ACIT, Gurgaon V. M/s. All Grace Developers Pvt. Ltd., Gurgaon

ITA 4358/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3674 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Keywords: Period of limitation; Initiation of penalty proceedings; Competent authority; Time period of passing order
• Section: 143(3); 27

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO. 4358/DEL/2016 ASSESSMENT YEAR: 2011-12 CO NO. 19/DEL/2018 ARISING OUT OF ITA 4358 /DEL/2016 ASSESSMENT YEAR 2011- 12 O R D E R ACIT, CIRCLE-1(1) GURGAON VS. ALL GRACE DEVELOPERS PVT. LTD. F-12/03, BASEMENT DLF PHASE-1 GURGAON PAN AAFCA6919G (APPELLANT) (RESPONDENT) M/S. ALL GRACE DEVELOPERS PVT. LTD. F-12/03, BASEMENT DLF PHASE-1 GURGAON PAN AAFCA6919G VS. ACIT, CIRCLE-1(1) GURGAON (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI RAVI KANT GUPTA, SR.DR ASSESSEE BY : SHRI SANDEEP SAPRA, ADVOCATE DATE OF HEARING 30/01/2018 DATE OF PRONOUNCEMENT 31/01/2018 ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 2 PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL AS WELL AS THE CROSS OBJECTION HAS BEEN FILED BY THE REVENUE AND BY THE ASSESSEE AGAINST IMPUG NED ORDER DATED 15.6.2016, PASSED BY LD. CIT(APPEALS)-1, GURGAON IN RELATION TO THE PENALTY PROCEEDINGS U/S 271D. THE REVENUE IS MAINLY AGGRIEVED BY DELETION OF PENALTY OF RS. 50 LACS IMPOSED BY LD. A CIT, RANGE- I, GURGAON U/S 271D, IN VIOLATION OF SECTION 269SS; WHER EAS IN THE CROSS OBJECTION THE ASSESSEE HAS CHALLENGED THE PENALTY ORDE R DATED 29.1.2015 ON THE GROUND THAT IT IS BARRED BY LIMITATION IN TERMS OF SECTION 275(1)(C). 2. SINCE THE GROUNDS RAISED IN CROSS OBJECTION RA ISES THE POINT OF LIMITATION AND GOES TO THE ROUTE OF THE MATTER, THEREFORE, WE ARE ADJUDICATING THE ISSUE OF LIMITATION FIRST. 3. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT, HEREIN THIS CASE THE AO WHO IS AN ADDITIONAL COMMISSIO NER OF INCOME TAX, RANGE NO. 1, GURGAON, WHILE FRAMING THE ASSESS MENT U/S 143(3) FOR THE IMPUGNED ASSESSMENT YEAR 2011-12, RECORDED TH AT ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY AMOUNTING TO RS . 50 LACS WHICH WAS IN VIOLATION OF SECTION 269SS AND ACCORDINGLY, HE HAS RECORDED HIS SATISFACTION THAT PENALTY PROCEEDINGS U/S 271D SHOUL D BE SIMULTANEOUSLY INITIATED. THE SAID ASSESSMENT ORDER WAS COMPLETED ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 3 VIDE ORDER DATED 21.1.2014. LD. COUNSEL SUBMITTED THA T ON THE SAME DATE THE SHOW CAUSE NOTICE WAS ALSO ISSUED BY THE LD. A DDITIONAL CIT, WHEREBY HE REQUIRED THE ASSESSEE AS TO WHY PENALTY PR OCEEDINGS U/S 271D FOR SUM AMOUNTING TO RS. 50 LACS SHOULD NOT BE INITIATED. AFTER INITIATING THE PENALTY PROCEEDINGS ON THE DATE OF THE ASSESSMENT