Sh Makhan Singh Mukh Sewadar, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 40/ASR/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3257 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-02-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 07-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Period of limitation
• Section: 246; 27; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 40/ASR/2016 ASSESSMENT YEAR: 2009-10 MAKHAN SINGH MUKH SEWADAR, DERA SANT AMIR SINGH, BAZAR SATTOWALA, KATRA KARAM SINGH, AMRITSAR [PAN: BEFPS 2614A] VS. THE INCOME TAX OFFICER, WARD 2(1), AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. PADAM BAHL (C.A.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 07.02.2019 DATE OF PRONOUNCEMENT: 27.02.201 9 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE ARISING OUT OF TH E ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, AMRITSAR ( CIT(A) FOR SHORT) DATED 03.11.2015, DISMISSING THE ASSESSEES APPEAL CONTES TING THE LEVY OF PENALTY UNDER SECTION 271B OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR ASSESSMENT YEAR (A.Y.) 2009-10 VIDE ORDER DATED 04/3/2014. 2. THE SHORT ISSUE ARISING IN THE INSTANT APPEAL; T HE LD. COUNSEL FOR THE ASSESSEE, SH. PADAM BAHL, NOT PRESSING GROUNDS 1 AND 3 OF THE APPEAL, IS IF THE IMPUGNED PENALTY ORDER IS BARRED BY TIME AND, THEREFORE, NON -EST IN LAW. ITA NO. 40/ASR/2016 (AY: 2009-10) MAKHAN SINGH, MUKH SEWADAR V. ITO 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, IN EXPLANATION OF THE DEPOSITS (AT RS. 164.64 LACS) IN HIS BANK ACCOUNT ( WITH HDFC BANK, GOLDEN TEMPLE BRANCH, AMRITSAR), STATED IT TO BE IN FACT T HE RECEIPT OF DERA SANT AMIR SINGH, OF WHICH HE IS THE MUKH SEWADAR (TRUSTEE/MAN AGER). THE SAME DID NOT FIND ACCEPTANCE BY THE REVENUE, WHO REGARDED IT AS THE A SSESSEES MONEY. ASSESSMENT WAS ACCORDINGLY MADE TREATING IT AS THE ASSESSEES RECEIPT ON 17/11/2011. THE GROSS RECEIPT EXCEEDING RS. 40 LACS, THERE WAS, AT THE SA ME TIME, VIOLATION OF SECTION 44AB OF THE ACT OBLIGING AN ASSESSEE TO GET HIS ACC OUNTS AUDITED, ATTRACTING PENALTY U/S. 271B, I.E., FOR THE FAILURE TO GET THE ACCOUNT S AUDITED AND FURNISHING AN AUDIT REPORT BY THE DUE DATE OF FILING THE RETURN OF INCO ME U/S. 139(1), PROCEEDINGS FOR WHICH WERE ACCORDINGLY INITIATED AT THE CONCLUSION OF THE ASSESSMENT BY ISSUE OF NOTICE U/S. 271B R/W S.274. THE ASSESSEE, CONTESTIN G THE ASSESSMENT IN THE APPELLATE PROCEDURE, REQUESTED FOR KEEPING THE SAID PENALTY P ROCEEDINGS IN ABEYANCE. PROCEEDINGS WERE ACCORDINGLY KEPT IN ABEYANCE, I.E. , IN TERMS OF SECTION 275(1)(A), BY THE ASSESSING OFFICER (AO), AND TAKEN UP ON THE DISPOSAL OF THE ASSESSEES APPEAL IN THE QUANTUM PROCEEDINGS BEFORE THE TRIBUN AL (IN ITA NO. 440/ASR/2012, ON 28.01.2014), AND THE PENALTY LEVIED AT ONE-HALF PER CENT. OF THE GROSS RECEIPT, I.E., AT RS. 82,317. THE ASSESSEES CONTENTION IN T HE PENALTY PROCEEDINGS, WHICH DID NOT FIND FAVOUR WITH THE REVENUE AUTHORITIES, WAS T HAT HIS CASE IS COVERED U/S. 275(1)(C), AND NOT SECTION 275(1)(A), SO THAT THE L EVY OF PENALTY VIDE ORDER DATED 04.03.2014 IS BARRED BY TIME. THE REVENUES CASE IS OF IT BEING COVERED U/S. 275(1)(A), CONSIDERING WHICH THE PENALTY IS ADMITTE DLY (AS ALSO BY THE SH. BAHL BEFORE US) WITHIN TIME. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 SECTION 275, WHICH PROVIDES THE TIME LIMITATION FOR PENALTIES IMPOSED UNDER CHAPTER XXI OF THE ACT, IN ITS RELEVANT PART, READ S AS UNDER: ITA NO. 40/ASR/2016 (AY: 2009-10) MAKHAN SINGH, MUKH SEWADAR V. ITO 3 BAR OF LIMITATION FOR IMPOSING PENALTIES. 275. (1) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHAL L BE PASSED (A) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHER OR DER IS THE SUBJECT-MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTION 246 OR SEC TION 264 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 PE NALTY HAS BEEN INITIATED, ARE COMPLETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE O RDER OF THE COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE APPELLATE TRIBUNAL IS RECEI VED BY THE CHIEF COMMISSIONER OR COMMISSIONER, WHICHEVER PERIOD EXPIRES LATER: PROVIDED THAT IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTH ER ORDER IS THE SUBJECT-MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTI ON 264 OR SECTION 246A, AND THE COMMISSIONER (APPEALS) PASSES THE ORDER ON OR AFTER THE 1 ST DAY OF JUNE, 2003 DISPOSING OF SUCH APPEAL, AN ORDER IMPOSING PENALTY SHALL BE PAS SED BEFORE THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH AC TION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED, OR WITHIN ONE YEAR FROM T HE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER, WHICHEVER IS LATER; (B) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHE R 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 FINA NCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALT Y HAS BEEN INITIATED ARE COMPLETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FO R IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES LATER. IT IS CLEAR THAT THE PERIOD OF LIMITATION IS THE LA TER OF THE END OF THE OF THE FINANCIAL YEAR IN WHICH THE PENALTY PROCEEDINGS ARE INITIATED OR SIXTH MONTHS FROM THE END OF THE MONTH IN WHICH THEY ARE SO (SS. 275(1)(A)/(C)). ONLY THE SIX-MONTH BAR IS APPLICABLE IN CASE OF REVISION (SEC. 275(1)(B)). WH ERE, HOWEVER, THE RELEVANT ASSESSMENT ORDER IS THE SUBJECT MATTER OF APPEAL BE FORE THE COMMISSIONER (APPEALS) OR THE APPELLANT TRIBUNAL, THE PERIOD IS TO BE RECKONED, INSTEAD OF THE DATE OF THE INITIATION OF THE PENALTY PROCEEDINGS, THE DATE OF THE RECEIPT OF THE APPELLATE ORDER (S. 275(1)(A)). THE EXCLUSION OF TH E PERIOD OF ADJUDICATION UNDER THE APPELLATE PROCEDURE IS CLEARLY TO AVOID MULTIPLICIT Y OF PROCEEDINGS. THE IMPOSITION OF PENALTY, WHERE THE ASSESSMENT IS IN APPEAL, BEIN G INEXTRICABLE RELATED TO THE ITA NO. 40/ASR/2016 (AY: 2009-10) MAKHAN SINGH, MUKH SEWADAR V. ITO 4 QUANTUM PROCEEDINGS, IT IS ONLY DEEMED PROPER FOR T HE QUANTUM PROCEEDINGS TO ARRIVE AT A FINALITY, I.E., AT LEAST AS FAR AS THE FACTS ARE CONCERNED, SO THAT THE PENALTY PROCEEDINGS ARE BASED ON FIRM FINDINGS OF FACT, AS DETERMINED IN THE APPELLATE PROCEEDINGS. THIS EXPLAINS THE RATIONALE OF THE SAI D EXCLUSION U/S. 275(1)(A) AS ALSO CLARIFIED BY SEVERAL DECISIONS, AS BY THE TRIBUNAL IN AHUJA RICE & GENERAL MILLS V. DY. CIT [1999] 69 ITD 329 (ASR), THE OPERATIVE PART OF WHI CH (PARA 6) WAS ALSO READ OUT DURING HEARING. 4.2 THE ASSESSEES CASE IS THAT THE SAID EXCLUSION CANNOT APPLY IN HIS CASE AS THE FAILURE TO OBTAIN AND FURNISH THE AUDIT REPORT U/S. 44AB, THOUGH DISCOVERED IN THE QUANTUM PROCEEDINGS, ARE INDEPENDENT THEREOF. THE Q UESTION THEREFORE BOILS DOWN TO IF IT IS INDEED SO. THE OBLIGATION TO GET THE AC COUNTS AUDITED ARISES ONLY WHERE THE ASSESSEES TURNOVER OR GROSS RECEIPT EXCEEDS A PART ICULAR THRESHOLD LIMIT (RS.40 LACS FOR THE RELEVANT YEAR). IT IS THIS TURNOVER THAT IS UNDER DISPUTE IN THE QUANTUM PROCEEDINGS, I.E., SUBJECT TO THE APPELLATE PROCESS . A DECISION, ONE WAY OR THE OTHER, I.E., OF THE IMPUGNED TURNOVER BEING THE ASSESSEES TURNOVER OR NOT HE DISPUTING IT TO BE HIS TURNOVER, CLAIMING IT TO BE OF THE DERA, HAS A DIRECT BEARING ON THE ASSESSEES OBLIGATION TO GET HIS ACCOUNTS AUDITED A ND, CONSEQUENTLY, THE LEVY OF PENALTY U/S. 271B FOR FAILURE, WITHOUT REASONABLE C AUSE, TO DO SO. THE RATIO OF THE TRIBUNALS ORDER IN THE AHUJA RICE & GENERAL MILLS (SUPRA), THUS, SUPPORTS THE REVENUES CASE OF THE TIME LIMIT BEING REFERABLE TO SECTION 275(1)(A), INSTEAD OF THAT OF THE ASSESSEE. WHY, AND EVEN AS, WITHOUT DOU BT, THERE IS NO ESTOPPEL AGAINST LAW, THE ASSESSEE HIMSELF CONSIDERS SO, AS THAT ONL Y EXPLAINS HIS REQUEST TO THE ASSESSING OFFICER IN THE PENALTY PROCEEDINGS FOR KE EPING THE SAME IN ABEYANCE. THAT IS, THERE AN AGREEMENT OR UNANIMITY WITH REGAR D TO THE PROCEEDINGS UNDER APPEAL HAVING A DIRECT BEARING ON THE ISSUE OF LEVY OF PENALTY. THIS IS OF COURSE SUBJECT TO A PROVISION THEREFOR IN LAW, WHICH S. 27 5(1)(A) PROVIDES, AS THE TIME ITA NO. 40/ASR/2016 (AY: 2009-10) MAKHAN SINGH, MUKH SEWADAR V. ITO 5 LIMITATION IS OTHERWISE MANDATORY. THERE IS, FURTHE R, NO QUARREL WITH THE PROPOSITION THAT THE PENALTY PROCEEDINGS GET INITIATED WITH THE ISSUE OF NOTICE U/S. 274, AS HELD IN AHUJA RICE & GENERAL MILLS (SUPRA). 4.3 SH. BAHL, UPON IT BE SO POSITED BY THE BENCH DU RING HEARING, WOULD SUBMIT THAT EVEN IF NOT INDEPENDENT OF THE QUANTUM PROCEED INGS, THE TIME LIMITATION, GOVERNED AS IT IS BY LAW, AND MANDATORY, SHALL PREV AIL. THE PLEA IS VALID, I.E., IN PRINCIPLE; THERE BEING, AS AFORESAID, NO ESTOPPEL A GAINST LAW. THE WORD RELEVANT QUALIFYING THE WORDS ASSESSMENT OR OTHER ORDER IN SECTION 275(1)(A) ASSUMES RELEVANCE IN THIS REGARD. JUXTAPOSED WITH THE RELEV ANCE AND THE PURPOSE OF THE EXCLUSION OF THE PERIOD OF DETERMINATION, AT LEAST ON MATTERS OF FACT, IN QUANTUM PROCEEDINGS FOR CONCLUDING PENALTY PROCEEDINGS AFTE R INITIATION, LEAVES ONE IN NO MANNER OF DOUBT THAT THE WORD RELEVANT HAS TO BE READ IN A BROAD, RATHER THAN IN A NARROW, SENSE, IN KEEPING WITH THE PURPOSE AND NEED FOR THE SAID EXCLUSION. IN THE PRESENT CASE, THE QUANTUM OF TURNOVER IS FUNDAMENTA L TO THE LEVY OF PENALTY. THIS IS AS THE TURNOVER, A SUBJECT MATTER OF DISPUTE IN THE QUANTUM PROCEEDINGS, IS A GIVEN AS FAR AS THE PENALTY PROCEEDINGS ARE CONCERNED, SO THAT IT OUGHT NOT TO, ON FACTS AND COMMON PRINCIPLES, BE PROCEEDED WITH WITHOUT FIRST RESOLVING THE SAME. THE LEGISLATIVE INTENT MUST BE THE FOUNDATION OF ANY IN TERPRETATIVE EXERCISE ( CIT V. BABY MARINE EXPORT [2009] 290 ITR 323 (SC)). THE WORD RELEVANT IN S ECTION 275(1)(A) WOULD, IN OUR VIEW, IMPLY AN ORDER WHICH BECOMES RE LEVANT ON ACCOUNT OF THE ISSUE UNDER APPEAL IN QUANTUM PROCEEDINGS BEING RELEVANT FOR THE PURPOSE OF LEVY OF PENALTY UNDER CHAPTER XXI OF THE ACT. THE OTHER DEC ISIONS MENTIONED IN THE WRITTEN SUBMISSIONS, THOUGH NOT RELIED UPON OR REFE RRED TO DURING HEARING, HAVE ALSO BEEN THOUGH PERUSED. THE DECISION IN SUBODH KUMAR BHARGAVA V. CIT [2009] 309 ITR 31 (DEL) IS ON THE MEANING OF THE WORDS WH ICHEVER PERIOD EXPIRES LATER, WHICH HAS NO BEARING OR IS NOT RELEVANT IN THE PRES ENT CASE; THE PENALTY BEING ITA NO. 40/ASR/2016 (AY: 2009-10) MAKHAN SINGH, MUKH SEWADAR V. ITO 6 ADMITTEDLY IN TIME W.R.T. S. 275(1)(A). AGAIN, THER E IS NO DISPUTE THAT THE TIME LIMITATION IS MANDATORY, AS HELD IN CIT V. CHHAJER PACKAGING & PLASTICS (P.) LTD . [2008] 300 ITR 180 (BOM); THAT BEING THE VERY PREMI SE OF THE INSTANT APPEAL. 5. IN OUR CONSIDERED VIEW, THEREFORE, THE IMPUGNED PENALTY ORDER IS NOT BARRED BY TIME. THE ASSESSEE HAS NOT MADE OUT ANY CASE ON THE MERITS OF THE LEVY OF PENALTY; THE TURNOVER/GROSS RECEIPT UNDER QUESTION HAVING BEEN HELD IN THE APPELLATE PROCEEDINGS TO BE OF THE ASSESSEE. WE DECIDE ACCORD INGLY. 6. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 27, 2019 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 27.02.2019 /GP/SR PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: MAKHAN SINGH, MUKH SEWADAR, DERA SANT AMIR SINGH, BAZAR SATTOWALA, KATRA KARAM SINGH, AMRITSAR (2) THE RESPONDENT: THE INCOME TAX OFFICER, WAR D 2(1), AMRITSAR (3) THE CIT(APPEALS)-1, AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER