P. Ramesh Kumar, Namakkal V. ACIT, Salem

ITA 3132/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4331 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 01-06-2017
• Assessment Year: 1997-1998
• Appeal Filed On: 10-11-2016
• Court: TRIBUNAL
• Department Lawyers: MRS SUMATHI VENKATRAMAN
• Assessee Lawyers: G BASKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , ! . , ' BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER , AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS. 3132, 3133, 3134, 3135 & 3136/MDS/2016 /ASSESSMENT YEARS: 1997-98, 1998-99, 1999-00, 2001- 02 & 2002-03 SHRI P. RAMESH KUMAR, 129-C-7, SALEM ROAD, NAMAKKAL-637 001. VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL RANGE, 67-A, RACE COURSE ROAD, COIMBATORE-18. [PAN: ADPPR 8882 F ] ( & /APPELLANT) ( '(& /RESPONDENT) & ) / APPELLANT BY : MR.G.BASKAR, ADV. '(& ) /RESPONDENT BY : MRS.SUMATHI VENKATRAMAN, JCIT ) /DATE OF HEARING : 01.06.2017 ) /DATE OF PRONOUNCEMENT : 01.06.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NOS.3132, 3133, 3134, 3135 & 3136/MDS/2016 ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSI ONER OF INCOME TAX (APPEALS), SALEM, IN ITA NO.258/2009-10 DATED 24.10 .2016 FOR THE AY 1997-98, ITA NO.259/2009-10 DATED 24.10.2016 FOR TH E AY 1998-99, ITA NO.260/2009-10 DATED 24.10.2016 FOR THE AY 1999-200 0, ITA ITA NO.3132 TO 3136/MDS/2016 :- 2 -: NO.261/2009-10 DATED 24.10.2016 FOR THE AY 2001-02 & NO.262/2009-10 DATED 24.10.2016 FOR THE AY 2002-03 RESPECTIVELY. 2. MRS. SUMATHI VENKATRAMAN, JCIT REPRESENTED ON BE HALF OF THE REVENUE AND SHRI G. BASKAR, ADV. REPRESENTED ON BEH ALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LD.AR THAT DURING THE CO URSE OF ASSESSMENT THE AO HAD NOTICED THAT THE ASSESSEE HAS ACCEPTED C ASH LOANS IN EXCESS OF RS.20,000/- VIOLATING THE PROVISIONS OF SEC.269 SS OF THE ACT. IT WAS A SUBMISSION THAT THE ASSESSMENT ORDER WAS PASSED BY THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. IT WAS A SUBMISSION THAT THE SHOW CAUSE NOTICE FOR LEVY OF PENALTY U/S. 271D WAS ISSUED BY THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SAL EM ON 26.03.2006 FOR ALL THE ASSESSMENT YEARS UNDER APPEAL. IT WAS A SU BMISSION THAT CONSEQUENTLY UNDER THE PROVISIONS OF SEC.275(I)(C), THE LIMITATION FOR COMPLETION OF THE PENALTY PROCEEDINGS WAS 30.09.200 6. IT WAS A SUBMISSION THAT HOWEVER ON 26.07.2006 FRESH SHOW CA USE NOTICE WAS ISSUED BY THE ADDL. COMMISSIONER OF INCOME TAX, CEN TRAL RANGE, COIMBATORE AND THE ASSESSEE HAD REPLIED TO THE SAME WITH A LETTER DATED 16.08.2006 AND THE PENALTY CAME TO BE LEVIED BY ADD L. COMMISSIONER OF INCOME TAX, CENTRAL RANGE, COIMBATORE ON 31.01.2007 . IT WAS A SUBMISSION THAT THE PENALTY ORDER PASSED BY THE ADD L. COMMISSIONER OF INCOME TAX, CENTRAL RANGE, COIMBATORE ON 31.01.2007 WAS BARRED BY LIMITATION IN SO FAR AS THE SHOW CAUSE NOTICE HAD A LREADY BEEN ISSUED ON ITA NO.3132 TO 3136/MDS/2016 :- 3 -: 26.03.2006 BY THE DY. COMMISSIONER OF INCOME TAX, C ENTRAL CIRCLE, SALEM. IT WAS A SUBMISSION THAT AS PER THE PROVISI ONS OF SEC.271D PENALTY WAS IMPOSED UNDER SUB-SECTION 1 ONLY BY THE JOINT COMMISSIONER AND AS PER THE DEFINITION CLAUSE OF 2(28C), JOINT C OMMISSIONER INCLUDED THE ADDL.CIT. IT WAS A SUBMISSION THAT THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF HISSARIA BROS. REPORTED IN 291 ITR 2 44 HAS HELD THAT IF THE SHOW CAUSE NOTICE IS ISSUED BY THE AO THEN THE PERI OD OF SIX MONTHS IS TO BE RECKONED FROM SUCH SHOW CAUSE NOTICE. HE PLACED BEFORE US THE COPY OF THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF HISSARIA BROS. REPORTED IN 291 ITR 244. IT WAS A SUBMISSION THAT THIS VIEW WAS UPHELD BY THE HONBLE SUPREME COURT REPORTED IN 386 ITR 719 WHEREIN THE CIVIL APPEAL FILED BY THE REVENUE AGAINST THE RAJAS THAN HIGH COURT IN 291 ITR 244 HAD BEEN CONFIRMED. IT WAS A FURTHER SUBMI SSION THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF NARAYANI & SONS PVT. LTD. REPORTED IN (2016) 141 DTR 315 (CAL) HAS CATEGORICALLY HELD THA T IN PARA NOS.12 15 AS FOLLOWS: 12. SEC. 274 LAYS DOWN THE PROCEDURE FOR IMPOSITION OF PENALTY. SUB-S. (1) OF S.274 PROVIDES FOR AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE AN ORDER IMPOSING PENALTY IS PASSED. THOUGH S. 271D VESTS TH E JURISDICTION OF IMPOSING PENALTY SOLELY IN THE JT. CIT, IT IS SILENT AS REGARDS INIT IATION OF THE PROCEEDINGS. THE QUESTION IS, CAN SUCH INITIATION OF PROCEEDINGS BE MADE BY THE AO? T HE AO IS THE PERSON, WHO IS LIKELY TO COME ACROSS THE CASES OF CONCEALMENT OR VIOLATION O F THE PROVISIONS OF LAW ATTRACTING PENAL PROVISIONS. CAN THE AO, HAVING COME ACROSS A CASE O F VIOLATION OF LAW ATTRACTING PENAL PROVISIONS, ISSUE A NOTICE AND IN CASE HE DOES SO, WOULD THAT BE AN ACT WITHOUT JURISDICTION? THIS QUESTION HAS BEEN ANSWERED BY THE KERALA HIGH COURT IN THE AFFIRMATIVE. A SOMEWHAT SIMILAR SITUATION IS CONTEMPLATED OR IS BOUND TO AR ISE UNDER SUB-S. (2) OF S.274 WHICH PROVIDES AS FOLLOWS: (2) NO ORDER IMPOSING THE PENALTY UNDER THIS CHAPTE R SHALL BE MADE (A) BY THE ITO, WHERE THE PENALTY EXCEEDS TEN THOUSA ND RUPEES; (B) BY THE ASSTT. CIT OR DY. CIT, WHERE THE PENALTY EXCEEDS TWENTY THOUSAND RUPEES, EXCEPT WITH THE PRIOR APPROVAL OF THE JT. C IT. ITA NO.3132 TO 3136/MDS/2016 :- 4 -: 13. PRIOR TO INTRODUCTION OF TAX LAWS (AMENDMENT) AC T, 1975, SUB-S. (2) OF S. 274 WAS AS FOLLOWS: (2) NOTWITHSTANDING ANYTHING CONTAINED IN CL. (III) OF SUB-S. (1) OF S. 271, IF IN A CASE FALLING UNDER CL. (C) OF THAT SUB-SECTION, THE MINIMUM PENALTY IMPOSABLE EXCEEDS A SUM OF RUPEES ONE THOUSAND, THE ITO SHALL REFER THE CASE TO THE IAC WHO SHALL, FOR THE PURPOSE, HAVE ALL THE POWERS CONFERR ED UNDER THIS CHAPTER FOR THE IMPOSITION OF PENALTY. 14. A PLAIN READING OF SUB-S. (2) OF S. 274, AS IT W AS, GOES TO SHOW THAT BEFORE THE SAID ACT OF 1975 WAS INTRODUCED, THE AO HAD JURISDICTION TO I MPOSE PENALTY NOT EXCEEDING A SUM OF RS.1000. A CASE INVOLVING PENALTY IMPOSABLE EXCEEDI NG A SUM OF RS.1000 WAS REQUIRED TO BE REFERRED BY HIM TO THE IAC, WHO HAD THE JURISDIC TION TO IMPOSE PENALTY EXCEEDING A SUM OF RS.1000. QUESTION AROSE WHETHER IN A CASE INVOLVI NG PENALTY IMPOSABLE EXCEEDING A SUM OF RS.1000, THE AO COULD INITIATE THE PROCEEDINGS BY ISSUING A NOTICE. THAT QUESTION WAS ANSWERED BY THE SUPREME COURT IN THE AFFIRMATIVE. T HEIR LORDSHIPS IN THE CASE OF D.M. MANASVI VS. CIT 1972 CTR (SC) 437: (1972) 86 ITR 557 (SC), HELD AS FOLLOWS: WE ARE ALSO NOT IMPRESSED BY THE ARGUMENT ADVANCED ON BEHALF OF THE APPELLANT THAT THE PROCEEDINGS FOR THE IMPOSITION OF PENALTY WERE INITIATED NOT BY THE ITO BUT BY THE IAC WHEN THE MATTER HAD BEEN REFERRED TO HIM UNDER S. 274(2) OF THE ACT. THE PROCEEDINGS FOR THE IMPOSITION OF PENALTY IN TE RMS OF SUB-S. (1) OF S. 271 HAVE NECESSARILY TO BE INITIATED EITHER BY THE ITO OR BY THE AAC. THE FACT THAT THE ITO HAS TO REFER THE CASE TO THE IAC IF THE MINIMUM IMP OSABLE PENALTY EXCEEDS THE SUM OF RUPEES ONE THOUSAND IN A CASE FALLING UNDER CL. (C) OF SUB-S. (1) OF S. 271 WOULD NOT SHOW THAT THE PROCEEDINGS IN SUCH A CASE CANNOT BE INITIATED BY THE ITO. THE ITO IN SUCH AN EVENT CAN REFER THE CASE TO THE IAC A FTER INITIATING THE PROCEEDINGS. IT WOULD, INDEED, BE THE SATISFACTION OF THE ITO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS REGARDING THE CONCEALMENT OF INCOME WHI CH WOULD CONSTITUTE THE BASIS AND FOUNDATION OF THE PROCEEDINGS FOR LEVY OF PENAL TY. 15. APPLYING THE VIEWS EXPRESSED BY THE APEX COURT IT CAN BE SAID THAT IN A CASE FALLING UNDER S. 271D THE AO IS NOT PRECLUDED FROM INITIATIN G THE PROCEEDINGS BY ISSUING A NOTICE. 4. IT WAS A SUBMISSION THAT THE PENALTY ORDER BEING BARRED BY LIMITATION, THE SAME WAS LIABLE TO BE QUASHED. 5. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE ORD ER OF THE AO AND LD.CIT(A). IT WAS A SUBMISSION THAT THE CBDT HAS I SSUED A CIRCULAR F.NO.279/MISC./M-116/2012-ITJ DATED 26.04.2016 WHER EIN THE DEPARTMENTAL VIEW IN REGARD TO THIS ISSUE HAS BEEN CLARIFIED. IT WAS A SUBMISSION THAT SHOW CAUSE NOTICE ISSUED BY THE AO WAS LIABLE TO BE DISCARDED AND THE LIMITATION IF ANY WAS TO BE CONSI DERED FROM THE DATE OF ITA NO.3132 TO 3136/MDS/2016 :- 5 -: THE ISSUANCE OF THE SHOW CAUSE NOTICE BY THE ACIT, CENTRAL RANGE, COIMBATORE. IT WAS A SUBMISSION THAT THE LEVY OF P ENALTY BE UPHELD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ADMIT TEDLY, THE HONBLE RAJASTHAN HIGH COURT DECISION IN THE CASE OF HISSAR IA BROS. REPORTED IN 291 ITR 244 WHEREIN THE HONBLE HIGH COURT OF RAJASTHAN HAS HELD THAT ONCE SHOW CAUSE NOTICE IS ISSUED BY THE AO THEN THE TIME LIMIT WOULD RUN FROM THAT SHOW CAUSE NOTICE. THIS VIEW HAS ALSO BE CONF IRMED BY THE APEX COURT IN 386 ITR 719. THIS IS ALSO VIEW OF THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF NARAYANI & SONS PVT. LTD. ON PERUSAL OF THE CIRCULAR ISSUED BY THE CBDT SHOWS THAT, CBDT IS RELYING UPON THE DE CISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF GRIHALAKSHMI VISIO N REPORTED IN 379 ITR 100. THIS IS A DECISION DATED 08.07.2015. THE HO NBLE APEX COURT CONFIRMED THE DECISION OF THE HONBLE RAJASTHAN HIG H COURT IN THE CASE OF HISSARIA BROS. ON 22.08.2016. IN THESE CIRCUMSTAN CES, THE DECISION RELIED UPON BY THE REVENUE AND THE CIRCULAR ISSUED BY THE CBDT WOULD NO MORE COVER THE ISSUE. THIS BEING SO, RESPECTFULLY FOLLO WING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF HISSARIA BROS. RE FERRED TO SUPRA AND ALSO THE RAJASTHAN HIGH COURT IN THE CASE OF HISSARIA BR OS. SUPRA AND THE DECISION IN THE CASE OF NARAYANI & SONS PVT. LTD. R EFERRED TO SUPRA, THE PENALTY ORDER PASSED BY THE ADDL.CIT, CENTRAL RANGE , COIMBATORE ON 31.01.2007 STANDS QUASHED AS BEING BARRED BY LIMITA TION. ITA NO.3132 TO 3136/MDS/2016 :- 6 -: 7. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JUNE, 2017, AT CHENNAI. SD/- SD/- ( . ) ( A. MOHAN ALANKAMONY ) ! /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER /CHENNAI, 1 /DATED: 1 ST JUNE, 2017. TLN ) '23 43 /COPY TO: 1. & /APPELLANT 4. 5 /CIT 2. '(& /RESPONDENT 5. 3 ' /DR 3. 5 ( ) /CIT(A) 6. /GF