENT BY : SHRI VIVEK BATRA % &'( # )* / DATE OF HEARING : 01.10.2014 DATE OF ORDER : 08.10.2014 + / O R D E R PER BENCH: THIS IS A SET OF TEN APPEALS BY THE ASSESSEE DIRECT ED AGAINST THE COMMON ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-31, MUMBAI (CIT(A) FOR SHORT) DATED 14.01.2011, CONFIRMING THE LEVY OF PENALTY U/S. 271 (1)(C) OF THE INCOME TAX ACT, 1961 2 ITA NOS. 2286 TO 2295/MUM/2011 MOHINDER TARNEJA VS. ITO (THE ACT HEREINAFTER) VIDE SEPARATE ORDERS, I.E., FOR THE RELEVANT ASSESSMENT YEARS, OF EVEN DATE, BEING 29.04.2009. 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE A SSESSEE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE LEVY OF PENALTY IN THE INSTANT CASE SUFFERS FROM A FUNDAMENTAL DEFECT IN-A S-MUCH AS THE SAME STANDS IMPOSED WITHOUT AWAITING THE DISPOSAL OF THE ASSESSEES APP LICATION/S U/S.273AA TO THE COMPETENT AUTHORITY, BEING THE COMMISSIONER OF INCOME-TAX-20, MUMBAI (CIT FOR SHORT), MADE ON 24.04.2009 FOR ALL THE YEARS. A COPY OF THE SAID AP PLICATION WAS ALSO SUPPLIED TO THE ASSESSING OFFICER (A.O.), WHO HOWEVER PROCEEDED IN THE MATTER, LEVYING PENALTY FOR ALL THE YEARS VIDE ORDERS OF EVEN DATE, I.E., 29.04.200 9, PRESUMABLY AS THE PENALTY PROCEEDINGS WERE GETTING TIME BARRED (ON 30/4/2009) . THIS HAS, HOWEVER, CAUSED A SERIOUS PREJUDICE TO THE ASSESSEE IN-AS-MUCH AS THE IMMUNIT Y PROVIDED BY THE LAW U/S.273AA, FOR WHICH THE ASSESSEE HAS A GOOD CASE, COULD NOT BE AV AILED OF. ON BEING ENQUIRED OF THE STATUS OF THE APPLICATIONS U/S.273AA, IT WAS SUBMIT TED BY HIM THAT THE SAME REMAIN UN- DISPOSED TO DATE. FURTHER, EVEN ON MERITS, THE ASSE SSEE HAS A GOOD CASE IN-AS-MUCH AS THE PENALTY HAS BEEN LEVIED BY ESTIMATING THE INCOME, B ASED ON THE ASSESSEES ADMISSION BEFORE THE HONBLE SETTLEMENT COMMISSION. FIRSTLY, THE A.O. HAS NOT RESTRICTED HIMSELF TO THE SAID ADMISSION AND, SECONDLY, IT NEEDS TO BE AP PRECIATED THAT THE SAID ADMISSION WAS MADE WITH A VIEW TO SETTLE THE MATTER AND OUGHT NOT TO PREJUDICE THE ASSESSEES CASE, WHICH HAS TO BE NECESSARILY DECIDED ON THE BASIS OF THE MATERIAL ON RECORD. THE PROCEEDINGS BEFORE THE HONBLE SETTLEMENT COMMISSIO N CANNOT BE SAID TO BE A PART OF THE ASSESSMENT RECORD OR FOR THAT MATTER THE PROCEEDING S BEFORE THE INCOME-TAX AUTHORITY. ALSO, IT CANNOT BE LOST SIGHT OF THAT THE INCOME AS SESSED BY THE SETTLEMENT COMMISSION IS SAVED FROM ANY PANEL ACTION. THE FIRST APPELLATE AU THORITY HAS MERELY ENDORSED THE FINDINGS BY THE A.O., DISREGARDING THE ASSESSEES C ONTENTION MADE WITH REFERENCE TO THE NON DISPOSAL OF ITS APPLICATION/S U/S. 273AA. THE L D. AR WAS, HOWEVER, IN AGREEMENT TO THE MATTER BEING RESTORED BACK TO THE FILE OF THE A .O. FOR ADJUDICATION AFRESH AFTER THE 3 ITA NOS. 2286 TO 2295/MUM/2011 MOHINDER TARNEJA VS. ITO DISPOSAL OF THE ASSESSEES APPLICATION/S U/S.273AA BY THE LD. CIT, FOR WHICH NO TIME LIMIT STANDS PROVIDED BY THE STATUTE. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD, ON THE OTHER HAND, SUBMIT THAT THE TRIBUNAL, THOUGH WITHIN ITS POWERS TO SET ASIDE THE IMPUGNED PENALTY ON ANY GROUND/S, CANNOT SET-ASIDE THE ORDERS IMPOSING THE SAME WHERE THE PENALTY ORDER THAT MAY BE PASSED BY THE A.O. IN THE SET-ASIDE PROCEEDINGS IS NOT SAV ED BY LAW AS TO TIME LIMITATION. IN REJOINDER, THE LD. AR; THE LD. DR HAVING RAISED THE ISSUE OF TIME LIMITATION, WOULD SUBMIT THAT THE TRIBUNAL IS COMPETENT TO SET ASIDE ANY ORDER WHICH IS A SUBJECT MATTER OF APPEAL BEFORE IT FOR ANY REASON IT DEEMS PROPER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AND THAT THERE IS NO QUESTION OF THE PENA LTY BEING BARRED BY TIME ON THAT GROUND. PLACING SUCH A LIMITATION WOULD IN FACT TANTAMOUNT TO NEGATING OR CIRCUMSCRIBING THE POWER OF SET ASIDE AVAILABLE TO THE APPELLATE AUTHO RITY. RELIANCE WAS PLACED FOR THE PURPOSE ON THE DECISION IN THE CASE OF BOMBAY METRO VS. GOKAK PATEL VOLKAD LTD., JT. [1995] (1) SC 155-161, RELYING ON DIT VS. POORAN MALL & SONS [1974] 96 ITR 390 (SC). FURTHER, THE BAR OF SECTION 275 APPLIES ONLY WHERE THE ORDER OF PENALTY IS PASSED BY THE PRIMARY AUTHORITY, AND NOT TO THAT PASSED BY THE TR IBUNAL OR ON ITS DIRECTIONS, AS CLARIFIED IN THAKUR V. HARI PRASAD VS. CIT [1987] 167 ITR 603 (AP), PLACING A COPY OF THE SAID DECISION ON RECORD. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE FIRST QUESTION BEFORE US IS IF THE ASSESSEE HAD MOVED THE COMPETENT AUTHORITY, BEING THE LD. CIT, U/S.273AA IN TIME. THE RELEVANT APPLICATIONS, AS STATED, WERE FILED WITH THE OFFICE OF THE LD. CIT IN ALL THE CASES ON 24.04 .2009. A LETTER DATED 04.6.2012 (COPY ON RECORD) BY THE OFFICE OF THE CIT STATES THAT THE SA ID APPLICATION IS NOT AVAILABLE/TRACEABLE IN THAT OFFICE AND, FURTHER, THAT THE ACKNOWLEDGEME NT (OF THE APPLICATION) DOES NOT BEAR THE INITIALS OF THE TAPAL STAFF OR THE INWARD NUMBER. T HE LD. AR HAS FILED AN AFFIDAVIT DATED 15.07.2014, AVERRING THAT THE APPLICATION U/S.273AA DATED 23.04.2009 WAS FURNISHED WITH THE OFFICE OF THE CIT ON 24.04.2009. THAT HE HAD AC TUALLY VISITED THE OFFICE OF THE CIT ON 14.06.2012 AND 26.06.2012 FOR FOLLOW-UP IN THE MATT ER AND TO VERIFY THE ENTRIES IN THE 4 ITA NOS. 2286 TO 2295/MUM/2011 MOHINDER TARNEJA VS. ITO TAPAL REGISTER MAINTAINED BY THE SAID OFFICE, TO FI ND THAT THE APPLICATION DATED 23.04.2009 HAD BEEN ACTUALLY FILED ON 24.04.2009. THAT AS PER THE PRACTICE IN THE DEPARTMENT, INWARD NUMBER IS NOT PROVIDED ON ANY COMMUNICATION EXCEPT ON THE RECEIPT OF THE RETURN OF INCOME. THIS AFFIDAVIT, WHICH APPEARS TO HAVE BEEN FURNISHED AT THE INSTANCE OF THE TRIBUNAL, WAS TAKEN COGNIZANCE OF BY THE BENCH WHEN THE APPEALS CAME UP FOR HEARING LAST; THE TRIBUNAL NOTING AS UNDER (REFER ORDER SHE ET ENTRY DATED 16.07.2014)): THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 15.07.20 14 MENTIONING THAT APPLICATION U/S.273AA HAS BEEN FILED WITH THE CIT-2 0, MUMBAI ON 24.04.2009 WITH COPY TO A.O. THE DEPARTMENT IS DIRE CTED, THROUGH LD. DR, TO FILE COUNTER AFFIDAVIT IN THE MATTER. THE DEPART MENT IS, IN ADDITION TO ABOVE, REQUIRED TO FILE AND PRODUCE INWARD TAPAL RE GISTER. HEARING IS ADJOURNED TO 01.10.2014. BOTH PARTIES INFORMED. THE ORDER-SHEET CLEARLY REQUIRES THE LD. DR TO FILE A COUNTER AFFIDAVIT IN THE MATTER AS ALSO TO PRODUCE THE INWARD TAPAL REGISTER. NO COUNTER AF FIDAVIT OR AFFIDAVIT-IN-REPLY OR OTHERWISE REBUTTAL HAS, HOWEVER, BEEN FILED BY THE REVENUE. IN FAIRNESS, HOWEVER, WE MUST MENTION THAT THE LD. DR DID NOT BEFORE US DISP UTE THE FILING OF THE APPLICATION U/S.273AA BY THE ASSESSEE IN TIME, I.E., ON 24.04.2 009. UNDER THE CIRCUMSTANCES, WE CONSIDER THE ASSESSEE TO HAVE MOVED VALID APPLICATI ON/S U/S.273AA ON 24.04.2009 WITH THE COMPETENT AUTHORITY, I.E., THE OFFICE OF THE CI T. WE CONSIDER IT AS SO AS THE SAID PROVISION ONLY BARS AN APPLICATION AFTER THE LEVY O F PENALTY; THE OTHER CONDITIONS OF THE PROVISION, VIZ. ABATEMENT OF THE PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION, ETC. BEING APPARENTLY AND UNDISPUTEDLY SATISFIED IN THE PRESENT CASE. WE FURTHER FIND THAT THE ASSESSEE HAD DULY INFORMED THE A.O. OF THE SAME IN- AS-MUCH AS HE CANNOT PLEAD PREJUDICE IF HE HAD NOT DULY COMMUNICATED THE SAID FACT, I.E. , OF THE APPLICATION/S U/S.273AA HAVING BEEN MOVED BEFORE THE COMPETENT AUTHORITY, TO THE A .O. 3.2 THE NEXT QUESTION BEFORE US IS OF ANY LEGAL INF IRMITY, IF ANY, ATTENDING THE IMPOSITION OF THE PENALTY/S IN THE INSTANT CASE, I. E., IN VIEW OF THE NON-DISPOSAL OF THE ASSESSEES APPLICATION/S U/S.273AA, VALIDLY MADE. D ESPITE PERSUASIONS TO THE CONTRARY BY THE LD. AR, WE ARE UNABLE TO BRING OURSELVES TO AGR EE THEREWITH. THERE IS NO PROVISION IN 5 ITA NOS. 2286 TO 2295/MUM/2011 MOHINDER TARNEJA VS. ITO SECTION 275, WHICH GRANTS EXTENDED TIME (FOR THE LE VY OF PENALTY) WHERE THE ORDER PASSED IN THE PROCEEDINGS DURING THE COURSE OF WHICH THE P ENALTY PROCEEDINGS HAD BEEN INITIATED IS BEING CONTESTED BEFORE THE FIRST OR THE SECOND A PPELLATE AUTHORITY, FOR KEEPING THE PENALTY PROCEEDINGS IN ABEYANCE FOR WANT OF DISPOSA L OF AN APPLICATION U/S.273AA, OR SECTION 273A FOR THAT MATTER. THE TWO PROCEEDINGS A RE INDEPENDENT OF EACH OTHER, AND PERHAPS FOR THE REASON THAT, UNLIKE THE OUTCOME OF THE QUANTUM PROCEEDINGS, WHICH HAS A DIRECT BEARING ON THE LEVY OR OTHERWISE OF PENALTY, THE PROCEEDINGS U/S.273A/273AA STAND ON ALTOGETHER DIFFERENT FOOTINGS. RATHER, IF AND TO THE EXTENT THE ASSESSEE SEEKS IMMUNITY, ONE COULD ARGUE, AND UNDERSTANDABLY SO, OF THERE BE ING A TACIT CONCESSION TO BEING LIABLE TO PENALTY. AS SUCH, WE DO NOT CONSIDER THE PENALTY ORDERS AS BEING LEGALLY INFIRM IN-AS- MUCH AS THE A.O. WAS DUTY BOUND TO HAVE COMPLETED T HE PENALTY PROCEEDINGS, VALIDLY INITIATED, WITHIN THE STATUTORY TIME PERIOD THERE-F OR. 3.3 IT CANNOT AT THE SAME TIME BE DENIED THAT IN-A S-MUCH AS THE ASSESSEES APPLICATION U/S.273AA REMAINS UN-DISPOSED, HE STANDS PREJUDICED . FURTHER, THE NON-DISPOSAL OF THE APPLICATION, DESPITE LAPSE OF CONSIDERABLE TIME, CO ULD ALSO BE FOR THE REASON THAT THE PENALTY/S IN THE MATTER STANDS ALREADY IMPOSED, SO THAT THE ASSESSEES APPLICATION BECOMES UNFRUCTUOUS. THE ARGUMENT, APPEALING AT FIRST SIGHT , FAILS ON SCRUTINY. THIS IS FOR THE REASON, AS AFORE-STATED, THE PROVISIONS OF SECTION 273AA AND SECTION 271(1)(C) ARE INDEPENDENT OF EACH OTHER. IN OUR CONSIDERED VIEW, THEREFORE, THE LD. CIT SHOULD HAVE PROCEEDED IN THE MATTER, I.E., IN DECIDING ON THE A SSESSEES APPLICATION U/S.273AA ON MERITS, UNGUIDED AND UNINFLUENCED BY THE FACT THAT THE PENALTY STANDS ALREADY LEVIED AND, FURTHER, CONFIRMED BY THE FIRST APPELLATE AUTHORITY , EVEN AS STATED IN THE LETTER DATED 04.06.2012 (SUPRA) BY HIS OFFICE. IF IT IS A FIT CASE FOR GRANT OF IMMUNITY, AS CLAIM ED, WHAT VALUE, ONE MAY ASK, THE LEVY OF THE PENALTY ON MERI TS ? FURTHER, THE ASSESSEES CASE ON MERITS, AS SOUGHT T O BE MADE BEFORE US, ALSO APPEARS AS NOT WITHOUT MERIT AND REQUIRES CONSIDERATION. WE MAY THOUGH MENTION THAT THE APEX COURT IN POORAN MAL V. DIT (INV.) [1974] 93 ITR 505 (SC) EXPLAINED THAT IT IS THE 6 ITA NOS. 2286 TO 2295/MUM/2011 MOHINDER TARNEJA VS. ITO RELEVANCY OF THE EVIDENCE AND NOT ITS LEGALITY PER SE WHICH IS MATERIAL/CRUCIAL TO ITS ADMISSIBILITY UNDER THE INDIAN JURISPRUDENCE, INCLU DING THE PROCEEDINGS UNDER THE ACT. WE, ACCORDINGLY, ONLY CONSIDER IT PROPER UNDER THE CIRCUMSTANCES THAT THE MATTER IS RESTORED BACK TO THE FILE OF THE A.O. FOR CONSIDERA TION OF THE ASSESSEES CASE DE NOVO , I.E., AFTER THE DISPOSAL OF THE ASSESSEES APPLICATION/S U/S.273AA FOR THE RELEVANT YEARS. IN THIS REGARD, WE MAY ALSO CONSIDER THE QUESTION OF IMPOSI TION OF THE PENALTY BEING TIME BARRED, I.E., POST THE SAID RESTORATION. ON THE BASIS OF TH E ABUNDANT CASE LAW BEFORE US, WE ARE IN NO MANNER OF ANY DOUBT THAT THE APPREHENSION RAISED IN THIS REGARD BY THE LD. DR, VALID IN PRINCIPLE, IN VIEW OF THE LEGAL MAXIM THAT NO COURT OR TRIBUNAL, OR EVEN PUBLIC AUTHORITY FOR THAT MATTER, CAN BY ITS ACTION OR NON-ACTION PR EJUDICE THE CASE OF ANY PARTY BEFORE IT, IS MISPLACED. THE PENALTY ORDER/S THAT MAY BE PASSED B Y THE A.O. IN THE SET ASIDE PROCEEDINGS WOULD NOT BE SUBJECT TO THE TIME LIMITA TION AS PROVIDED U/S.275. THIS IS AS, AS EXPLAINED BY THE APEX COURT IN BOMBAY METRO VS. GOKAK PATEL VOLKAD LTD., JT. (SUPRA), THE PERIOD OF LIMITATION UNDER THE GENERAL LAW DOES NOT APPLY TO CONSEQUENTIAL ORDERS. AS SUCH, THERE BEING NO SPECIFIC TIME LIMITATION WITH REGARD THERETO, THERE IS NO REQUIREMENT OF LAW THAT THE CONSEQUENTIAL ORDER, GIVING EFFECT TO AN APPELLATE ORDER, MUST ALSO BE PASSED WITHIN THE STATUTORY PERIOD OF LIMITATION FO R THE ORIGINAL ORDER. DECISION 4. IN VIEW OF THE FOREGOING, WE DIRECT AS UNDER: A) THE RELEVANT PENALTY PROCEEDINGS FOR ALL THE YEARS UNDER REFERENCE ARE SET ASIDE BACK TO THE FILE OF THE A.O.; B) THE LD. CIT SHALL DISPOSE OF THE ASSESSEES APPLICA TION/S U/S.273AA FOR THE RELEVANT YEARS WITHIN A PERIOD OF NINETY (90) DAYS FROM THE RECEIPT OF THE COPY OF THIS ORDER BY HIS OFFICE, ON MERITS, PER A SPEAKING ORDER/S, A LLOWING THE ASSESSEE PROPER OPPORTUNITY FOR BEING HEARD IN THE MATTER; AND C) THE A.O., IN THE EVENT OF THE ASSESSEES APPLICATIO N/S BEING NOT GRANTED BY THE LD. CIT, SHALL FORTHWITH PROCEED WITH THE PENALTY PROCE EDINGS, AND ADJUDICATE THE SAME AFTER HEARING THE ASSESSEE, CONSIDERING HIS OB JECTIONS AS RAISED BEFORE HIM PER A SPEAKING ORDER/S AND IN ACCORDANCE WITH LAW. WE MAY FURTHER CLARIFY THAT WE HAVE NOT AND DO NOT PURPORT TO MAKE ANY OBSERVATION ON THE MERITS OF THE ASSESSEES CASE, WHICH WE HAVE IN FACT NOT CONSIDERED AT ALL, AND DOING 7 ITA NOS. 2286 TO 2295/MUM/2011 MOHINDER TARNEJA VS. ITO WHICH MAY RESULT IN PREJUDICING ITS CASE EITHER WAY . THE SOLE PREMISE AND PURPOSE OF THE SET ASIDE IS TO ENABLE THE ASSESSEE TO CLAIM IMMUNI TY, STATUTORILY PROVIDED U/S.273AA, I.E., ON MERITS, AND WHICH STANDS PRECLUDED IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AND THEREBY CAUSE TO REMOVE THE PREJUDICE CAUSED TO HIM THUS. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEALS ARE ALLOWE D FOR STATISTICAL PURPOSES. ,-). &/0,) # 1 2# 345 6 7 ' 8 ) # ) 9: ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 01, 2 014 AT THE CONCLUSION OF THE HEARING SD/- SD/- (I. P. BANSAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % ( MUMBAI; ;& DATED : 08.10.2014 '.&../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. % <) ( ) / THE CIT(A) 4. % <) / CIT - CONCERNED 5. ?'@A !)&B/ , * B/- , % ( / DR, ITAT, MUMBAI 6. AC0 D( / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , % ( / ITAT, MUMBAI