M/S MANLIFE TRADING PVT. LTD, MUMBAI V. JCIT (TDS), - 1(3), MUMBAI

ITA 2944/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1229 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 07-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAJIT V NAIR
• Keywords: Period of limitation; Initiation of penalty proceedings; Assessment record; TDS; Set aside
• Section: 201(1); 271E; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ) , D BENCH MUMBAI BEFORE SHRI RAJESH KUMAR , AM & SHRI PAVAN KUMAR GADALE , JM ITA NO. 2944 /MUM/ 20 19 ( ASSESSMENT YEAR : 2014 - 15 ) M/S. MANLIFE TRADING PVT. LTD., OFF. NO.105 - B, 65, KUSAL BHAVAN 5 T H KUMBHARWADA LANE MUMBAI 400 004 VS. JT. COMMISSIONER OF INCOME TAX (TDS) - 1(3) MUMBAI PAN/GIR NO. AAECM5805C (APPELLANT ) .. (RESPONDENT ) ITA NO. 2945 /MUM/ 2019 ( ASSESSMENT YEAR : 2014 - 15 ) SHRI KALPESH MANOHAR SANGHVI (PROPRIETOR: KMS INTERNATIONAL) SHO P NO.2, 65, KUSHAL BHAVAN 5 TH KUMBHARWADA MUMBAI 400 004 VS. JT. COMMISSIONER OF INCOME TAX (TDS) - 1(3) MUMBAI PAN/GIR NO. ATBPS3875K (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI NEELKANTH KHANDELWAL REVENUE BY SHRI SAJIT V. NAIR DATE OF HEARING 18 / 01 /202 1 DATE OF PRONOUNCEMENT 21 / 01 /202 1 ITA NO . 2944/MUM/2019 & 2945/MUM/2019 2 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE AFORESAID APPEAL S HAVE BEEN FILED BY TWO DIFFERENT ASSESSEE S AGAINST THE IMPUGNED ORDER DATED 07/02/2019, PASSED BY THE CIT(A) - 59 , MUMBAI, FOR THE ASSESSMENT YEAR 2014 - 15 . 2. THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS: - 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER U/S.271C OF THE ACT. 2 . THE APPELLANT CARVES LEAVE TO ADD AND AMEND THE GROUND S OF APPEAL. 3. ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND VIDE LETTER DATED 12/01/2021 WHICH IS REPRODUCED HEREUNDER: - 1 . THE JT. COMMISSIONER OF INCOME - TAX (TDS) - 1(3), MUMBAI (HEREINAFTER REFERRED TO AS THE ASSESSING OFFICER) ERRED IN LEVYING THE PE NALTY OF RS.73,84,430/ - UNDER SECTION 271C OF THE ACT. 3 . THE LD. AR SUBMITTED THAT THE ISSUE RAISED IN THE ADDITIONAL GROUND IS ARISING OUT OF THE ASSESSMENT ORDER AND IS ONLY A LEGAL ISSUE WHICH CAN BE RAISED AT ANY STAGE INCLUDING AT THE APPELLATE STAGE. THE LD. A R SUBMITTED THAT SINCE IS OF A LEGAL NATURE, ARISING OUT OF THE ASSESSMENT RECORD, THEREFORE, THE SAME MAY KINDLY BE ADMITTED BY PLACING RELIANCE ON THE DECISION OF NATIONAL THERMAL POWER CO. LTD., VS CIT REPORTED IN 229 ITR 383 (SC) . THE LD. AR P RAYED THAT THE ADDITIONAL GROUND MAY BE ADMITTED AND ADJUDICATED ACCORDINGLY. THE LD. DR ON THE OTHER ITA NO . 2944/MUM/2019 & 2945/MUM/2019 3 HAND STRONGLY OBJECTED TO THE PLEA OF THE ASSESSEE THAT THE ISSUE WAS NEVER RAISED BY THE AO BEFORE THE LD. CIT(A), THEREFORE, ASSESSEE SHOULD NOT BE ALLO WED TO R AKE UP THE ISSUE. 4 . AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE ISSUE RAISED BY THE ASSESSEE IS TO QUA THE PENALTY ORDER BEING BARRED BY LIMITATION U/S.275 (1)(C) OF THE ACT WHICH IS A LEGAL ISSUE AND THE FACTS OF THE SAID ISSUE ARE AVAILABLE ON ASSESSMENT RECORD S. WE FURTHER NOTE THAT THE ISSUE RAISED DOES NOT REQUIRE ANY FURTHER VERIFICATION OF FACTS AT THE LEVEL OF AO . WE ARE THEREFORE, INCLINED TO ADMIT THE SAME FOR ADJUDICATION KEEPING IN VIEW THE RATIO LAID DOWN BY THE APEX COURT IN THE C ASE OF NATIONAL THERMAL POWER CO. LTD., VS CIT REFERRED TO SUPRA. 6. THE LD. AR AT THE OUTSET SUBMITTED THAT THE PENALTY ORDER U/S.271(1)(C) PASSED BY THE AO DATED 30/09/2016 CLEARLY BARRED BY LIMITATION. THE LD. AR SUBMITTED THAT THE ASSESSMENT U/S.201 (1) & 201(1A) WAS PASSED BY THE AO (TDS) ON 29/02/2016 AND A COPY WAS FORWARDED TO THE JOINT COMMISSIONER OF INCOME TAX (TDS) RANGE 1 - (3), MUMBAI WITH THE REQUEST TO INITIATE PENALTY PROCEEDINGS U/S.271 C OF THE ACT 1961 . T HEREAFTER, THE JOINT COMMISSIONER OF INCOME TAX (TDS) 1(3) ISSUED A SHOW - CAUSE NOTICE DATED 11/04/2016 TO THE ASSESSEE AS TO WHY THE PENALTY OF A SUM EQUAL TO THE AMOUNT OF TAX WHICH THE ASSESSEE HAS FAILED TO DEDUCT AND DEPOSIT TAX SHOULD NOT BE LEVIED U/S.271C OF THE ACT AND THE PENALT Y WAS FINALLY IMPOSED OF RS.73,84,430/ - IN THE ORDER DATED 30/09/2016 PASSED U/S. 271C OF THE ACT . ACCORDING TO THE LD. AR, THE SAID ORDER OF PENALTY IS HOPELESSLY BARRED BY LIMITATION AS THE SAME HAS NOT BEEN PASSED WITHIN THE PERIOD OF LIMITATION AS PER T HE PROVISION OF SECTION 27 5 (1)(C) OF THE ACT. ITA NO . 2944/MUM/2019 & 2945/MUM/2019 4 7. THE LD. AR DREW THE ATTENTION ON THE PROVISION OF THE SAID SECTION AND SUBMITTED THAT NO ORDER IMPOSING PENALTY U/S 271C OF THE AT UNDER THIS CHAPTER SHALL BE PASSED 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. THE LD. AR SUBMITTED THAT THE PENALTY WAS INITIATED WITH THE PASSING OF THE ORDER U/S.201(1) / 201(1A) DATED 29/02/2016, THEREFORE, PERIOD OF LIMITATION HAS TO BE RECKONED FROM THE DATE OF THE SAID ORDER I. E . 29/02/2016 AND NOT FROM THE DATE OF SHOW - CAUSE NOTICE DATED 11/04/2016 ISSUED BY THE JCIT(TDS) . ACCORDING TO THE LD. AR, THE SAID PENALTY ORDER IS BARRED BY LIMITATION AS THE SAME HAS NOT BEEN PASSED WITHIN SIX MONTHS FROM 29/02/2016 OR ON EXPIRY OF FINANCIAL YEAR IN WHICH THE PROCEEDING DURING WHICH IMPOSIT ION OF PENALTY HAS BEEN INITIATED ARE CO MPLETED WHICHEVER EXPIRES LATER . IN THIS CASE, THE FINANCIAL YEAR IN WHICH THE ORDER U/S.201(1) 201(1A) WAS PASSED ENDED ON 31.3.2016 AND THEREFORE, EITHER IT SHOULD BE COMPLETED BEFORE 31/03/2016 OR WITHIN SIX MON THS FROM 29/02/2016. BEFORE US, THE PENALTY WAS INITIATED WITH THE ORDER PASSED U/S.201(1) & 201(1A) OF THE ACT 29.2.2016 . THE LD. AR RELIED ON THE HONBLE DELHI HIGH COURT DECISIONS JKD CAPITAL AND FINLEASE LTD(2015) 378 ITR 614 (DELHI) AND PCIT VS MAHESH W OOD PRODUCTS PVT LTD.(2017) 394 ITR 3 12 (DELHI) . THE L D. AR THEREFORE, PRAYED THAT THE PENALTY ORDER MAY KINDLY BE QUASHED AS BEING BARRED BY LIMITATION , AS HAS BEEN HELD BY THE HONBLE DELHI HIGH COURT IN THE AFORESAID TWO DECISIONS WHEREIN IT HAS BEEN HE LD THAT INITIATION OF PENALTY HAS TO BE TAKEN FROM THE DATE OF THE CONCERNED ORDER AND NOT FROM THE DATE OF SHOW - CAUSE NOTICE ISSUED BY THE ISSUING AUTHORITY. ITA NO . 2944/MUM/2019 & 2945/MUM/2019 5 8. THE LD. DR ON THE OTHER HAND STRONGLY OPPOSED THE CONTENTION S OF THE ASSESSEE QUA THE PENALTY ORDER BEING TIME BARRED AND SUBMITTED THAT THE SAME SHOULD BE RECKONED FROM THE DATE OF ISSUE OF SHOW - CAUSE NOTICE . THE DR SUBMITTED THAT I N THE PRESENT CASE, THE SHOW - CAUSE NOTICE WAS ISSUED ON 11/04/2016 AND THEREFORE, THE PENALTY ORDER WAS RIGHTLY PASS ED WITHIN THE LIMITATION ON 30/09/2016 AND PRAYED BEFORE THE BENCH THAT ADDITIONAL GROUND MAY PLEASE BE DISMISSED AS DEVOID OF ANY MERITS . 9. AFTER HEARING THE LD. DR AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT IN THIS CASE, UNDISPUTEDLY, THE PENALT Y PROCEEDINGS UNDER SECTION 271C OF THE ACT WERE RECOMMENDED BY THE AO(TDS) IN THE ORDER PASSED U/S.201(1) / 201(1A) OF THE ACT DATED 29/02/2016 TO THE JOINT COMMISSIONER OF INCOME TAX ( TDS ) - 1(3), MUMBAI FOR INITIATION OF PENALTY PROCEEDINGS U/S.271C OF T HE ACT. WE NOTE THAT A SHOW - CAUSE NOTICE WAS ISSUED BY THE JOINT COMMISSIONER OF INCOME TAX (TDS) ON 11/04/2016 AND PENALTY ORDER WAS FINALLY PASSED ON 30/09/2016. NOW THE ISSUE BEFORE IS WHETHER THE INITIATION OF PENALTY TAKES PLACE WITH PASSING OF THE O RDER U/S. 201(1) / 201(1A) ON 29/02/2016 OR WITH THE ISSUE OF SHOW - CAUSE NOTICE DATED 11/04/2016. WE HAVE PERUSED THE PROVISION S OF THE ACT CAREFULLY AND EVALUATED AND ANALYZED THE SAME IN THE LIGHT OF THE DECISION S CITED BY THE LD. AR SUPRA OF HONBLE DELHI HIGH COURT . THE HONBLE HIGH COURT HAS HELD THAT THE DATE OF INITIATION OF PENALTY IS TAKEN FROM DATE OF THE ORDER IN WHICH THE PENALTY HAS BEEN RECOMMENDED BY THE AO AND NOT FROM THE DATE OF SHOW - CAUSE NOTICE. THE HONBLE DELHI HIGH COURT IN THE CASE OF JKD CAPITAL AND FINLEASE LTD( SUPRA ) HAS HELD THAT NO PENALTY COULD BE LEVIED AFTER EXPIRY OF THE FINANCIAL YEAR IN WHICH QUANTUM PROCEEDINGS COMPLETED OR BEYOND SIX MONTHS FROM THE MONTH IN WHICH PENALTY PROCEEDINGS WERE INITIATED THOUGH THE DECI SION IS RENDERED IN THE CONTEXT OF SECTION 271E OF THE ACT. IN THE SUBSEQUENT DECISION IN ITA NO . 2944/MUM/2019 & 2945/MUM/2019 6 PCIT VS MAHESH WOOD PRODUCTS PVT LTD. THE HONBLE DELHI HIGH COURT HAS LAID DOWN THE SAME RATIO BY FLOWING THE EARLIER DECISIONS IN JKD CAPITAL AND FINLEASE LTD. (SU PRA) WHEREIN IT WAS HELD THAT THE ORDER PASSED WAS BARRED BY LIMITATION ON THE GROUND THAT INITIATION OF PENALTY HAS TO BE TAKEN FROM THE ORDER OF ASSESSING OFFICER AND NOT FROM THE DATE OF ISSUE OF SHOW NOTICE. WE, THEREFORE RESPECTFULLY FOLLOWING THE RAT IO LAID DOWN BY THE HONBLE DELHI COURT IN THE DECISIONS AS DISCUSSED ABOVE , SET ASIDE THE ORDER OF LD CIT(A) AND DIRE CT THE AO TO DELETE THE PENALTY. ACCORDINGLY, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED. 10. SINCE WE HAVE ALLOWED THE AD DITIONAL GROUND , THE OTHER GROUNDS RAISED BY THE ASSESSEE NEED NOT TO BE ADJUDICATED. ITA NO.2945/MUM/2019 (A.Y.2014 - 15) 11. THE ISSUE RAISED IN THIS APPEAL IS IDENTICAL TO ONE AS HAS BEEN DECIDED BY US IN ITA NO.2944/MUM/2019. IN THIS CASE, THE ORDER U /S.201(1) AND 201(1A) OF THE ACT WAS PASSED 05/03/2015 AND PENALTY ORDER WAS PASSED ON 30/09/2016 AND SHOW - CAUSE NOTICE WAS GIVEN ON 11/04/2016. THEREFORE, THE FACTS OF THIS CASE ARE QUITE SIMILAR TO ONE AS STATED BY US IN ITA NO.2944/MUM/2019 . T HEREFORE, OUR DECISION IN ITA NO. 2944/MUM/2019 RENDERED ABOVE SHALL APPLY , MUTATIS MUTANDIS , TO THIS APPEAL AS WELL. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO . 2944/MUM/2019 & 2945/MUM/2019 7 12. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 21 / 01 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( PAVAN KUMAR GADALE ) SD/ - ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 21 / 01 / 2021 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//