HUKUM CHAND JAIN, Kota V. ITO, Kota

ITA 407/JPR/2011

• Counselvise Citation: 40723114 RSA 2011
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 04-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Retrospective amendment; Revised return
• Section: 133A; 131; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L. KALRA) ITA NO.407/JP/2011 ASSESSMENT YEAR : 2002-2003 SH. HUKUM CHAND JAIN, VS. I.T.O. WARD 2(1), KAITHOON. KOTA. (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING: 29.12.2011 DATE OF PRONOUNCEMENT: 30.12.2011 ORDER PER SHRI N.L. KALRA, A.M. 1. THE ASSESSEE HAS FILED AN APPEAL AGAINST ORDER O F LD. CIT (A) AJMER DATED 18.02.2011. THE GROUNDS OF APPEAL ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED I.T.O., WARD 2(1), KOTA, HAS ERRED IN IMPOSING PENALTY OF RS.105526/- U/S 271(1)(C) WITHOUT ANY BASIS AND CAUSE. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED I.T.O. HAS ERRED IN IMPOSING THE PENALTY BARRED BY TIME BECAUSE THE FIR ST NOTICE WAS ISSUED ON DT.28.3.05 AND THE PENALTY IMPOSED VIDE ORDER DT.8. 8.06, IT IS VIOLATION OF SECTION 275 OF I.T. ACT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HAT THE LEARNED I.T.O. ALSO ERRED IN IMPOSING THE PENALTY WITHOUT CONSIDERING T HE REPLY DT. 24.4.06 SUBMITTED BY THE ASSESSEE. WHILE THE ORDER PASSED AFTER 4 MON THS ON DT.8.8.06. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED I.T.O. CONTINUED TO ISSUE NOTICES (NOS. 5, WHICH ALL WERE DULY REPLIED) FOR IMPOSING THE PENALTY FROM THE PERIOD 28.3.2005 TO 28.3.2006, BUT MEAN TIME NO ANY ORDER WAS PASSED FOR IMPOSING THE PENALTY. 2 2. THE LD. A/R OF THE ASSESSEE VIDE LETTER DATED 12 .12.2011 HAS STATED THAT APPEAL BE DISPOSED OFF ON THE BASIS OF HIS WRITTEN SUBMISSION S AND ACCORDINGLY THE APPEAL IS BEING DISPOSED. 3. WHILE MAKING ASSESSMENT, ADDITIONS WERE MADE FOR 7 ITEMS, 2 ITEMS WERE DELETED BY LD. CIT (A) AND ONE ITEM WAS DELETED BY I.T.A.T. HENCE ONLY THE FOLLOWING 4 ITEMS REMAINED CONFIRMED AFTER THE ORDER OF TRIBUNAL. THE FOUR ITEMS ARE UNEXPLAINED CASH FOUND AND SURRENDERED AT THE TIME OF SURVEY RS.1,38,000/- INVESTMENT IN B.C. MANAGED BY ASSESSEE RS.36,00 0/- INTEREST EARNED ON INVESTMENT IN BC RS.1875/- UNEXPLAINED CREDITS INCLUDED IN RETURN RS.62000 /- 4. THE A.O. HAS CONSIDERED ONLY THREE ITEMS FOR IMP OSITION OF PENALTY I.E. RS.1,38,000/-, RS.36,000/- AND RS.1875/-. IT WILL BE USEFUL TO REP RODUCE THE FOLLOWING PARAS FROM THE ORDER OF A.O. IN WHICH PENALTY HAS BEEN IMPOSED: AFTER RECEIPT OF THE HONOURABLE I.T.A.T.S ORDER TH E ASSESSEE WAS PROVIDED MORE OPPORTUNITY BY ISSUING NOTICE DATED 28.3.2006 FIXIN G HEARING ON 7.4.2006, ON WHICH DATE THE ASSESSEE FILED A LETTER SAYING THAT THE MATTER IS SUB-JUDICE BEFORE THE ITAT JAIPUR AND HONBLE HIGH COURT. THE ASSESSE E WAS ADDRESSED A LETTER DATED 10.4.2006 FIXING CASE FOR 17.4.2006 AT 11.00 AM. ON THIS DATE ADJOURNMENT WAS SOUGHT. THE CASE WAS FIXED FOR HEARING ON 24.4. 2006 AT 11.00 AM. THE A/R OF THE ASSESSEE APPEARED ON THIS DATE AND FILED A LETT ER CITING CERTAIN CASE LAWS. ON PERUSAL OF CASE LAWS SO CITED IT APPEARS THAT THE F ACTS OF THE CASES REFERRED TO BY THE A/R ARE NOT SIMILAR AS THAT OF THE CASE OF PRES ENT ASSESSEE AS SUCH THE SAME ARE NOT APPLICABLE. IN THE INSTANT CASE. FURTHER TH E ASSESSEES A/R SUBMITTED IN HIS LETTER DATED 24.4.2006 THAT MATTER IS SUB-JUDICE BE FORE I.T.A.T. JAIPUR AND THE HONBLE HIGH COURT COPIES OF THE RECEIPTS PURPORTED TO HAVE BEEN ENCLOSED BUT NO SUCH COPLES HAVE BEEN FILED WITH THE LETTER IN QUES TION. HERE IT WILL BE PERTINENT TO MENTION THAT IN THIS CASE THE HONOURABLE ITAT HAS A LREADY DECIDED THE CASE VIDE ORDER DATED 27.02.2006. THE ASSESSEE FILED MISCELLA NEOUS APPLICATION AGAINST THE ORDER OF THE ITAT DATED 27.02.2006 WHICH HAS ALSO B EEN DISPOSED OFF VIDE ORDER DATED 30.06.2006 AND THE ASSESSEES MISCELLANEOUS A PPLICATION HAS BEEN DISMISSED. FROM THE ABOVE SUBMISSIONS OF THE ASSESSEE IT IS QU ITE CLEAR THAT AS FAR AS THE MERIT OF THE CASE IS CONCERNED HE HAS NO STRONG EXP LANATION AT ALL. ALL THE ABOVE ITEMS OF INCOME I.E. S.NO.2,4 & 5 WERE DETECTED BY THE DEPARTMENT IN THE COURSE OF 3 SURVEY U/S 133A OF THE I.T. ACT AND/OR FOUND AS A R ESULT OF SCRUTINY OF INCRIMINATING MATERIAL FOUND DURING SURVEY. INFACT THE ASSESSEE SURRENDERED THE FIRST TWO ITEMS OF RS.62000/- & RS.138000/- FOR ASS ESSMENT IN THE COURSE OF SURVEY IT-SELF. BUT WHILE FILLING OF RETURN ONLY RS.62000/ -. WAS INCLUDED IN THE TOTAL INCOME AND RS.138000/- WAS NOT CONSIDERED. ALL THE ABOVE THREE ADDITIONS HAVE STOOD TO THE TEST OF APPEAL UPTO HONOURABLE ITAT. I NFACT BOTH THE APPEALLATE AUTHORITIES HAVE STRONGLY CONFIRMED THE OPINION AND DECISION OF THE A.O. IT HAS BEEN CLEARLY ESTABLISHED THAT THE AFORESAID THREE I TEMS ADDED TO THE ASSESSEES TOTAL INCOME ARE SUCH, THE CORRECT & TRUE PARTICULA RS OF WHICH WERE NOT DISCLOSED BY THE ASSESSEE. IN VIEW OF THE ABOVE FACTS IT CAN BE SAID THAT THIS IS A CASE WHERE THE ASSESSEE FALLED TO OFFER AN EXPLANATION OR OFFICER ON EXPLAN ATION WHICH WAS FOUND TO BE FALSE. IN THIS CASE THE EXPLANATIONS OFFERED BY THE ASSESSEE HAVE REMAINED UNSUBSTANTIATED. RELIANCE IS PLACED ON THE JUDGMENT AWARDED BY THE H ONOURABLE SUPREME COURT IN THE CASE OF SHRI K.P. MADHUSUDANAN V/S CIT REPORTED IN 251 ITR 99. THE ASSESSEE HAS FALLED TO PROVE THAT ALL THE FACTS REL ATING TO THE EXPLANATION OFFERED AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME WERE DISCLOSED BY HIM. THIS IS, THEREFORE, A FIT AND STRONG CASE FOR IMPOSITION OF PENALTY U/S 271 (1) (C) OF THE I.T. ACT 1961. 5. THE LD. CIT (A) REDUCED THE PENALTY AFTER OBSERV ING AS UNDER: THERE CAN BE THREE DISTINCT MUTUALLY EXCLUSIVE SITU ATIONS IN CASE OF AN ADDITION TO INCOME: (A) WHERE THE ADDITION IS ON ACCOUNT OF CONTUMACIOU S CONDUCT OF THE ASSESSEE AND MENS REA IS ESTABLISHED. IN THIS SITUATION PENA LTY WAS ALWAYS LEVIABLE AND CONTINUES TO BE SO LEVIABLE; (B) WHERE IT CAN NEITHER BE ESTABLISHED THAT THE AD DITION IS ON ACCOUNT OF CONTUMACIOUS CONDUCT OF THE ASSESSEE NOR IS IT ESTA BLISHED THAT THE ASSESSEES CONDUCT AND EXPLANATION IS BONA FIDE. IN THIS SITUATION AS PER DILIP SHROFFS CASE, PENALTY WOULD NOT HAVE BEEN LE VIABLE SINCE THE ONUS OF ESTABLISHING MENS REA COULD NOT HAVE BEEN DISCHARGE D BY THE AO, BUT PURSUANT TO THE DECISION OF DHARMENDRA TEXTILE PENA LTY IN SUCH A CASE WILL BE LEVIABLE. (C) WHERE IT IS ESTABLISHED THAT THE ASSESSEES CO NDUCT AND EXPLANATION IS BONA FIDE-IN THIS SITUATION PENALTY WAS NEVER LEVIA BLE AND EVEN POST THE DECISION OF DHARMENDRA TEXTILE THERE IS NO CHANGE. THEREFORE, LEGAL POSITION HAS CHANGED ONLY IN SITUATION (B). 4 WHEN THE PRESENT CASE IS EXAMINED IN VIEW OF THIS L EGAL POSITION, IT IS FOUND THAT SURVEY WAS CONDUCTED ON 16.1.2002 AT THE PREMISES O F APPELLANT, DURING THE COURSE OF WHICH ADDITIONAL INCOME OF RS.8,00,000/- WAS OFFERED FOR TAXATION. APPELLANT FILED HIS RETURN ON 17.10.2002 BY DECLARI NG INCOME OF RS.1,33,600/-. THUS THE DISCLOSURE OF INCOME IN THIS RETURN WAS NO T TRUE AND FULL AND THE ASSESSMENT WAS COMPLETED BY MAKING VARIOUS ADDITION S AS MENTIONED EARLIER. ADDITIONS OF RS.1,38,000/-, RS.36,000/- AND RS.1875 /- WERE CONFIRMED BY CIT (A) AND HONBLE ITAT. THESE FACTS HAVE BEEN MENTIONED B Y AO IN THE PENALTY ORDER AS FOLLOWS: THUS PRESENTLY THE ADDITION MENTIONED AT SL. NO.2, 4 & 5 I.E. RS.138000/-, RS.36000/- AND RS.1875/- SURVIVE FOR CONSIDERATION FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE I.T. ACT, 1961. THE AGGREGATE AMOU NT OF INCOME INVOLVED IS RS.175875/-. THESE ADDITIONS WERE MADE BY THE A.O. BY OBSERVIN G THAT: DURING THE COURSE OF ASSESSMENT PROCEEDINGS QUESTI ONNAIRE DATED 19.9.2003 WAS ISSUED TO THE ASSESSEE ASKING HIM TO EXPLAIN THE RE ASONS FOR DOING SO. THE ASSESSEE FILED WRITTEN EXPLANATION DATED 10.11.2003 . IT IS STATED IN THIS EXPLANATION THAT THERE WAS NO CASH FOUND AT THE TIM E OF SURVEY AND THE STATEMENT ON OATH WAS RECORDED UNDER DURESS. ACCORDING TO THE ASSESSEE THE FACT THAT POST DATED CHEQUES FOR TAX AGAINST SURRENDERED AMOUNT WE RE GIVEN ITSELF PROVES THAT NO CASH WAS FOUND. THIS CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE. THE POSITION IS THAT AN INVENTORY OF CASH FOUND AT THE TIME OF SURV EY WAS PREPARED GIVING EVEN THE DENOMINATION OF RUPEES AND THEIR QUANTITY HAS BEEN RECORDED IN THE INVENTORY. THE INVENTORY HAS BEEN SIGNED BY THE ASSESSEE AS WE LL AS OFFICIALS OF THE I.T. DEPARTMENT WHO ARE RESPONSIBLE PERSONS. NOT ONLY TH IS, SPECIFIC QUESTION WAS ASKED ABOUT THE EXCESS CASH FOUND, WHEREIN THE ASSE SSEE CLEARLY STATED THAT HE HAD NO EXPLANATION TO OFFER AND SURRENDERED THIS AMOUNT FOR TAXATION. THE ONLY POINT THAT POST DATED CHEQUES TOWARDS PAYMENTS OF TAX WER E GIVEN BY THE ASSESSEE DOES NOT MEAN THAT NO CASH WAS FOUND. AS A MATTER OF FAC T THE ASSESSEE DEPOSITED RS.80,000/- IN CASH ON 23.1.2002 TOWARDS ADVANCE TA X. IT IS INCORRECT TO SAY THAT THE STATEMENT WAS RECORDED UNDER DURESS. AT THE END OF THE STATEMENT IT HAS BEEN CATEGORICALLY MENTIONED BY THE ASSESSEE AS UNDER: MIJKSDR LKJS C;KU ESAUS IWJS GKS'K GOKL ESA] FCUK FDLH NCKO DS FN;S GSA LHKH C;KU ESAUS I<+ DJ NS[K FY, GSA ;G ESJS CRK;S V UQLKJ GH FY[KSA X;S GS TKS FD IW.KZR;K LGH GSA ESAUS BLESA DKSBZ HKH RF; U GHA FNIK;K GSA IN VIEW OF THIS CONTENTION OF THE ASSESSEE IS REJEC TED AND THE SUM OF THE RS.138000/- IS TREATED AS UNEXPLAINED MONEY U/S 69A OF THE ACT AND IS INCLUDED AS ASSESSEES INCOME FORM UNDISCLOSED SOURCES. SIMILAR AS REGARDS ADDITION OF RS.37875/- (36000+18 75) IN THE ASSESSMENT ORDER THE A.O. OBSERVED AT PARA 9 OF ASSESSMENT ORDER AS UNDER: 5 AT THE TIME OF SURVEY A REGISTER DESCRIBED AS B.C. REGISTER WAS ALSO FOUND. ITS PHOTO COPY WAS OBTAINED. ACCORDING TO THIS REGISTER THE ASSESSEE MADE INVESTMENT OF RS.36,000/- DURING THIS YEAR IN THE SAID B.C. HE ALSO EARNED INTEREST OF RS.1875/- ON THIS INVESTMENT. THIS WAS POINTED OUT TO THE ASSESSEE VIDE LETTER DATED 09.02.2005, PROPOSING TO ADD THESE AMOUNTS AS UNACCOUNTED AND UNEXPLAINED INVESTMENT/INCOME. THE ASSESSEES A/R A TTENDED ON 24.2.2005 AND ADMITTED THAT THE INCOME EARNED THROUGH B.C. IS NOT APPEARING IN ACCOUNT BOOKS AND HAS ALSO NOT BEEN REFLECTED IN THE BOOKS OF ACC OUNTS. THE TOTAL AMOUNT OF RS.37,875/- (36000+1875) IS THEREFORE ADDED AS ASSE SSEES INCOME FROM UNDISCLOSED SOURCES. THE APPELLANT OFFERED RS.138000/- FOR TAXATION ON A CCOUNT OF CASH FOUND AT HIS PLACE WHICH WAS UNACCOUNTED. THIS WAS DULY ADMITTED BY HIM IN HIS STATEMENT. SUBSEQUENTLY HE RETRACTED HIS STATEMENT AND ON THE OTHER HAND ALLEGED THAT NO SUCH CASH WAS FOUND AND BOGUS INVENTORY WAS PREPARE D BY DEPARTMENT OFFICIALS. THIS IS A SERIOUS ALLEGATION AGAINST DEPARTMENTAL O FFICIALS, BUT APPELLANT FAILED TO FILE ANY EVIDENCE IN SUPPORT OF THIS ALLEGATION AT ANY STAGE. AS ADMITTED BY APPELLANT HIMSELF AFFIDAVITS WERE FILED, WHICH WERE NOT ACCEPTED BY CIT (A) AND HONBLE ITAT. THEREFORE NO COGNIZANCE CAN BE TAKEN OF SUCH WILD ALLEGATIONS. THIS ALSO PROVES PRESENCE OF MES-REA ON THE PART OF APPELLANT. IN SUCH A SITUATION AO HAS RIGHTLY CONCLUDED THAT APPELLANT FURNISHED I NACCURATE PARTICULARS OF HIS INCOME, IN THE RETURN FILED BY HIM ON 17.10.2002. I N THIS CASE IT IS NOT ESTABLISHED THAT THE CONDUCT AND EXPLANATION OF APPELLANT WAS B ONAFIDE, THEREFORE THE CASE FALLS IN CATEGORY (B) OF PARA 4.18 AS MENTIONED ABO VE. THE LEVY OF PENALTY U/S 271 (1) (C) IS THEREFORE JUSTIFIED IN THIS CASE PURSUAN T TO THE DECISION OF DHARMENDRA TEXTILES. HOWEVER IT IS OBSERVED THAT AO HAS LEVIED THE PENAL TY AT 200% OF TAX SOUGHT TO BE EVADED. NORMALLY MINIMUM PENALTY IS TO BE LEVIED, U NLESS THERE ARE SPECIFIC REASONS FOR LEVYING PENALTY AT A HIGHER AMOUNT. IN THIS CASE NO SUCH REASONS HAVE BEEN GIVEN BY AO. IT WILL BE THEREFORE FAIR AND REA SONABLE TO RESTRICT THE PENALTY TO RS.52,763/- WHICH IS THE MINIMUM PENALTY LEVIABL E IN THIS CASE. AO IS THEREFORE DIRECTED TO RESTRICT LEVY OF PENALTY TO RS.52,763/- AS AGAINST RS.1,05,526/- LEVIED BY HIM GROUND NO.1,2,3 & 4 ARE THUS PARTLY ALLOWED. 6. THE LD. CIT (A) HAS REFERRED TO THE FOLLOWING DE CISIONS: CIT V HANDLOOM EMPORIUM 282 ITR 431 (ALL) SMT. KUSUM JAISWAL V CIT 65 CTR 193 (ALL) CIT V K. MAHIM 149 ITR 737 ADD CIT V RADHEY SHYAM 123 ITR 125 (ALL) SUNANDA RAM DEKA V CIT 210 ITR 988 (GAU) 6 CIT V HAJI P MOHAMMED 132 ITR 623 (KER) BADRI PRASAD OM PRAKASH V CIT 163 ITR 440 (RAJ) G.C. AGARWAL V CIT 186 ITR 571 P.C. JOSEPH & BROS V CIT 240 ITR 818 (KER) K.P. MADHUSUDAN V CIT 251 ITR 99 (S.C.) CIT V MOHD MOHTRAM FAROOQUI 259 ITR 132 (RAJ) DHARMENDER TEXTILE PROCESSOR 306 ITR 277 (S.C) 7. THE LD. A/R GAVE THE DETAILS OF NOTICES USUED AN D REPLY FILED AND THESE NOTICES ARE AS UNDER: DATE OF ISSUE REPLY FILED ON 28.03.2005 06.04.2005 19.07.2005 29.07.2005 17.11.2005 05.12.2005 16.02.2006 28.02.2006 28.03.2006 07.04.2006 (A.O. WAS ON LEAVE) 10.04.2006 FOR DT.17.04.2006 16.04.2006 (ADJOUR NMENT SOUGHT) 8. THE ADJOURNMENT APPLICATION SEEKING ADJOURNMENT ON 16.4.2006 WAS NOT RECEIVED BY THE A.O. AND HENCE THE SAME WAS GIVEN ON RECEIPT COUNTE R OF I.T. DEPARTMENT. THE PENALTY ORDER PASSED IS INFRINGEMENT OF LIMITATION U/S 275 (1)(C) OF I.T. ACT. THE LD. CIT (A) HAS CONSIDERED THE CASE LAWS WHERE THE REVISED RETURNS ARE FILED. 9. THE LD. A/R STATED THAT THE TRIBUNAL WHILE DISPO SING OFF THE MISCELLENOUS APPLICATION HAS NOT MENTIONED A SINGLE WORD IN THE APPELLATE ORDER THOUGH SALE DEEDS WERE PART OF ANNEXURES TO THE APPEAL. DECISION OF TRIBUNAL IS MEANING LESS. T HE DECISIONS REFERRED BY LD. CIT (A) HAS NO RELEVANCE. IT WAS STATED THAT ASSESSEE RETRACTED TH E STATEMENT AND FILED AFFIDAVIT. CASH WAS NOT FOUND AT THE TIME OF SURVEY. THE LD. A/R RELIED ON THE FOLLOWING DECISIONS: (I) 44 TAX WORLD 192 VINOD KUMAR JAIPURIA V ITO FIN DING DURING ASSESSMENT PROCEEDINGS ARE NOT BINDING DURING PENALTY PROCEEDI NGS. NO PENALTY IF ADDITION ON ESTIMATE BASIS. NO PENALTY IF NO SATISFACTION. NO P ENALTY IF NO MENSREA. 7 (II) CIT V MISHRIMAL SONI 209 CTR 438 (RAJ) : THIS IS A CASE IN RESPECT OF EXPL 5 TO SECTION 271(1)(C). HENCE NOT APPLICABLE. (III) CIT V AJAIB SINGH & CO. 253 ITR 630 (P&H): RE LATES TO DISALLOWANCE OF EXPENDITURE HENCE NOT RELEVANT AS IT IS APPLICABLE WHEN THERE IS A CASE OF FILING OF INACCURATE PARTICULARS. (IV) CIT V JALA RAM OIL MILLS 253 ITR 192 (GUJ): IF EXPLAINATION TO CREDITS U/S 68 NOT ACCEPTED THEN ADDITION IS NOT SUFFICIENT FOR IMPOSI TION OF PENALTY. (V) CIT V A.P. YARU COMBINES (P) LTD. 200 CTR 641 ( KAR) : HIGH DENOMATION NOTES WERE NOT IN CIRCULATION AT THE TIME WHEN THESE WERE FOUND AND HENCE SECTION 69A IS NOT APPLICABLE HENCE NO PENALTY. THIS DECISION IS OF NO HELP TO THE ASSESSEE. (VI) CHITRA DEVI V ACIT 28 TW 454 (JODHPUR) STATEME NT RECORDED DURING SEARCH CAN NOT BE SAID TO BE AN EVIDENCE FOUND AS A RESULT OF SEARCH. THIS IS WITH REFERENCE TO PROVISIONS OF SECTION 158 B(B) & 158BB. THIS DECISION IS OF NO HELP. 10. WE HAVE HEARD BOTH THE PARTIES. (A) LETTER DT. 6.4.2005 : REQUESTED THAT PENALTY B E KEPT IN ABEYANCE. (B) LETTER DT. 29.7.2005 : PENALTY PROCEEDINGS HE KEPT PENDING. (C) LETTER DT. 5.12.2005: APPEAL IS PENDING BEFORE ITAT, PENALTY BE KEPT PENDING. (D) LETTER DT. 28.2.2006: THE ASSESSEE INTIMATED T HAT HE HAS ENQUIRED ON PHONE THAT I.T.O. AND INSPECTOR ARE NOT AVAILABLE. HENCE THE ASSESSEE DID NOT COMPLY WITH SUMMON U/S 131 ON 27.2.200 6. (E) 7.4.2006 PENALTY BE KEPT PENDING. (F) 17.4.2006 THE COUNSEL WILL BE OUT OF STATION. (G) THERE IS COPY OF LETTER DT. 24.4.2006 AND THE R ECEIPT HAS BEEN STRUCK BY THE DEPARTMENT. 11. THE LD. A/R IN HIS WRITTEN SUBMISSIONS BEFORE U S HAS MENTIONED AS UNDER: THE CIT (APPEALS) DECISIONS APPEAR TO COME FROM AN IGNORANT BRAIN. IN RESPECT OF DECISION OF TRIBUNAL, THE LD. A/R HAS STATED THAT SUCH ORDER IS MEANINGLESS. 8 12. THE ACT HAS BEEN AMENDED AND DEEMED SATISFACTIO N IS PROVIDED WITH RETROSPECTIVE EFFECT. THE HONBLE APEX COURT IN THE CASE OF DHARMENDAR TE XTILE PROCESSERS (SUPRA) HAS HELD THAT PENALTY IS A CIVIL LIABILITY AND MENSREA IS NOT NEE DED. BEFORE THE A.O. THE ASSESSEE HAS NOT FILED ANY EXPLAINATION. SUMMON U/S 131 WAS NOT COMPLIED A ND LETTER WAS WRITTEN ON NEXT DAY THAT A/R ENQUIRED ON 27.2.2006 AT 10.50 AM THAT I.T.O. IS NO T AVAILABLE-PERHAPS THIS CAN NOT BE TESMED AS COMPLIANCE TO SUMMON U/S 131 IN WHICH IT IS MENTION ED THAT ASSESSEE SHOULD NOT LEAVE BEFORE PERMISSION. NO EXPLAINATION IN RESPECT OF ADDITIONS . THE PENALTY IS NOT TIME BARRED AS PROVISO IS NOT APPLICABLE WHEN APPEAL IS FILED BEFORE TRIBUNAL . WE REPRODUCE OUR FINDING ON THIS ISSUE IN THE CASE OF M/S. PODDAR ASSOCIATES IN ITA NO.979/JP/201 0 VIDE ORDER DT. 20.5.2011 AS UNDER: IN THE C.O., THE ASSESSEE HAS STATED THAT THE PENAL TY ORDER IS BARRED BY LIMITATION. THE LD. AR SUBMITTED THAT THE LIMITATION IS TO BE R ECKONED FROM THE RECEIPT OF THE ORDER OF THE LD. CIT (A) AND NOT THE ITAT IN CASE T HE ORDER OF THE LD. CIT (A) HAS BEEN PASSED AFTER 01.06.2003. ON THIS BASIS, IT WAS SUBMITTED THAT PENALTY IS BARRED BY LIMITATION. THE PROVISO TO SECTION 275(1) (A) IS APPLICABLE IN A CASE WHERE THE ASSESSMENT ORDER IS SUBJECT MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS). PROVISO IS AN EXCEPTION TO SECTION 275(1 )(A) WILL NOT BE APPLICABLE. A PROVISO IS MEAN TO CARVE OUT AN EXCEPTION AND NOT T O ABROGATE PART OF THE MAIN PROVISIONS. THEREFORE THE PROVISO TO SECTION 271(1) (A) IS AN EXCEPTION TO THE MAIN PROVISION AND WILL NOT CURTAIL THE LIMIT PROVIDED I N SECTION 275(1)(A) OF THE ACT. A PROVISO CANNOT BE HELD TO CONTROL THE SUBSTANTIVE E NACTMENT OR TO WITHDRAW BY MERE IMPLICATION ANY PART OF WHAT THE MAIN PROVISIO N HAS GIVEN OR TO SET AT NAUGHT THE REAL OBJECT OF THE MAIN ENACTMENT. THE P ROVISO IS TO BE CONSTRUED HARMONIOUSLY WITH THE MAIN ENACTMENT. WE THEREFORE HOLD THAT THE PENALTY ORDER IS NOT BARRED BY LIMITATION. RELIANCE IS ALSO PLACED ON THE DECISION OF CIT V M OHAN INVESTMENT TRADING CO. LTD. 245 CTR 312 (DEL) WHICH FOLLOWED DECISION OF MADRAS HIG H COURT REPORTED IN 288 ITR 452 (MAD). 13. WE THEREFORE, FEEL THAT LD. CIT (A) WAS JUSTIFI ED IN IMPOSING THE PENALTY. THE ORDER IS PRONOUNCED IN OPEN COURT ON 30.12.201 1 SD/- SD/- (R.K.GUPTA) (N.L.KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30.12.2011 *S.KUMAR* 9 COPY FORWARDED TO:- 1. HUKUM CHAND JAIN, KAITHOON. 2. INCOME TAX OFFICER, WARD-2(1), KOTA. 3. THE CIT 4. THE CIT(A), 5. THE D/R, ITAT, JAIPUR 6. THE GUARD FILE IN ITA NO.407/JP/2011 BY ORDER A.R., I.T.A.T., JAIPUR