ITSELF, THE PENALTY U/S 271(D) HAS BEEN LEVIED BY THE AO VIDE ORDER DATED 29.1.2015, WHICH HE POINTED OUT THAT IT IS CLEARLY BARRE D BY LIMITATION IN TERMS OF SECTION 275(1)(C). HE SUBMITTED THAT, UNDER THE SAID PROVISION TWO LIMITATION HAS BEEN PROVIDED WHEN PENAL TY CANNOT BE IMPOSED; FIRSTLY , AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR IMPOS ITION OF PENALTY HAS BEEN INITIATED ARE COMPLETED, WHICH HERE IN THIS C ASE SHOULD BE 31.3.2014; OR SECONDLY , AFTER SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED WH ICH HERE IN THIS CASE WOULD COME TO 31 ST JULY, 2014. SINCE THE LATER PERIOD IS 31 ST JULY, 2014, THEREFORE, THE ORDER DATED 29.1.2015 IS CLEARL Y BARRED BY LIMITATION. IN SUPPORT, HE RELIED UPON FOLLOWING JUD GMENTS:- 300 ITR 180, CIT CHHAJER PACKAGING AND PLASTICS P L TD. (BOMBAY H.C.), COPY ENCLOSED AT PAGES 15-21. 394 ITR 312, PR. CIT VS. MAHESH WOOD PRODUCTS PVT. LTD . (DELHI H.C.). 352 ITR 328, CIT VS. JITENDRA SINGH RATHORE (RAJASTHAN H.C.). 287 ITR 239, ITO VS. RAMKISHORE REWARAM TADA (MP. H .C.). ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 4 266 ITR 393, SHANBHAG RESTAURANT VS. DY. CIT (KARNATAK A H.C.). 4. APART FROM THAT, HE ALSO RELIED UPON THE JUDG MENT OF HONBLE DELHI HIGH COURT OF PCIT VS, MAHESH WOOD PRODUCTS PVT. LTD. IN ITA NO. 786/787/2016, JUDGMENT DATED 5.5.2017 , WHEREIN THE HONBLE HIGH COURT HELD THAT THE DATE ON WHICH THE AO WR OTE A LETTER TO ACIT RECOMMENDING THE ISSUANCE OF THE PENALTY U/S 271E SHOULD BE THE STARTING POINT OF THE INITIATION. HERE IN THIS CASE WHEN ADDITIONAL CIT HIMSELF IS THE COMPETENT AUTHORITY TO LE VY THE PENALTY U/S 271D AND HAS INITIATED THE PENALTY PROCEEDINGS HIM SELF AT THE TIME OF ASSESSMENT, THEN SAME SHOULD BE TAKEN AS THE DA TE OF INITIATION. 5. ON THE OTHER HAND, LD. SR. DR, SUBMITTED THAT HERE IN THIS CASE ANOTHER SHOW CAUSE NOTICE WAS ISSUED BY THE LD. ADDITI ONAL CIT ON 22.7.2014 AND IT WAS THIS NOTICE WHICH STATES THAT THIS IS THE NOTICE U/S 274 R.W.S 271D; AND THEREFORE, SUCH A NOTICE SHO ULD BE RECKONED AS POINT OF INITIATION OF PENALTY PROCEEDINGS. HE SUB MITTED THAT THIS ISSUE WAS ALSO RAISED BEFORE THE LD. CIT(A) AND LD. CIT(A) HAS CALLED FOR REMAND REPORT OF THE AO, WHICH WERE FOR THE SAKE OF READY REFERENCE, RELEVANT PORTION OF WHICH IS REPRODUCED :- ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 5 KINDLY REFER TO YOUR OFFICE LETTER NO. CIT(A)-1IGG NIR.R NO. 61/2015-16/1B44 DATED 3.12.2015, WHEREIN THE COMMEN TS OF THIS OFFICE HAVE BEEN SOUGHT ON THE REPLY FILED BY THE ASSESSEE BEFORE YOUR GOODSELF ON THE IMPOSITION OF PENALTY U /S 271 D OF THE INCOME TAX ACT, 1961, WHEREIN THE ASSESSEE HAS CHAL LENGED THE IMPOSITION OF PENALTY U/S 27 ID OF THE INCOME TAX A CT, 1961 BY STATING THAT THE SAID PENALTY ORDER PASSED BY THE T HEN AO I.E. ADDL CIT ,RANGE 1 ON 291112015 WAS TIME BARRED ON 3 1/7/2014 ON THE GROUND THAT THE FIRST NOTICE WAS ISSUED BY T HE THEN AO I.E. ADDL CIT, RANGE 1 ON 24/112014. IN THIS REGARD THE REPORT IS AS UNDER: IT IS BROUGHT TO YOUR KIND NOTICE THAT THE ASSUMPTI ON DRAWN THE ASSESSEE IS TOTALLY MISPLACED AND WITHOUT MERITS. T HE FIRST NOTICE U/S 274 READ WITH SECTION 271 D OF THE INCOME TAX A C 1 FOR IMPOSITION OF PENALTY U/S 271 D WAS ISSUED TO THE A SSESSEE ON 22/7/2014. FOR THE RESPECTIVE NOTICE OF INITIATION OF PENALTY PROCEEDINGS THE TIME BARRING SHALL BE GOVERNED BY S EC 275(1)C OF THE INCOME TAX ACT, 1961 WHICH READS AS UNDER: (C) IN ANY OTHER CASE, AFTER THE EXPIRY OF THE FIN ANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTIO N FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPL ETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTIO N FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIO D EXPIRES LATER. HENCE IT CAN BE SEEN THAT THE TIME BARRING FOR THE AFORESAID PROCEEDINGS U/S 271 D OF THE INCOME TAX ACT, 1961 W AS 31/3/2015 AND NOT31/7/20 14. ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 6 5. LD. CIT(A), HELD THAT THE NOTICE DATED 24.1.20 14 WAS MERELY A SHOW CAUSE BEFORE INITIATION OF PENALTY PROCEEDINGS AND IT WAS NOT A NOTICE WHICH HAS KICK STARTED THE PENALTY PROCEEDINGS. THE FIRST NOTICE WHICH WAS SERVED UPON THE ASSESSEE IN THIS REGARD WAS ON 22.7.2014, WHICH WAS THE PROPER NOTICE AND POINT OF INITIATION OF PENALTY PROCEEDINGS IF THIS DATE IS TAKEN FOR CONSIDERATION THIS PENALTY ORDER IS CLEARLY WITHIN THE STATUTORY TIME LIMIT. THUS, LD. SR. DR STRONGLY RELIED UPON THE LD. CIT(A). HE FURTHER RELIED UPON THE ORDER OF ITAT MUMBAI BENCH IN THE CASE OF M/S. DIGHI PORT LTD. VS. ITO IN ITA NO. 576/MUM/2010 ORDER DATED 25.4.2012, WHEREIN IN THE CONTEXT OF 271B, THE TRIBUNAL HELD THAT THE SHOW CAUSE NOTICE WHICH JUST ASKED THE ASSESSEE AS TO WHY PENALTY PROCEEDINGS SHOULD NOT INITIATED CANNOT BE TAKEN AS THE NOTICE BUT ONLY WHEN AO IS NOT SA TISFIED WITH THE EXPLANATION OF THE ASSESSEE AND HE ISSUES SHOW CAU SE NOTICE AS TO WHY PENALTY SHOULD NOT BE IMPOSED, THEN THAT NOTICE SHO ULD BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF CALCULATING THE LIMITATION. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FACTS QUA THE ISSUE OF LIMITATION. AS STATED ABOVE HERE IN THIS CASE THE ASSESSMENT ORDER HAS BEEN PASSED BY LD. ADDI TIONAL COMMISSIONER OF INCOME TAX, RANGE -1, GURGAON, WHER EIN IN THE ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 7 COURSE OF THE ASSESSMENT PROCEEDINGS, HE HAS RECORDE D FOLLOWING SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS U/ S 271D:- THE RECEIPT OF SHARE APPLICATION MONEY OF RS. 50 L ACS IN CASH FROM SOME SMT. SEEMA AGGARWAL (AS CONFIRMED BY SMT. SEEMA AGGARWAL HERSELF) IS NOT ALLOWABLE UNDER THE PROVIS IONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961. I AM THEREFORE S ATISFIED THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961. PENALTY PROCEEDINGS U/S 271D OF THE INCOME TAX ACT, 1961 IS SIMULTANEOUSLY INITIATED. THEREAFTER AT THE END OF THE ASSESSMENT ORDER, HE MENTIO NS: ISSUE NOTICE FOR INITIATION OF PENALTY U/S 271D . ON THE SAME DATE, SHE ISSUES THE FOLLOWING NOTICE:- TO, M/S. ALL GRACE DEVELOPERS PVT. LTD. F-12/3, BASEMENT DLF PHASE-1, GURGAON SIR/MADAM, SUBJECT: PENALTY PROCEEDINGS U/S 271D OF THE INCOME TAX ACT, 1961 REGARDING PLEASE REFER TO THE ASSESSMENT PROCEEDINGS U/S 143(3) FOR THE A.Y. 2011-12 COMPLETED ON 21.01.2014. IT HAS BEEN NOTICED THAT FOLLOWING AMOUNT S TOWARDS SHARE APPLICATION MONEY IN THE NATURE OF DEPOSITS HAVE NO T BEEN RECEIVED THROUGH CHEQUE/BANK DRAFT, WHICH IS A NON-COMPLIANC E OF SECTION 269SS OF THE INCOME TAX ACT, 1961 :- ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 8 SL. NO. DATE AMOUNT 1. 15.04.2010 50,00,000/- IN THIS REGARD YOU ARE REQUESTED TO SHOW CAUSE AS TO WHY PENALTY PROCEEDINGS U/S 271D OF THE INCOME TAX ACT, 1961 MAY NOT BE INITIATED IN YOUR CASE. IN THIS CONNECTION, YOU ARE REQUESTED TO ATTEND THE OFFICE OF THE UNDERSIGNED ON 10.02.20 14 AT 12.30 PM, FAILING WHICH IT WILL BE ASSUMED THAT YOU HAVE NOTH ING TO SAY IN THIS REGARD. YOURS FAITHFULLY, (MAMTA BANSAL) ADD L. COMMISSIONER OF INCOME TAX, RANGE-1, GURGAON 7. UNDER THE PROVISION OF SECTION 271D, THE COMPE TENT AUTHORITY TO IMPOSE THE PENALTY IS JOINT COMMISSIONER. SINCE AD DITIONAL CIT IS HIGHER IN HIERARCHY AND BOTH JOINT COMMISSIONER OF I NCOME TAX AND ADDITIONAL COMMISSIONER ARE INTERCHANGEABLE IN TERMS OF SECTION 2(7A), THEREFORE, ADDITIONAL CIT WAS THE COMPETENT AU THORITY TO IMPOSE THE PENALTY. HERE IN THIS CASE NOT ONLY THE SATISFACTI ON HAS BEEN RECORDED BY THE ADDITIONAL CIT, BUT ALSO INITIATED BY HI M NOT ONLY IN THE ASSESSMENT ORDER BUT ALSO IN TERMS OF AFORESAID NOTI CE WHICH WAS ISSUED ON 21.1.2014. THE CASE OF THE REVENUE BEFORE US IS THAT, THERE IS ANOTHER SHOW CAUSE NOTICE ISSUED ON 22.7.2014, WH EREBY THE AO HAS MENTIONED NOTICE ISSUED U/S 274 R.W.S 271D, WHICH SHOULD BE ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 9 RECKONED AS A NOTICE ON WHICH INITIATION OF PENALTY PROCEEDINGS HAS BEEN DONE BY THE AO AND EARLIER NOTICE IS MERE INTIM ATION TO THE ASSESSEE AS TO WHY PENALTY MAY NOT BE INITIATED. THUS, THERE IS A DIFFERENCE IN THE TWO NOTICES. WE ARE UNABLE TO APPRE CIATE SUCH A CONTENTION OF THE REVENUE, ESPECIALLY WHEN THE PROVISI ON OF SECTION 275(1)(C) CATEGORICALLY STATES AS UNDER :- (C) IN ANY OTHER CASE, AFTER THE EXPIRY OF THE FIN ANCIAL 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 ACTION FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES L ATER. THE KEY PHRASES USED ARE; IN THE COURSE OF WHICH ACTION OF IMPOSING OF PENALTY HAS BEEN INITIATED OR ACTION OF IMPOSITION OF PENALTY IS INITIATED. THE ACTION HAS TO BE SEEN QUA THE SATISFACTION OF THE AO DURING THE COURSE OF THE ACTION IN WHICH HE HAS REACH ED TO HIS CONCLUSION THAT PENALTY SHOULD BE INITIATED AND MOMENT HE ISSUES THE SHOW CAUSE NOTICE TO THE ASSESSEE, THE PENALTY SAID TO H AVE BEEN INITIATED. IF THE ARGUMENT OF THE REVENUE IS ACCEPTED THE N IN EVERY CASE THE PLEA WOULD BE TAKEN THAT THE FIRST NOTICE WHICH SUCCEE DS THE SATISFACTION OF THE AO SHOULD NOT BE TAKEN AS POINT OF I NITIATION BUT ONLY WHEN A NOTICE WHICH MENTIONS 274/271D OR PENALT Y IMPOSABLE IN ANY OTHER SECTION, THAT ALONE SHOULD BE TAKEN AS INITIAT ION OF PENALTY PROCEEDINGS. IF THE AO ISSUES SUCH NOTICE AFTER TWO Y EARS THEN UNDER WHICH COURSE OF ACTION SUCH PENALTY HAS BEEN INITIATED OR WH ICH IS THE ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 10 CAUSE OF ACTION FOR IMPOSITION OF PENALTY IS INITIATED . WHETHER IT CAN BE SAID THAT THE LIMITATION IS OPEN TO THE AO AT HIS CHOICE , EVEN WHEN COURSE OF ACTION OR CAUSE OF ACTION HAS ELAPSED? WHETH ER IT IS OPEN FOR THE AO TO INITIATE ACTION AT ANY TIME HE CHOOSES? IN OUR HUMBLE OPINION IT CANNOT BE THE INTENTION OF LEGISLATURE THAT POIN T OF INITIATION IS LEFT OPEN TO THE AO WHEN THE COURSE OF ACTION OR CAU SE OF ACTION FOR IMPOSING THE PENALTY HAS ELAPSED. HERE ONCE AGAIN I T IS REITERATED THAT PENALTY HAS BEEN INITIATED IN THE ASSESSMENT PROCEEDIN GS AND SIMULTANEOUSLY SHOW CAUSE NOTICE HAS BEEN ISSUED, WHI CH IS THE STARTING POINT FOR THE LIMITATION PERIOD AS ENVISAGED U/S 275(1)(C). SINCE THE LATER PERIOD OF SIX MONTHS HAS TO BE SEEN F OR THE TIME LIMIT OF COMPLETION OF SUCH A PENALTY ORDER, WHICH HERE IN THI S CASE WAS EXPIRING ON 31 ST JULY, 2014. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS. JKD CAPITAL AND FINLEASE LTD. THE HONBLE HIGH COURT IN THE CONTEXT OF PENALTY U/S 271E HAVE INCORPORATED THE PROVISION OF PENALTY U/S 271B IN THE FOLLOWING MANNER :- IN TERMS OF THE ABOVE PROVISION, THERE ARE TWO DIS TINCT PERIODS OF LIMITATION FOR PASSING A PENALTY ORDER, AND ONE THA T EXPIRES LATER WILL APPLY. ONE IS THE END OF THE FINANCIAL YEAR IN WHICH THE QUANTUM PROCEEDINGS ARE COMPLETED IN THE FIRST INST ANCE. IN THE PRESENT CASE, AT THE LEVEL OF THE ASSESSING OFFICER , THE QUANTUM PROCEEDING WAS COMPLETED ON DECEMBER 28, 2007. GOIN G BY THIS ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 11 DATE, THE PENALTY ORDER COULD NOT HAVE BEEN PASSED LATER THAN MARCH 31, 2008. THE SECOND POSSIBLE DATE IS THE EXP IRY OF SIX MONTHS FROM THE MONTH IN WHICH THE PENALTY PROCEEDI NGS WERE INITIATED. WITH THE ASSESSING OFFICER HAVING INITIA TED THE PENALTY PROCEEDINGS IN DECEMBER 2007, THE LAST DATE BY WHIC H THE PENALTY ORDER COULD HAVE BEEN PASSED IS JUNE 30, 2008. THE LATER OF THE TWO DATES IS JUNE 30, 2008. CONSIDERING THAT THE SUBJECT MATTER OF THE QUANTUM PROCEEDINGS WAS THE NON-COMPLIANCE WITH SECTION 269T OF THE ACT , THERE WAS NO NEED FOR THE APPEAL AGAINST THE SAID ORDER IN TH E QUANTUM PROCEEDINGS TO BE DISPOSED OF BEFORE THE PENALTY PR OCEEDINGS COULD BE INITIATED. IN OTHER WORDS, THE INITIATION OF PENALTY PROCEEDINGS DID NOT HINGE ON THE COMPLETION OF THE APPELLATE QUANTUM PROCEEDINGS. THIS POSITION HAS BEEN MADE EX PLICIT IN THE DECISION IN QT V. WORLDWIDE TOWNSHIP PROJECTS LTD. (SUPRA) IN WHICH THE COURT CONCURRED WITH THE VIEW EXPRESSED I N CIT V. HISSARIA BROS. [2007] 291 ITR 244 (RAJ) IN THE FOLL OWING TERMS (PAGE 257 OF 291 ITR) : 'THE EXPRESSION OTHER RELEVANT THING USED IN SECTIO N 275(L)(A) CLAUSE (B) OF SUB-SECTION (1) OF SECTION 275 IS SIG NIFICANTLY MISSING FROM CLAUSE (C) OF SECTION 275(1) TO MAKE O UT THIS DISTINCTION V CLEAR. WE ARE, THEREFORE, OF THE OPIN ION THAT SINCE PENALTY PROCEEDINGS FOR DEFAULT IN NOT HAVING TRANSACTIONS THROUGH THE BANK AS REQUIRED UNDER SEC TION 269SS AND SECTION 269T ARE NOT RELATED TO THE AS ME NT PROCEEDING BUT ARE INDEPENDENT OF IT, THEREFORE, TH E COMPLETION: APPELLATE PROCEEDINGS ARISING OUT OF TH E ASSESSMENT PROCEEDINGS OR OTHER PROCEEDINGS DURING WHICH ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 12 THE PENALTY PROCEEDINGS UNDER SE 271D AND SECTION 2 71E MAY HAVE BEEN INITIATED HAS NO RELEVANCE SUSTAINING OR NOT SUSTAINING THE PENALTY PROCEEDINGS AND, THEREFORE C LAUSE (A) OF SUB-SECTION (1) OF SECTION 275 CANNOT BE ATTRACT ED TO > PROCEEDINGS. IF THAT WERE NOT SO CLAUSE (C) OF SECT ION 275(1) WOULD REDUNDANT BECAUSE OTHERWISE AS A MATTER OF FA CT EVERY PENALTY PROCEEDING IS USUALLY INITIATED WHEN DURING SOME PROCEEDINGS DEFAULT IS NOTICED, THOUGH THE FIN AL FACT FINDING IN THIS PROCEEDING NOT HAVE ANY BEARING ON THE ISSUES RELATING TO ESTABLISHING DEFAULT PENALTY FOR NOT DEDUCTING TAX AT SOURCE WHILE MAKING PAYMENT EMPLOY EES, OR CONTRACTOR, OR FOR THAT MATTER NOT MAKING PA THR OUGH CHEQUE OR DEMAND DRAFT WHERE IT IS SO REQUIRED TO B E EITHER OF THE CONTINGENCIES DOES NOT AFFECT THE COMPUTATIO N OF T INCOME AND LEVY OF CORRECT TAX ON CHARGEABLE INCOME ; IF CLAUSE (A TO BE INVOKED, NO NECESSITY OF CLAUSE (C) WOULD ARISE.' (EMPHASIS SUPPLIED) 11 IN FACT, WHEN THE ASSESSING OFFICER RECOMMENDED THE INITIATION OF ALTY PROCEEDINGS THE ASSESSING OFFICER APPEARED TO BE CONSCIOUS OF THE FACT THAT HE DID NOT HAVE THE POWER TO ISSUE NOTICE AS FAR AS THE PENALTY PROCEEDINGS UNDER SECTION 271E WAS CONC ERNED. HE, THEREFORE, REFERRED THE MATTER CONCERNING PENALTY P ROCEEDINGS UNDER SECTION 271E TO THE ADDITIONAL COMMISSIONER O F INCOME-TAX. FOR SOME REASON, THE ADDITIONAL COMMISSIONER OF INC OME-TAX DID NOT ISSUE A SHOW-CAUSE NOTICE TO THE ASSESSEE UNDER SECTION 271E (1) TILL MARCH 20, 2012. THERE IS NO EXPLANATION WH ATSOEVER FOR THE DELAY OF NEARLY FIVE YEARS AFTER THE ASSESSMENT ORD ER ADDITIONAL COMMISSIONER OF INCOME-TAX ISSUING NOTICE UNDER SEC TION OF THE ACT. THE ADDITIONAL COMMISSIONER OF INCOME-TAX OUGH T T BEEN ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 13 CONSCIOUS OF THE LIMITATION UNDER SECTION 275(L)(C) , I.E., THAT NO ORDER OF PENALTY COULD HAVE BEEN PASSED UNDER SECTI ON 271E AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE QUANT UM PROCEEDINGS WERE COMPLETED OR BEYOND SIX MONTHS AFTER THE MONTH IN WHICH THEY WERE INITIATED, WHICHEVER WAS LATER. IN A CASE WHERE THE PROCEEDINGS STOOD INITIATED WITH THE ORDER PASSED B Y THE ASSESSING OFFICER, BY DELAYING THE ISSUANCE OF THE NOTICE UNDER SECTION 271E BEYOND JUNE 30, 2008, THE ADDITIONAL C OMMISSIONER OF INCOME-TAX DEFEATED THE VERY OBJECT OF SECTION 2 75(1)(C). THIS JUDGMENT HAS BEEN REITERATED BY THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF PCIT VS. MAHESH WOOD PRODUCTS PVT. LTD. (SUPRA). FOLLOWING THE PRINCIPLE LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE AFORESAID CASES, WE HOLD THAT WHEN THE ADDITIONAL CIT INITIATED THE PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER AND ALSO ISSUED A SHOW CAUSE NOTICE ON THE SAM E DATE, I.E., 21.1.2014, THEN IT IS THE DATE FROM WHICH LIMITATION P ERIOD OF SIX MONTHS SHOULD BE COUNTED, WHICH HERE IN THIS CASE WAS UP TILL 31 ST JULY, 2014. OSTENSIBLY THE IMPUGNED ORDER DATED 29.1. 2014 IS CLEARLY BARRED BY LIMITATION AND HENCE SAME IS QUASHED. SINC E WE HAVE ALREADY QUASHED THE PENALTY ON THE GROUND OF LIMITATIO N THE REVENUES APPEAL ON MERITS HAS BECOME PURELY AN ACADEMIC. IN THE RESULT CROSS OBJECTION IS ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 4358/DEL/2016 ACIT VS. M/S. ALL GRACE DEVELOPERS PVT. LTD. & CO NO. 19/DEL/2018 M/S. ALL GRACE DEVELOPERS PVT. LTD. VS. ACIT 14 ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2018. SD/- SD/- (O.P. KANT) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31/01/2018 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI