Shri Virupaxi Rachappa Wali., Belgaum V. Joint Commissioner of Income tax, Range-2, Belgaum

ITA 289/PAN/2013

• Counselvise Citation: 28924114 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BARTHAKUR
• Assessee Lawyers: V G KOTABAL ITP
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Question of law; Reasonable cause; Time period of passing order
• Section: 143(3); 260A; 246; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BABNSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 289/PNJ/2013 (ASST. YEAR : 200 9 - 1 0 ) SHRI VIRUPAXI RACHAPPA WALI , VS. J CIT, RANGE - 2, 3200/17, BUS STAND ROAD, BELGAUM. GOKAK. PAN NO. AAGPW 8746 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.G. KOTABAL - ITP DEPARTMENT BY : SHRI B. BARTHAKUR - D.R. DATE OF HEARING : 2 8 /0 8 /2014 . DATE OF PRONOUNCEMENT : 1 9 / 12 /201 4 . O R D E R PER D.T. GARASIA , J .M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A), BELGAUM DATED 0 2/0 8 /201 3 FOR THE A.Y. 2009 - 10 . 2. THE FOLLOWING GROUNDS ARE RAISED BY THE ASSESSEE : 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACTS. 2. THE CIT(A) HAS ERRED IN HOLDING THAT THE PENALTY ORDER U/S 271D OF THE JCIT IS WITHIN THE LIMITATION PERIOD PRESCRIBED U/S 275(C). 3. THE CIT(A) HAS ERRED IN HOLDING THAT THE ACTION OF THE JCIT IN PAS SING THE PENALTY ORDER AFTER AFFORDING AN OPPORTUNITY 2 OF BEING HEARD U/S 129 IS PERFECTLY VALID AND INCONFORMITY WITH THE LEGAL PROVISIONS OF THE ACT. 4. THE CIT(A) IS NOT CORRECT IN HOLDING THAT THE APPELLANT CANNOT CHALLENGE THE GROUND OF LIMITATION IN V IEW OF PROVISIONS OF SEC. 292BB. 5. WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL RELATING TO PERIOD OF LIMITATION, THE CIT(A) IS NOT JUSTIFIED THAT THE APPELLANT FAILED TO PROVE THAT THERE WAS A REASONABLE CAUSE FOR TAKING THE LOANS IN CASH. 6. THE APPELLANT CRAVES FOR LEAVE TO ADD, TO DELETE OR AMEND THE GROUNDS OF APPEAL AS MAY BE ADVISED. 7. FOR THESE AND OTHER GROUNDS OF APPEAL THAT MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE CIT(A) AS WELL AS PENALTY ORDER U/S 271D OF THE JCIT MAY KINDLY BE SET ASIDE IN THE INTEREST OF EQUITY AND NATURAL JUSTICE. 3. GROUND NO.1 IS GENERAL IN NATURE. GROUNDS NO. 2 & 3 ARE INTER - CONNECTED, THEREFORE, IT IS DISPOSED OF BY THIS COMMON ORDER. 4 . SHORT FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR THE A.Y. 2009 - 10 WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) ON 23/12/2011 BY THE INCOME TAX OFFICER, WARD - 1, GOKAK . WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THERE WERE DEPOSITS INTO THE BANK ACCOUNT OF THE ASSESSEE. AT THE TIME OF EXAMINATION OF SOURCES , THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS OBTAINED LOANS IN CASH FROM THE VARIOUS PERSONS ON VARIOUS DATES TOTALLING TO RS. 13,49,500 / - ON NUMBER OF OCCASIONS, THE DETAILS OF WHICH ARE AS UNDER: - 3 SL.NO. NAME FROM WHOM ACCEPTED DATE OF ACCEPTANCE AMOUNT ACCEPTED 01 CHANDRAYYA N HIREMATH ON VARIOUS DATES RS. 3,07,000 02 MEERASAB H. MULTANI ON VARIOUS DATES RS 3,17,000 03 LAXMAN H KONKANI & SMT. P.H. KONKANI ON VARIOUS DATES RS 1,57,000 04 SHIVABASU U HALLUR ON VARIOUS DATES RS 1,36,500 05 KALLAPPA B SAMBANNAVAR ON VARIOUS DATES RS 96,000 06 JAGADISH S SAMBANNAVAR ON VARIOUS DATES RS 74,000 07 GANGAPPA I IRAPANGOL ON VARIOUS DATES RS 40,000 08 FAKIRAPPA P BULLI ON VARIOUS DATES RS 50,000 09 MAHADEV S BHUJANNAVAR ON VARIOUS DATES RS 1,72,000 TOTAL RS 13,49,500 THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HA D TAKEN THE ABOVE AMOUNTS IN VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT AND IMPOSED THE PENALTY OF RS. 13,49,500/ - . 5. THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS CONFIRMED THE PENALTY . 6. THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER HAS LEVIED PENALTY ON THE GROUND THAT THE ASSESSEE HAS TAKEN MONEY IN CASH INSTEAD OF BY WAY OF CROSS ED CHEQUE OR DD AS PER THE PROVISIONS OF SEC. 269SS OF THE ACT. THE JCIT , RANGE - 2, BELGAUM INITIATED PENALTY PROCEEDINGS U/S 271D OF THE ACT BY ISSUING SHOW - CAUSE NOTICE F NO. 01/PEN/271D/2012 - 13 DATED 09/07/2012 AS TO WHY PENALTY UNDER SEC. 271D OF THE ACT SHOULD NOT BE LEVIED FOR VIOLATION OF PROVISIONS OF SEC. 269SS OF THE ACT. THE AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE JCIT ON 24/07/2012 AND REQUESTED FOR TIME TO SUBMIT A WRITTEN REPLY 4 AND THE ASSESSEE HAS SUBMITTED DETAILED REPLY ON 29/08/2012 SETTING OUT THE FACTS AND CIRCUMSTANCES UNDER WHICH THE ASSESSEE RECEIVED THE LOAN IN CASH AND REQUESTED TO WITHDRAW THE PENALTY PROCEEDINGS. THEREAFTER, THERE WAS A CHANGE IN THE INCUMBENT IN THE OFFICE OF THE JCIT , THE ASSESSEE WAS GIVEN ONE MORE OPPORTUNITY OF BEING HEARD IN THE MATTER AS PER SEC. 129 OF THE ACT . IN RESPONSE TO THE SAID LETTER , THE ASSESSEE APPEARED BEFORE THE JCIT AND REITERATED THE SAID SUBMISSIONS MADE EARLIER, HOWEVER THE JCIT HAS IMPOSED THE PENALTY U/S 271D OF THE ACT. THE LEARNED AR SUBMITTED THAT THE PENALTY PROCEEDINGS U/S. 271D WERE INITIATED BY THE J CIT, RANGE - 2, BELGAUM ON 09/07/2012 BY ISSU ING SHOW - CAUSE NOTICE AS PER SEC. 275(1)(C) . T HE LAST DATE FOR PASSING PENALTY ORDER WAS 31/01/2013 I.E. SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE PENALTY PROCEEDINGS WERE INITIATED . PENALTY ORDER U/S 271D HAS BEEN PASSED ON 12/12/2013 WHICH IS BARRED BY LIMITATION. AS PER SEC. 275 (1)(C) OF THE ACT, THE LIMITATION FOR INITIATION OF ACTION FOR IMPOSI TION OF PENALTY IS NOT IN THE COURSE OF SOME PROCEEDINGS , THE FIRST PART OF THIS S ECTION WOULD HAVE NO APPLICATION AND LIMITATION PRESCRIBED I N THE SECOND PART WHICH WOULD APPLY AND AS PER THIS SECTION, PENALTY PERIOD OF LIMITATION FOR INITIATION OF PROCEEDINGS U/S 275(1)(C) IS SIX MONTHS ONLY. THE LEARNED AR SUBMITTED BEFORE US THAT THE FIRST NOTICE IS ISSUED ON 09/07/2012, 5 THEREFORE, PENALTY ORDER SHOULD BE PASSED ON 31/01/2013 I.E. WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE PENALTY PROCEEDINGS W ERE INITIATED . IN THIS CASE , PENALTY PROCEEDINGS WERE INITIATED BY THE JCI T, RANGE - 2, BELGAUM , BUT THE JCIT , BELGAUM WAS CHANGE D AND ANOTHER JCIT HAD GIVEN NOTICE AND JCIT TAKEN 14 DAYS TIME TO PASS THE ORDER, THEREFORE, CIT(A) HAS EXCLUDED 14 DAYS TIME FOR PASSING THE PENALTY ORDER AND HE HAS EXCLUDED THIS TIME AND THAT THE PENALTY IS WITHIN THE TIME LIMIT AS PER SEC. 275(1)(C) OF THE ACT. THE KARNATAKA HIGH COURT - JURISDICTIONAL HIGH COURT IN THE CASE OF B.N. AMAR NATH VS. C OMMISSIONER OF INCOME TAX & ANOTHER ( 259 ITR 590 ) WHEREIN SIMILAR SITUATION HAS ARISEN AND THE HONBLE HIGH COURT HAS CONSIDERED SEC. 129 OF THE ACT AND THE HONBLE HIGH COURT HELD THAT AS PER SEC. 129 OF THE ACT, IF THE INCOME TAX ASSESSING OFFICER IS CHANGED AND IF THE NEW ASSESSING OFFICER INITIATED T HE PENALTY PROCEEDINGS AND IF THE ASSESSEE WAS GIVEN OPPORTUNITY OF REHEARING AND IF SUCH HEARINGS WAS GIVEN BY THE AUTHORITY THEN THE TIME TAKEN IN GIVING THE OPPORTUNITY TO THE ASSESSEE CAN BE COMPUTED FOR THE PURPOSE OF LIMITATION. IF THE ASSESSEE DID NOT MAKE ANY REQUEST AS PER SEC. 129 OF THE ACT AND IF THE DEPARTMENT ISSUED THE NOTICE SUO - MOTU AND IF THERE IS NO REQUEST BY THE ASSESSEE FOR REHEARING THEN THE LIMITATION CANNOT BE CONDONED AND THE MATTER IS CLEARLY BARRED BY LIMITATION. THE 6 HONBLE HI GH COURT HAS HELD THAT EXPLANATION TO SEC. 275 OF THE ACT CANNOT BE INVOKED BY THE DEPARTMENT UNILATERALLY TO COMPUTE THE PERIOD OF LIMI TATION OF ITS OWN WITHOUT THERE BEING ANY REQUEST FOR REHEARING BY THE ASSESSEE. THEREFORE, THIS CASE IS BARRED BY LIMITATION. 7. THE LEARNED DR RELIED UPON THE ORDER OF CIT(A). LEARNED DR SUBMITTED THAT IT IS UNDISPUTED FACT THAT PENALTY PROCEEDINGS WERE INITIATED U/S. 271D BY THE JCIT , RANGE - 2, BELGAUM ON 09/07/2012. AS PER THE PROVISIONS OF SEC. 275 (1)(C) OF THE ACT , THE LAST DATE OF PASSING THE ORDER WAS 31/01/2013, BUT THERE WAS A CHANGE IN INCUMBENT OF JCIT, RANGE - 2, BELGAUM IN THE MONTH OF JANUARY, 2013 AND THE ASSESSEE WAS GIVEN SHOW - CAUSE NOTICE AS PER SEC . 129 OF THE ACT AND OPPORTUNITY OF HEARING WAS GIVEN TO THE ASSESSEE AND THE NEW JCIT HAS TAKEN 14 DAYS TIME TO REHEAR THE MATTER I.E. FROM 22/01/2013 TO 04/02/2013 , THEREFORE THAT TIME IS EXTENDED BY 14 DAYS AND IF THAT TIME IS EXCLUDED, THE PENALTY ORDER IS WITHIN THE TIME. 8. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES . LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE , WE FIND THAT THIS PENALTY PROCEEDING HAS TO BE COMPLETED WITHIN SIX MONTHS FROM THE MONTH IN WHICH THE PENALTY PROCEEDINGS WERE INITIATED BY WAY OF NOTICE U/S. 275 OF THE ACT. WE REPRODUCE SEC. 275 WHICH READS AS UNDER: - 7 275. [(1)] NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL BE PASSED [( A ) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHER ORDER IS THE SUBJECT - MATT ER OF AN APPEAL TO THE [***] COMMISSIONER (APPEALS) UNDER 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 PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, 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 TRIBUNAL IS RECEIVED BY THE [ PRINCIPAL CHIEF COMMISSION ER OR ] CHIEF COMMISSIONER OR [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER, WHICHEVER PERIOD EXPIRES LATER : [ PROVIDED THAT IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHER ORDER IS THE SUBJECT - MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTION 246 OR SECTION 246A , AND THE COMMISSIONER (APPEALS) PASSES THE ORDER O N OR AFTER THE 1ST DAY OF JUNE, 2003 DISPOSING OF SUCH APPEAL, AN ORDER IMPOSING PENALTY SHALL BE PASSED BEFORE THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPL ETED, OR WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) IS RECEIVED BY THE [ PRINCIPAL CHIEF COMMISSIONER OR ] CHIEF COMMISSIONER OR [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER, WHICHEVER IS LATER;] ( B ) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHER ORDER IS THE SUBJECT - MATTER OF REVISION UNDER SECTION 263 [OR SECTION 264 ], AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH SUCH ORDER OF REVISION IS PASSED; ( C ) IN ANY OTHER CASE, AFTER THE EXPIRY OF THE FINANCI AL 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 THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES LATER. ] [(1A) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHER ORDER IS THE SUBJECT - MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTION 246 OR SECTION 246A OR AN APPEAL TO THE APPELLATE TRIBUNAL UNDER SECTION 253 OR AN APPEAL TO THE HI GH COURT UNDER SECTION 260A OR AN APPEAL TO THE SUPREME COURT UNDER SECTION 261 OR REVISION UNDER SECTION 263 OR SECTION 264 AND AN ORDER IMPOSING OR ENHANCING OR REDUCING OR CANCELLING PENALTY OR DROPPING THE PROCEEDINGS FOR THE 8 IMPOSITION OF PENALTY IS PASSED BEFORE THE ORDER OF THE COMMISSIONER (APPEALS) OR THE APPELLATE TRIBUNAL OR THE HIGH COURT OR THE SUPREME COURT IS RECE IVED BY THE [ PRINCIPAL CHIEF COMMISSIONER OR ] CHIEF COMMISSIONER OR THE [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER OR THE ORDER OF REVISION UNDER SECTION 263 OR SECTION 264 IS PASSED, AN ORDER IMPOSING OR ENHANCING OR REDUCING OR CANCELLING PENALTY OR DROPPING THE PROCEEDINGS FOR THE IMPOSITION OF PENALTY MAY BE PASSED ON THE BASIS OF ASSESSMENT AS REVISED BY GIVING EFFECT TO SUCH ORDER OF THE COMMISSIONER (APPEALS) OR, THE APPELLATE TRIBUNAL OR THE HIGH COURT, OR THE SUPREME COURT OR ORDER OF REVISION UNDER SECTION 263 OR SECTION 264 : PROVIDED THAT NO ORDER OF IMPOSING OR ENHANCING OR REDUCING OR CANCELLING PENALTY OR DROPPING THE PROCEEDINGS FOR THE IMPOSITION OF PENALTY SHALL BE PASSED ( A ) UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD; ( B ) AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) OR THE A PPELLATE TRIBUNAL OR THE HIGH COURT OR THE SUPREME COURT IS RECEIVED BY THE [ PRINCIPAL CHIEF COMMISSIONER OR ] CHIEF COMMISSIONER OR THE [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER OR THE ORDER OF REVISION UNDER SECTION 263 OR SECTION 264 IS PASSED: PROVIDED FURTHER THAT THE PROVISIONS OF SUB - SECTION (2) OF SECTION 274 SHALL APPLY IN RESPECT OF THE ORDER IMPOSING OR ENHANCING OR REDUCING PENALTY UNDER THIS SUB - SECTION.] [(2) THE PROVISIONS OF THIS SECTION AS THEY STOOD IM MEDIATELY BEFORE THEIR AMENDMENT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 (4 OF 1988), SHALL APPLY TO AND IN RELATION TO ANY ACTION INITIATED FOR THE IMPOSITION OF PENALTY ON OR BEFORE THE 31ST DAY OF MARCH, 1989.] [ EXPLANATION. IN COMPUTING THE PERIO D OF LIMITATION FOR THE PURPOSES OF THIS SECTION, ( I ) THE TIME TAKEN IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 ; ( II ) AN Y PERIOD DURING WHICH THE IMMUNITY GRANTED UNDER SECTION 245H REMAINED IN FORCE; AND ( III ) ANY PERIOD DURING WHICH A PROCEEDING UNDER THIS CHAPTER FOR THE LEVY OF PENALTY IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT, SHALL BE EXCLUDED.]] 9 IN THE INSTANT CASE, SEC. 129 OF THE ACT IS ALSO APPLICABLE, THEREFORE, WE REPRODUCE THE PROVISIONS OF SEC. 129 WHICH READS AS UNDER: - 129. WHENEVER IN RESPECT OF ANY PROCEEDING UNDER THIS ACT AN INCOME - TAX AUTHORITY CEASES TO EXERCISE JURISDICTION AND IS SUCCEEDED BY ANOTHER WHO HAS AND EXERCISES JURISDICTION, THE INCOME - TAX AUTHORITY SO SUCCEEDING MAY CONTINUE THE PROCEEDING FROM THE STAGE AT WHICH THE PROCEEDING WAS LEFT BY HIS PREDECESSOR : PROVIDED THAT THE ASSESSEE CONCERNED MAY DEMAND THAT BEFORE THE PROCEEDING IS SO CONTINUED THE PREVIOUS PROCEEDING OR ANY PART THEREOF BE REOPENED OR THAT BEFORE ANY ORDER OF ASSESSMENT IS PASSED AGAINST HIM, HE BE REHEARD. 9. I N THE INSTANT CASE, IT IS UNDISPUTED FACT THAT AS PER THE ORDER OF CIT(A) AT PAGE NOS. 18 & 19 WHEREIN IT IS SPECIFICALLY MENTIONED THAT PENALTY PROCEEDINGS HAS BEEN INITIATED ON 09/07/2012 AND THE PENALTY PROCEEDINGS SHOULD HAVE BEEN CONCLUDED ON OR BEFORE 31/01/2013 AS THE PERIOD OF LIMITATION OF SIX MONTHS UNDER SEC. 275(1)(C) WOULD END O N THAT DATE. THE PENALTY ORDER HAS BEEN PASSED ON 12/02/2013. AS PER THE ASSESSING OFFICER, THE JCIT WAS CHANGED AND NEW JCIT , RANGE - 2, BELGA UM HAS ASSUMED THE CHARGE IN THE MONTH OF JANUARY 2013, THE NEW JCIT INCUMBENT HAS GIVEN OPPORTUNITY TO THE ASSESSEE BY ISSUING A LETTER DATED 22/01/2013 AND THE ASSESSEE WAS REHEARD ON 04/02/2013. AS PER THE RECORD, THE DEPARTMENT HAS ISSUED SUO - MOTU NOTICE TO THE ASSESSEE ON 22/01/2013 AND THE MATTER WAS HEARD ON 04/02/2013. LEARNED DR HAS ALSO VERIFIED FROM THE PENAL TY PROCEEDINGS RECORD AND 10 HE FOUND THAT THE ASSESSEE HAS NOT REQUESTED THE JCIT , RANGE - 2, BELGAUM FOR REHEARING THE PEN ALTY PROCEEDING S. WE FIND THAT THE DEPARTMENT HAS SUO - MOTU ISSUED A NOTICE ON 21/01/2013 AND THE ASSESSEE WAS HEARD ON 04/02/2013. THE QUESTION HAS TO BE DECIDED WHETHER AS PER SEC. 275 OF THE ACT, TIME TAKEN FOR PASSING THE PENALTY ORDER IN WHICH THE LIMITATION PERIOD EXPIRED ON 31/01/2013 GET EXTENDED BY 14 DAYS AS THE JCIT HAS ISSUED A LETTER DATED 22/01/2013 AND REHEARD THE ASSESSEE ON 04/02/2013. WHETHER AS PER THE COMMISSIONERS ORDER, THE PERIOD OF LIMITATION GET EXTENDED BY 14 DAYS OR NOT? WE HAVE GONE T HROUGH THE HONBLE KARNATAKA HIGH COURT - JURISDICTIONAL HIGH COURT IN THE CASE OF B.N. AMARNATH VS. COMMISSIONER OF INCOME TAX & ANOTHER ( 259 ITR 590 ) WHEREIN HIGH COURT HAS IN HIS OWN WORDS HAS DISCUSSED THE PROVISIONS OF SECS. 275(1)(C) AND 129, WHICH REA D AS UNDER: - THE MAIN CONTENTION OF THE PETITIONER BEFORE THIS COURT IS THAT THE ORDER PASSED BY R - 2 AS PER ANNEXURE B LEVYING PENALTY OF RS. 25,442 ON OCTOBER 4, 2000, AS PER ANNEXURE B WAS CLEARLY BARRED BY TIME AND, THEREFORE, THE ORDER PASSED BY R - 2 HAS TO BE SET ASIDE. THE PETITIONER HAS ALSO RAISED AN IMPORTANT QUESTION OF LAW WHETHER THE EXPLANATION TO SECTION 275 OF THE ACT CAN BE MADE USE OF BY THE DEPARTMENT TO SAVE THE LIMITATION WHEN THE ASSESSEE HAS NOT REQUESTED THE DEPARTMENT TO REHEAR THE MATTER UNDER THE PROVISO TO SECTION 129 OF THE ACT. BEFORE THE COMMISSIONER THE PETITIONER HAS MAINLY QUESTIONED THE CORRECTNESS OF THE ORDER PASSED BY R - 2 AS PER ANNEXURE B CONTENDING THAT NO PENALTY CAN BE LEVIED BY R - 2 BEYOND SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED. 11 LEARNED COUNSEL FOR THE PETITIONER HAS RELIED UPON SECTION 275(1)(C) OF THE ACT WHICH READS AS HEREUNDER: IN ANY OTHER CASE, AFTER THE EXPIRY OF THE FINANCIAL 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 THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES LATER. FROM THIS PROVISION, IT IS CLEA R THAT PENALTY CAN BE IMPOSED WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED IT IS NOT IN DISPUTE THAT THE FINANCIAL YEAR COMES TO AN END ON MARCH 31, 2000, EVEN THOUGH THE ASSESSMENT IN RESPECT OF THE PE TITIONER WAS COMPLETED ON MARCH 23, 2000. IF THE AUTHORITIES ARE INTENDING TO IMPOSE ANY PENALTY IN THE CASE OF THE PETITIONER, THEY HAVE TO LEVY THE SAME UNDER SECTION 271(1)(C) OF THE ACT WITHIN SIX MONTHS FROM MARCH 31, 2000. IN THE INSTANT CASE, PENALT Y HAS BEEN IMPOSED BEYOND SIX MONTHS FROM MARCH 31, 2000, AND THAT THERE IS A DELAY OF FOUR DAYS. THE DEPARTMENT HAS MADE AN ATTEMPT TO SUPPORT THE ORDER PASSED BY R - 2 BY RELYING UPON THE PROVISIONS OF SECTION 129 OF THE ACT. TO SUPPORT THE CONTENTION OF T HE DEPARTMENT, LEARNED COUNSEL FOR THE DEPARTMENT HAS RELIED UPON THE EXPLANATION TO SECTION 275 OF THE ACT. EXPLANATION TO SECTION 275 OF THE ACT READS HEREUNDER: EXPLANATION -- IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF THIS SECTION, - (I) T HE TIME TAKEN IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129; (II) ANY PERIOD DURING WHICH THE IMMUNITY GRANTED UNDER SECTION 245H REMAINED IN FORCE; AND (III) ANY PERIOD DURING WHICH A PROCEEDING UNDER THIS CHAPTER FOR THE LEVY OF PENALTY IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT, SHALL BE EXCLUDED. IT IS CLEAR FROM THE EXPLANATION TO SECTION 275 OF THE ACT THAT THE ASSESSEE IS ENTITLED TO SEEK AN OPPORTUNITY FOR REHEARING UNDER THE PROVISO TO SECTION 129 OF THE ACT. FROM THIS IT IS CLEAR THAT IF THERE IS 12 ANY APPLICATION OR A REQUEST IS MADE BY THE ASSESSEE TO PROVIDE HIM AN OPPORTUNITY FOR REHEARING AND IF SUCH REHEARING IS GIVEN BY THE AUTHORITIES, THEN THE TIME TAKEN IN GIVING OPPORTUNITY TO THE ASSESSEE C AN BE COMPUTED FOR THE PURPOSE OF LIMITATION. THEREFORE, IT IS CLEAR WHETHER THIS PROVISO CAN BE MADE USE OF TO COMPUTE THE PERIOD OF LIMITATION EVEN WITHOUT THERE BEING ANY REQUEST BY THE ASSESSEE AND AT THE INSTANCE OF THE DEPARTMENT. IT IS NOT IN DISPUT E THAT NOTICE UNDER SECTION 129 OF THE ACT HAS ALSO BEEN ISSUED BY THE INCOME - TAX OFFICER. BUT UNFORTUNATELY, THE SAID NOTICE WAS NOT ISSUED AT THE INSTANCE OF THE PETITIONER. THE PETITIONER AT NO POINT OF TIME HAS REQUESTED THE AUTHORITIES TO PROVIDE HIM AN OPPORTUNITY OF REHEARING. BUT THE DEPARTMENT ON ITS OWN WENT ON ISSUING NOTICES UNDER SECTION 129 OF THE ACT. IF THE DEPARTMENT ON ITS OWN HAS ISSUED NOTICE ONE AFTER THE OTHER AND WHEN THERE IS NO REQUEST MADE BY THE ASSESSEE FOR REHEARING, WHETHER THE DEPARTMENT CAN LEVY PENALTY BY RELYING UPON THE EXPLANATION TO SECTION 275 OF THE ACT FROM MARCH 31, 2000. THE RESPONDENTS ARE NOT IN A POSITION TO CONVINCE THIS COURT THAT THERE WAS AN ATTEMPT MADE BY THE PETITIONER REQUESTING THE DEPARTMENT TO PROVIDE H IM AN OPPORTUNITY OF REHEARING. WHEN THERE IS NO REQUEST BY THE PETITIONER, THE DEPARTMENT ON ITS OWN CANNOT TAKE SHELTER TO CONDONE THE LAPSES OF THE DEPARTMENT AND LEVY PENALTY BEYOND SIX MONTHS FROM MARCH 31, 2000. THEREFORE, IT IS CLEAR THAT THE DEPART MENT HAS COMMITTED AN ERROR IN LEVYING PENALTY AS PER ANNEXURE B, DATED OCTOBER 4, 2000, WHICH IS CLEARLY BARRED BY LIMITATION BY FOUR DAYS. IT IS ALSO CLEAR FROM THE ABOVE DISCUSSION THAT THE EXPLANATION TO SECTION 275 CANNOT BE INVOKED BY THE DEPARTMENT UNILATERALLY TO COMPUTE THE PERIOD OF IMITATION ON ITS OWN WITHOUT THERE BEING ANY REQUEST FOR REHEARING BY ANY ASSESSEE. THEREFORE, THE ORDER PASSED BY R - 2 WHICH HAS BEEN CONFIRMED BY R - 1 AS PER ANNEXURE C IS MISCONCEIVED AND THE ORDER PASSED BY R - 2 AS PE R ANNEXURE B IS CLEARLY BARRED BY LIMITATION AND THE SAME IS REQUIRED TO BE QUASHED. 10. SO, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT , WE FIND THAT THE PENALTY PROCEEDING HAS BEEN INITIATED ON 09/07/2012 AND THE PENALTY ORDER SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31/01/2013 AS THE LIMITATION PERIOD OF SIX MONTHS U/S . 275(1)(C) 13 OF THE ACT ENDS ON THAT DATE. P ENALTY ORDER HAS BEEN PASSED ON 12/02/201 3 IS BARRED BY LIMITATION, HENCE, WE REVERSE THE FINDING OF THE CIT(A) AND ALLOW THE APPEAL . 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ( ORDER PRONOUNCED IN THE COURT ON 1 9 T H DECEMBER , 201 4 ) S D / - S D / - (P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 9 T H DECEMBER , 201 4 . VR/ - COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI