ITO, New Delhi V. M/s Rupa Promoters Pvt. Ltd, New Delhi

ITA 3171/DEL/2010

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3907 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 23-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 25-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMITA TRIPATHY
• Keywords: Period of limitation; Initiation of penalty proceedings; Time period of passing order
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA,JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3171/DEL /2010 ASSTT. YEAR: 2006-07 ITO, WARD 15(4), ROOM NO. 223, C.R. BUILDING, NEW DELHI. VS RUPA PROMOTERS PVT. LTD., H-54, 2 ND FLOOR, DDA FLATS, ASHOK VIHAR-1, NEW DELHI-110052 (PAN: AADCR0877Q) (APPELLANT) (RESPONDENT) ITA NO. 3178/DEL /2010 ASSTT. YEAR: 2006-07 ITO, WARD 15(4), ROOM NO. 223, C.R. BUILDING, NEW DELHI. VS M/S RISHIKESH BUILDCON PVT. LTD., H-54, 2 ND FLOOR, DDA FLATS, ASHOK VIHAR-1, NEW DELHI-52 (AADCR0660D) (APPELLANT) (RESPONDENT) ITA NO. 3150/DEL /2010 ASSTT. YEAR: 2006-07 ITO, WARD 15(4), ROOM NO. 223, C.R. BUILDING, NEW DELHI. VS RISHIKESH PROPERTIES PVT. LTD., H-54, 2 ND FLOOR, DDA FLATS, ASHOK VIHAR-1, NEW DELHI-52 (PAN: AADCR0527R (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. PRAMITA TRIPATHY, CIT(DR ) RESPONDENT BY: SHRI RAJEEV SAXENA, MRS. SUMANGALA S AXENA, ADVS. DATE OF HEARING : 26.07.2017 DATE OF PRONOUNCEMENT: 24.10.2017 ITA NO.3171/DEL/2010 ASSESSMENT YEAR 2006-07 2 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THESE THREE APPEALS HAVE BEEN FILED BY THE DEPARTME NT CHALLENGING THE DELETION OF PENALTY IMPOSED UNDER S ECTION 271D OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED TH E ACT). ALL THE THREE APPEALS PERTAIN TO ASSESSMENT YEAR 2000 607 A ND SINCE THEY INVOLVE IDENTICAL ISSUES THEY WERE HEARD TOGET HER AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER. 2. THE BRIEF FACTS OF THE APPEALS ARE AS UNDER 2.1 ITA NO. 3171/DEL/2010 RUPA PROMOTERS PRIVATE LIMITED THE COMPANY IS ENGAGED IN THE WORK OF CARRYING OUT OF LAND DEVELOPMENT. DURING THE ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD RECEIVED CASH FROM T HREE PARTIES AGGREGATING TO RS. 5,02,03,000/-. SINCE THE ASSESSE E COMPANY WAS IN RECEIPT OF CASH IN EXCESS OF RS. 20,000/-, T HE AO HELD THAT THERE WAS A VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. THE ASSESSMENT WAS COMPLETED ON 17 TH OF DECEMBER 2008 UNDER SECTION 144 OF THE ACT WHEREIN PENALTY PROCEE DINGS UNDER SECTION 271D OF THE ACT WERE ALSO INITIATED. SHOW C AUSE NOTICE ITA NO.3171/DEL/2010 ASSESSMENT YEAR 2006-07 3 UNDER SECTION 271D OF THE ACT WAS ISSUED DATED 24/0 3/2009. SUBSEQUENTLY, AFTER CONSIDERING THE REPLIES OF THE ASSESSEE, PENALTY OF RS. 3,90,61,000 WAS IMPOSED VIDE ORDER D ATED 29/09/2009. AGGRIEVED, THE ASSESSEE APPROACHED THE LD. CIT (APPEALS) WHO DELETED THE PENALTY ON MERITS. NOW TH E DEPARTMENT HAS APPROACHED THE ITAT AND HAS CHALLENGED THE DELE TION OF PENALTY BY THE LD. CIT (APPEALS). 2.2 ITA NO. 3178/DEL/2010 RISHIKESH BUILDCON (P) LTD- THIS COMPANY IS ALSO ENGAGED IN THE WORK OF CARRYIN G OUT LAND DEVELOPMENT. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE AO OBSERVED THAT THE ASSESSEE HAD RECEIVED CASH AGG REGATING TO RS. 5,43,66,000/- FROM THREE COMPANIES. THE AO PRO CEEDED TO HOLD THAT THERE WAS A VIOLATION OF SECTION 269SS OF THE ACT AS THE COMPANY HAD RECEIVED CASH IN EXCESS OF RS. 20,000/- . THE ASSESSMENT WAS COMPLETED ON 17 TH OF DECEMBER 2008 WHEREIN PENALTY PROCEEDINGS UNDER SECTION 271D OF THE ACT W ERE ALSO INITIATED. NOTICE UNDER SECTION 271D OF THE ACT WAS ISSUED ON 24/03/2009 AND A PENALTY OF RS. 3,93,08,000/- WAS I MPOSED FOR VIOLATION OF PROVISION OF SECTION 269SS VIDE ORDER DATED 29/09/2009. ON THE ASSESSEE APPROACHING THE LD. CIT (APPEALS), THE ASSESSEES APPEAL WAS ALLOWED AND THE PENALTY W AS DELETED ON ITA NO.3171/DEL/2010 ASSESSMENT YEAR 2006-07 4 MERITS. NOW THE DEPARTMENT HAS APPROACHED THE ITAT AND HAS CHALLENGED THE DELETION OF PENALTY BY THE LD. CIT ( APPEALS). 2.3 ITA 3150/DEL/2010 M/S RISHIKESH PROPERTIES P VT LIMITED- THIS COMPANY IS ALSO ENGAGED IN THE WORK OF CARRYIN G OUT OF LAND DEVELOPMENT. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE AO NOTICED THAT THE ASSESSEE HAD RECEIVED CASH AGGR EGATING TO RS. 6,35,15,000/- FROM THREE COMPANIES AND HE HELD THAT THERE WAS A VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT AS THE COMPANY HAD RECEIVED CASH IN EXCESS OF RS. 20,0 00/-. THE ASSESSMENT WAS COMPLETED ON 18 TH OF DECEMBER 2008 WHEREIN PENALTY PROCEEDINGS UNDER SECTION 271D OF THE ACT W ERE ALSO INITIATED. SUBSEQUENTLY, NOTICE UNDER SECTION 271D OF THE ACT WAS ISSUED ON 24/03/2009 AND AFTER CONSIDERING THE REPL IES OF THE ASSESSEE, THE ORDER UNDER SECTION 271D WAS PASSED O N 29/09/2009 IMPOSING OF PENALTY OF RS. 4,23,10,000/- . ON APPEAL, THE PENALTY WAS DELETED BY THE LD. CIT (APP EALS) AND NOW THE DEPARTMENT HAS APPROACHED THE ITAT AND HAS CHAL LENGED THE DELETION OF PENALTY BY THE LD. CIT (APPEALS). 3. AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SOUGHT TO RAISE A LEGAL GROUND AND SUBMITT ED THAT THE ADJUDICATION OF THE LEGAL GROUND GOES TO THE VERY R OOT OF THE ITA NO.3171/DEL/2010 ASSESSMENT YEAR 2006-07 5 MATTER. IT WAS PRAYED THAT THE BENCH SHOULD FIRST H EAR BOTH THE PARTIES ON THE LEGAL GROUND BEING RAISED. THE LD. C IT DR HAD NO OBJECTION TO THE REQUEST OF THE LD. AR. THEREFORE, WE PERMIT THE LD. AR TO ARGUE ON THE LEGAL GROUND. THE LD. AR SUB MITTED THAT ALL THE THREE ORDERS OF THE AO IMPOSING PENALTY UND ER SECTION 271D OF THE ACT WERE BARRED BY LIMITATION. IT WAS S UBMITTED THAT AS PER THE PROVISIONS OF SECTION 275 OF THE ACT, TH ERE WERE TWO DISTINCT PERIODS OF LIMITATION FOR PASSING THE PENA LTY ORDER, ONE WHICH IS WITHIN THE FINANCIAL YEAR IN WHICH THE PEN ALTY IS INITIATED AND THE OTHER IS WITHIN SIX MONTHS FROM THE END OF THE MONTH WHEN THE PENALTY IS INITIATED. IT WAS SUBMITTED THA T IN ALL THE THREE APPEALS BEFORE THE ITAT, THE QUANTUM PROCEEDI NGS WERE COMPLETED IN THE MONTH OF DECEMBER 2008 AND THE PEN ALTY PROCEEDINGS HAD BEEN INITIATED AT THE TIME OF COMPL ETION OF ASSESSMENT. IT WAS FURTHER SUBMITTED THAT GOING BY THE DATE OF ASSESSMENT, AS PER THE FIRST PERIOD AS PROVIDED IN SECTION 275, THE PENALTY ORDERS COULD NOT HAVE BEEN PASSED LATER THAN 31/03/2009. IT WAS FURTHER SUBMITTED THAT THE SECON D POSSIBLE DATE WAS WITHIN SIX MONTHS FROM THE END OF THE MONT H IN WHICH THE PENALTY PROCEEDINGS WERE INITIATED. IT WAS SUBM ITTED THAT SINCE THE PENALTY PROCEEDINGS WERE INITIATED IN DEC EMBER 2008, ITA NO.3171/DEL/2010 ASSESSMENT YEAR 2006-07 6 THE LAST DATE BY WHICH THE PENALTY ORDERS SHOULD HA VE BEEN PASSED WAS 30 TH OF JUNE 2009. IT WAS SUBMITTED THAT IT IS UNDISPUTED THAT IN ALL THE THREE CASES THE PENALTY ORDERS WERE PASSED ON 29/09/2009 WHEREAS THE LIMITATION HAD ALR EADY EXPIRED ON 30/06/2009. IT WAS SUBMITTED THAT IN VIE W OF THE LEGAL PROVISIONS, ALL THE THREE PENALTY ORDERS WERE VOID AB INITIO AND HENCE THE APPEALS OF THE REVENUE DESERVED TO BE DIS MISSED. 3.1 THE LD. AUTHORISED REPRESENTATIVE PLACED RELIA NCE ON THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN PRIN CIPAL COMMISSIONER OF INCOME TAX VERSUS JKD CAPITAL AND FINLEASE LTD IN ITA 780/2015 WHEREIN A PENALTY UNDER SECTION 271E OF THE ACT WAS DELETED BY THE LD. CIT (APPEALS) BY HOLDING THAT THE PENALTY ORDER WAS PASSED BEYOND THE PERIOD OF LIMIT ATION. THE DELETION WAS UPHELD BY THE ITAT AND ON THE DEPARTME NT APPROACHING THE HONBLE HIGH COURT OF DELHI, THE HO NBLE HIGH COURT REFUSED TO INTERFERE WITH THE ADJUDICATION OF THE ITAT WHEREIN THE ITAT HAD CONFIRMED THE ORDER OF THE LD. CIT (APPEALS) BY REFERRING TO A JUDGMENT OF THE HONBLE DELHI HIG H COURT IN THE CASE OF CIT VERSUS WORLDWIDE TOWNSHIP PROJECTS LTD REPORTED IN 269 CTR 444. THE LD. AUTHORISED REPRESENTATIVE ALSO PLACED RELIANCE ON ANOTHER DECISION OF THE HONBLE DELHI H IGH COURT IN ITA NO.3171/DEL/2010 ASSESSMENT YEAR 2006-07 7 THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VERSUS MAHESH FOOD PRODUCTS PRIVATE LIMITED REPORTED IN 394 ITR 3 12 FOR THE PROPOSITION THAT AS PER THE SCHEME OF SECTION 275 ( 1) (C), LIMITATION BEGINS TO RUN FROM THE DATE ON WHICH THE PENALTY PROCEEDINGS WERE INITIATED. THE LD. AUTHORISED REPR ESENTATIVE REITERATED THAT SINCE THE PENALTY ORDERS WERE PASSE D BEYOND THE LIMITATION PERIOD, THE SAME WERE VOID AB INITIO . 4. IN RESPONSE, THE LD. CIT DR SUBMITTED THAT THE N OTICE INITIATING PENALTY UNDER SECTION 271D WAS ISSUED ON 24 TH OF MARCH 2009 AND, THEREFORE, THE LIMITATION SHOULD BE CALCULATED FROM THE DATE OF ISSUANCE OF NOTICE AND NOT FROM TH E DATE ON WHICH THE PENALTY PROCEEDINGS WERE INITIATED IN THE ASSESSMENT ORDER. IT WAS SUBMITTED THAT GOING BY THE DATE ON W HICH THE PENALTY NOTICES WERE ISSUED, THE LIMITATION PERIOD WOULD EXPIRE ON 30/09/2009 WHEREAS THE IMPUGNED ORDERS WERE PASSED ON 29/09/2009 AND, THEREFORE, THE PENALTY ORDERS WERE WITHIN THE LIMITATION PERIOD. IT WAS ALSO SUBMITTED THAT THE C ASE LAWS RELIED UPON BY THE ASSESSEE WERE DISTINGUISHABLE ON FACTS. IT WAS PRAYED THAT THE PENALTY HAD BEEN WRONGLY DELETED BY THE LD . CIT (APPEALS) AND THAT THE ORDERS OF THE LD. CIT (APPEA LS) SHOULD BE SET-ASIDE AND THE PENALTIES IMPOSED BY THE AO BE RE STORED. ITA NO.3171/DEL/2010 ASSESSMENT YEAR 2006-07 8 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE RELEVANT MATERIAL ON RECORD. THE FACTS OF THE CASES ARE UNDISPUTED THAT IN ALL THE THREE CASES, THE ASSESSMENTS WERE C OMPLETED IN DECEMBER 2008 WHEREIN THE PENALTY PROCEEDINGS UNDER SECTION 271D HAD BEEN INITIATED. IT IS ALSO UNDISPUTED THAT THE NOTICES UNDER SECTION 271D WERE ISSUED ON 24 TH OF MARCH 2009 AND THE PENALTY ORDERS WERE PASSED ON 29/09/2009. THUS, THE ONLY QUESTION THAT REMAINS TO BE ADJUDICATED IS AS TO WH ETHER THE LIMITATION PERIOD HAS TO BE CALCULATED FROM THE DAT E ON WHICH THE PENALTY PROCEEDINGS WERE FIRST INITIATED, THAT IS T HE DATE OF THE ASSESSMENT ORDER OR FROM THE DATE ON WHICH THE SHOW CAUSE NOTICES UNDER SECTION 271D WERE ISSUED, THAT IS MAR CH 2009. THE HONBLE DELHI HIGH COURT IN THE CASE OF JKD CAPITAL AND FINLEASE LTD (SUPRA) HAD HELD THAT THE STARTING POINT WOULD BE THE INITIATION OF PENALTY PROCEEDINGS. IN THAT CASE THE AO HAD WRITTEN A LETTER TO THE ACIT RECOMMENDING THE ISSUANCE OF S HOW CAUSE NOTICE. THE HONBLE DELHI HIGH COURT NOTED THAT WHI LE IT WAS TRUE THAT THE ACIT HAD THE DISCRETION WHETHER OR NOT TO ISSUE THE SHOW CAUSE NOTICE, IF HE DID DECIDE TO ISSUE A SHOW CAUS E NOTICE, THE LIMITATION WOULD BEGIN TO RUN FROM THE DATE OF THE LETTER OF THE AO RECOMMENDING INITIATION OF THE PENALTY PROCEEDINGS. SIMILARLY, IN ITA NO.3171/DEL/2010 ASSESSMENT YEAR 2006-07 9 THE CASE OF MAHESH FOOD PRODUCTS PRIVATE LIMITED (S UPRA), ALTHOUGH THERE WAS NO INITIATION OF PENALTY PROCEED INGS IN THE ASSESSMENT ORDER, THE AO MADE A REFERENCE TO THE AC IT ON 23/07/2012, WHICH WAS AFTER MORE THAN SIX MONTHS OF PASSING OF THE ASSESSMENT ORDER, ON THE BASIS OF WHICH A NOTIC E WAS ISSUED ON 28/08/2012 BY THE ACIT ASKING THE ASSESSEE TO SH OW CAUSE AS TO WHY PENALTY BE NOT LEVIED UNDER SECTION 271D AND 271E OF THE ACT. THE ASSESSEE CHALLENGED THE INITIATION OF PENALTY PROCEEDINGS ON THE GROUND OF LIMITATION WHICH WAS N EGATED BY THE ACIT AND PENALTIES WERE IMPOSED WHICH WERE CONFIRME D BY THE LD. CIT (APPEALS). ON APPEAL BEFORE THE ITAT, THE I TAT HELD THAT THE PENALTY ORDERS WERE BARRED BY LIMITATION. ON FU RTHER APPEAL BY THE DEPARTMENT, THE HONBLE DELHI HIGH COURT HEL D THAT THE LIMITATION WOULD BEGIN TO RUN FROM 23/07/2012, WHIC H WAS THE DATE ON WHICH A REFERENCE WAS MADE TO THE ACIT BY T HE AO FOR ISSUE OF SHOW CAUSE NOTICE. THE HONBLE DELHI HIGH COURT HELD THAT SINCE THE IMPUGNED PENALTY ORDER WAS PASSED ON 26/02/2013, THE SAME WAS BEYOND THE PERIOD OF LIMIT ATION WHICH EXPIRED ON 31 ST OF JANUARY 2013. THUS, IN THIS CASE ALSO THE LIMITATION PERIOD WAS TO BE CALCULATED FROM THE DAT E ON WHICH A REFERENCE WAS MADE BY THE AO TO THE ACIT AND NOT FR OM THE DATE ITA NO.3171/DEL/2010 ASSESSMENT YEAR 2006-07 10 ON WHICH THE SHOW CAUSE NOTICE WAS ISSUED. IN THE P RESENT APPEALS BEFORE US, THE PENALTY PROCEEDINGS WERE INI TIATED IN THE ASSESSMENT ORDERS ITSELF AND, THEREFORE, THE LIMITA TION PERIOD WILL BEGIN TO RUN FROM DECEMBER 2008 ITSELF AND NOT FROM MARCH 2009 WHEN THE PENALTY NOTICES WERE ISSUED. THEREFORE, RE SPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE ABOVE MENTIONED CASES WE HAVE NO HESITATION IN HOLDING THAT ALL THE THREE PENALTY ORDERS WERE BARRED BY LIMITAT ION AND WERE VOID AB INITIO. ACCORDINGLY, WITHOUT GOING INTO THE MERITS OF THE CASES, WE DISMISS ALL THE THREE APPEALS OF THE DEPA RTMENT AS THE PENALTY ORDERS ITSELF WERE VOID AB INITIO BEING BARRED BY LIMITATION. 6. IN THE FINAL RESULT ALL THE THREE APPEALS OF THE DEPARTMENTS STAND DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBER, 2017. SD/- SD/- (PRASHANT MAHARISHI ) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24 TH OCTOBER, 2017 GS ITA NO.3171/DEL/2010 ASSESSMENT YEAR 2006-07 11 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR