ASST CIT 1(1)(1), MUMBAI V. ANAND SHREE IMPEX LTD, MUMBAI

ITA 4404/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9721 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 1994-1995
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: B N RAO
• Keywords: Depreciation; Opportunity of being heard; Period of limitation; Time period of passing order
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , A M AND SHRI PAWAN SINGH, JM ./ I.T.A. NO. 4404/MUM/2016 ( / ASSESSMENT YEAR: 1994 - 95 ) ASST. CIT 1(1) (1), 579, AAYAKAR BHAWAN, M. K. ROAD, MUMBAI - 400 020 / VS. M/S. ANAND SHREE IMPEX LTD. 1, MISTRY COURT, 208, DINSHA VACHA ROAD, MUMBAI - 400 020 ./ ./ PAN/GIR NO. AAACF 6879 R ( / APPELLANT ) : ( / RESPONDE NT ) / APPELLANT BY : SHRI POOJA SWAROOP / RESPONDENT BY : SHRI B. N. RAO / DATE OF HEARING : 13.03.2018 / DATE OF PRONOUNCEMENT : 22.03. 2018 / O R D E R PER S HAMIM YAHYA , A. M.: THIS APPEAL BY THE R EVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 14.03.2015 AND PERTAINS TO ASSESSMENT YEAR 1994 - 95. 2. T HE GROUND OF APPEAL READ AS UNDER : 1. WHETHER CIT(A) IS JUSTIFIED TO IGNORE THE DA TE ON WHICH THE HONBLE ITAT PASSED ORDER HAVING REGARD TO THE MA FILED BY THE ASSESSEE, WHILE DETERMINING THE TIME BARRING DATE FOR IMPOSITION OF PENALTY U/S. 275 OF THE ACT. 2 ITA NO. 4404/MUM/2016 M/S. ANAND SHREE IMPEX LTD. 3. B RIEF FACTS OF THE CASE ARE AS UNDER : THE ASSESSEE HAD CLAIMED DEPRECIATION ON ASSETS OF RS.68,72,610/ - WHICH INCLUDED A CLAIM OF RS.49,50,000/ - WHICH WAS DEPRECIATION AVAILABLE AT 100% IN RESPECT OF JUMBO CRATES. THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT CONDUCTED A SEARCH U/S. 132 AT THE RESIDENCE OF ONE MR. DAMANIA ON 23 RD NOVEMBER 1995 IN THE COURSE OF WHICH IT WAS FOUND THAT THE TRANSACTION OF PURCHASING AND LEASING WAS A MAKE BELIEVE AND BOGUS TRANSACTION. THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT FOR THE YEAR 1994 - 95 MADE A D ISALLOWANCE OF DEPRECIATION AT RS .49,50,000/ - ON THIS BASIS. HE ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(L)(C) IN THE CASE. ON FIRST APPEAL BY THE ASSESSEE , THE CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. ON SECOND APPEAL THE TRIBUNAL VIDE ITS ORDER DATED 29.11.200 4 IN ITA NO.3139/MUM/2002 ALSO CONFIRMED THE DISALLOWANCE OF DEPRECIATION. SUBSEQUENTLY, THE ASSESSEE MOVED A MISCELLANEOUS APPLICATION U/S. 254(2) OF THE I. T. ACT BEING MA NO.272/MUM/2005 BRINGING TO THE NOTICE OF INCOME TAX APPELLATE TRIBUNAL THAT THERE WAS A MISTAKE IN THE ORDER INSOFAR AS THE TRIBUNAL WHILE DISALLOWING THE CLAIM OF DEPRECIATION ON THE BASIS THAT THE PURCHASE AND LEASING OF CRATES WAS MAKE BELIEVE AND BOGUS TRANSACTION AND THERE WERE NO CRATES IN EXISTENCE, DID NOT CONSIDER THE ALTERNAT IVE GROUND OF APPEAL OF THE ASSESSEE THAT ONCE IT WAS AGREED THAT THE PURCHASE AND SALE OF CRATES WAS BOGUS, IT PROVED THAT THE CRATES DID NOT EXIST AND IT COULD NOT HAVE EARNED ANY LEASE RENT WHICH WAS TAXED BY THE ASSESSING OFFICER. THE TRIBUNAL AGREEING WITH THE SUBMISSION OF THE ASSESSEE DECIDED THE GROUND 3 ITA NO. 4404/MUM/2016 M/S. ANAND SHREE IMPEX LTD. IN ITS FAVOUR IN ITS ORDER PASSED ON 14 TH DECEMBER 2005 HOLDING THAT THE LEASE RENT COULD NOT BE ASSESSED IN THE HANDS OF THE ASSESSEE . THE ASSESSING OFFICER PASSED ORDERS U/S. 271(L)(C) OF THE I T AC T, 1961 LEVYING PENALTY OF RS.60,00,000/ - RELATING TO DEPRECIATION DISALLOWED. THE SAID ORDER WAS PASSED ON 22 ND MARCH 2006. THE ASSESSEE CHALLENGED THE ORDER PASSED BY ASSESSING OFFICER AS TIME BARRED. IT WAS THE CASE OF THE ASSESSEE THAT U/S. 275 OF THE I. T. ACT, 1961 THE ORDER LEVYING PENALTY U/S. 271(L)(C) WAS BARRED BY LIMITATION. IT SUBMITTED THAT THE PENALTY ORDER U/S.275(L)(A) COULD NOT BE PASSED AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS IN THE COURSE OF WHICH ACTION FOR IMPO SITION OF PENALTY HAS BEEN INITIATED OR COMPLETED OR 6 MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER WHICHEVER PERIOD E XPIRES LATER. IN THIS CASE OF THE ASSESSEE ONLY THE SECOND LIMB WAS APPLICABLE AND THE ASSESSEE CLAIMED THAT THE TRIBUNAL ORDER DEALING WITH DISALLOWANCE OF DEPRECIATION HAVING BEEN PASSED ON 29 TH NOV EMBER 2004 PENALTY ORDER U/S. 271(L)(C) COULD BE PASSE D ONLY WITHIN 6 MO NTHS FROM THE DATE OF RECEIPT OF THE TRIBUNAL'S ORDER BY THE COMMISSIONER. IT WA S NOTED THAT THE FIRST ORDER OF THE TRIBUNAL DATED 29 TH NOVEMBER 2004 WAS SER VED ON CCIT ON 27 TH JANUARY 2005 AND ACCORDINGLY THE ORDER U/S. 271(L)(C) SHOULD HAVE BEEN PASSED ON OR BEFORE 31 ST JULY 2005 WHEREAS THE ASSESSING OFFICER PASSED THE SAID PENALTY ORDER ON 22 ND MARCH 2006. HOWEVER THE ASSESSING OFFICER AND THE CIT(A) JUSTIFIED THEIR ACTION HOLDING THAT THE SECOND ORDER OF THE TRIBU NAL PASSED IN MISCELLANEOUS 4 ITA NO. 4404/MUM/2016 M/S. ANAND SHREE IMPEX LTD. APPLICATION MOVED BY THE ASSESSEE WAS PASSED ON 14 TH DECEMBER 2005 AND THE SAID ORDER WAS SERVED ON CCIT ON 27.01.2005 AND THEREFORE THE ORDER PASSED U/S.271(L)(C) WAS WELL WITHIN THE TIME LIMITS. 4 . IN THE S ECOND APPEAL FILED BY THE ASSESSEE , THE TRIBUNAL HAS DIRECTED AS FOLLOWS. 'IN OUR CONSIDERED VIEW THE LIMITATION FOR COMPLETION OF THE PENALTY PROCEEDINGS IN THIS CASE HAS GOT TO BE DECIDED WITH REFERENCE TO THE FIRST ORDER OF THE TRIBUNAL DATED 29 1H OF NO VEMBER 2004. THE SAID ORDER HAS BEEN DISPATCHED ALONG WITH OTHER ORDERS, BEING A BUNCH OF 22 ORDERS AND SERVED UPON THE CCIT ON 27 TH JANUARY 2005. ONCE THE TRIBUNAL ORDERS HAVE BEEN SERVED UPON THE CCIT, IT WOULD BE FOR THE DEPARTMENT TO ESTABLISH THE SERV ICE OF THE ORDER UPON THE CONCERNED COMMISSIONERS HAVING JURISDICTION OVER RESPECTIVE CASES. THE CCIT IS NOT SUPPOSED TO KEEP THE ORDERS WITH HIM BUT TO PASS ON THE SAME TO THE CONCERNED COMMISSIONERS HAVING JURISDICTION OVER RESPECTIVE CASES. THE DATE OF SERVICE OF THE FIRST ORDER OF THE TRIBUNAL WOULD BE THUS AVAILABLE WITH THE OFFICE OF THE CCIT. THE CIT(A) HAS NOT ATTEMPTED TO ASCERTAIN THE DATE OF SERVICE OF THE FIRST ORDER OF THE TRIBUNAL UPON THE CONCERNED C'CIT. ONCE THE DATE OF THE SERVICE OF THE O RDER IS ASCERTAINED, THE LIMITATION OF THE PENALTY PROCEEDINGS SHALL HAVE TO BE DETERMINED WITH REFERENCE TO THE SERVICE OF THE FIRST ORDER OF THE TRIBUNAL UPON THE COMMISSIONER CONCERNED. WE ACCORDINGLY RESTORE THIS ISSUE TO THE FILE OF THE CIT(A, WITH TH E DIRECTION TO RECORD A FINDING ABOUT THE SERVICE OF THE FIRST ORDER OF THE TRIBUNAL AND DETERMINE THE VALIDITY OF THE PENALTY ORDER WITH REFERENCE TO THE SERVICE OF THE FIRST ORDER PASSED BY THE TRIBUNAL ON 29 TH NOVEMBER 2004. THE VIEW OF THE REVENUE AUTH ORITIES THAT THE LIMITATION HAS GOT TO BE TAKEN FROM THE SERVICE OF THE SECOND ORDER OF THE TRIBUNAL IS VACATED. SO HOWEVER, THE MATTER SHALL BE DECIDED BY THE CIT(A) AFRESH, IN ACCORDANCE WITH LAW WITH REFERENCE TO THE DATE OF SERVICE OF THE FIRST ORDER O F THE TRIBUNAL UPON THE CONCERNED COMMISSIONER. IN CASE THE ORDER OF THE PENALTY IS FOUND TO HAVE BEEN PASSED WITHIN THE PERIOD OF LIMITATION, THE CIT(A) SHALL CONSIDER THE ISSUE RELATING TO THE IMPOSITION OF PENALTY ON MERITS. AS POINTED OUT EARLIER, 100% PENALTY IN THIS CASE WORKS OUT TO RS.28,46,250/ - AND THE MAXIMUM WORKS OUT TO RS.85,38,750/ - . GENERALLY MINIMUM RATE OF PENALTY IS IMPOSED. IT WOULD BE FOR THE REVENUE AUTHORITIES TO CONSIDER THE FACTS AND CIRCUMSTANCES OF THIS CASE TO DETERMINE THE RATE OF PENALTY IN CASE IT IS FOUND TO BE CHARGEABLE IN THIS CASE. THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. WE DIRECT ACCORDINGLY. 5 ITA NO. 4404/MUM/2016 M/S. ANAND SHREE IMPEX LTD. 4. I N THE ABOVE FACTUAL BACKGROUND , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) PR OCEEDED TO EXAMINE T HE ISSUE. HE HELD THAT THE PENALTY ORDER PASSED WAS TIME - BARRED IN ACCORDANCE WITH THE ITAT DECISION AS ABOVE. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD IS AS UNDER: 3.6. WITH THE TRIBUNAL HAVING RECORDED THE FACTS AND ISSUE D DIRECTIONS AS ABOVE, I AM REQUIRED TO FIND OIIT THE EXACT DATE ON WHICH THE FIRST ORDER OF THE TRIBUNAL DATED 19 TH MAY 2009 WAS RECEIVED BY THE CHIEF COMMISSIONER OR THE COMMISSIONER AND WHETHER THE PENALTY ORDER PASSED U/S. 271(L)(C) WAS WITHIN 6 MONTHS FROM THE END OF THE MONTH IN WHICH THE SAID TRIBUNAL'S ORDER IS RECEIVED BY THE CHIEF COMMISSIONER OR THE COMMISSIONER OF THE INCOME TAX. 3.7. IN THE LIGHT OF THE ABOVE I AM CALLED UPON TO VERIFY AS TO ON WHAT DATE THE CCIT RECEIVED THE FIRST ORDER OF T HE TRIBUNAL PASSED ON 29 TH NOVEMBER 2004 AND RECKONED FROM THAT DATE WHETHER THE PENALTY ORDER PASSED U/S. 271(L)(C) OF THE I. T. ACT WAS IN TIME. 3.8. IN THIS CONNECTION, THE APPELLANT SUBMITS THAT IT HAD SENT A LETTER TO THE REGISTRAR INCOME TAX APPELL ATE TRIBUNAL, MUMBAI ON 26 TH OCTOBER 2006 REQUESTING THE REGISTRAR TO VERIFY FROM HIS RECORDS AND' TO COMMUNICATE THE DATE ON WHICH THE ORDER OF THE TRIBUNAL DATED 29 TH NOVEMBER 2004 WAS SERVED ON THE COMMISSIONER. IN REPLY THERETO THE ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL MR. V V CHUNEKAR HAS WRITTEN TO THE APPELLANT VIDE HIS LETTER DATED 3 RD NOVEMBER 2006 STATING THAT 'WITH REFERENCE TO THE ABOVE IT IS CERTIFIED THAT THE ORDER DATED 29 TH NOVEMBER 2004 IN THE CASE OF M/S. ANAND SHREE IMPEX PRI VATE LIMITED WAS SERVED TO THE COMMISSIONER OF INCOME TAX CITY 1 ON 27 TH JANUARY 2005 VIDE OUR OFFICE LETTER DATED 13 TH JANUARY 2005', THE A/R HAS PRODUCED THE ABOVE SAID LETTER IN ORIGINAL FOR MY PERUSAL. 3.9. FROM THE ABOVE FACTS MY FINDINGS ARE THAT T HE TRIBUNAL ORDER IN REFERENCE TO WHICH THE LIMITATION FOR PASSING ORDER U/S. 271(L)(C) WAS TO BE COMPUTED, WAS SERVED ON THE COMMISSIONER OF INCOME TAX CITY 1 ON 27 TH JANUARY 2005 AS CONFIRMED BY THE REGISTRY OF THE TRIBUNAL. THE ORDER U/S. 271(L)(C) SHOU LD HAVE BEEN ACCORDINGLY PASSED ON OR BEFORE 31 ST JULY 2005. THE IMPUGNED ORDER IN APPEAL PASSED U/S.271(L)(C) BY JOINT CIT (OSD) RANGE 6(1), MUMBAI BEING PASSED ON 22 ND MARCH 2006 OBVIOUSLY IS BEYOND TIME LIMITATION PRESCRIBED U/S.275(L). RESPECTFULLY FOL LOWING THE HON*BLE ITAT DIRECTION, I AM OF THE OPINION THAT THE PENALTY ORDER PASSED BY THE AO DATED 22.3.2006 IS BEYOND THE 6 ITA NO. 4404/MUM/2016 M/S. ANAND SHREE IMPEX LTD. TIME LIMITS AS PRESCRIBED U/S. 275(1) OF THE I.T. ACT AND THEREFORE, THE PENALTY ORDER IS QUASHED. HENCE THIS GROUND OF APPEAL IS A LLOWED. 5. A GAINST THE ABOVE ORDER , THE R EVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IN THIS CASE AN ORDER ON THE MERITS WAS PASSED BY THE TRIBUNAL ON 29.11.2004. S UBSEQUENTLY IN AN MISCELLANEOUS APPLICATION'S , THE ORDER WAS RECALLED AND THE NEW ORDER WAS PASSED ON 14.12.2005. I N THESE CIRCUMSTANCES , THE ISSUE AROSE AS TO WHICH OF THE ORDER OF THE TRIBUNAL SHOULD BE CONSIDERED FOR RECKONING THE PERIOD OF LIMITATION FOR THE LEVY OF PENALTY. THIS MA TTER HAD ALREADY TRAVELLED BEFORE THE TRIBUNAL. THE TRIBUNAL HAD PASSED AN ORDER ON THE FACTS AND CIRCUMSTANCES AND ITS DECISION HAS ALREADY BEEN REFERRED HERE IN ABOVE. IN THE SAID DECISION , THE TRIBUNAL HAD DIRECTED THAT THE LIMITATION PERIOD HAD TO BE C ALCULATED FROM THE DATE OF THE FIRST ORDER OF THE TRIBUNAL. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD FOLLOWED THE ABOVE DIRECTION OF THE TRIBUNAL. NOW BY WAY OF THIS APPEAL , THE R EVENUE HAS CHALLENGED THIS ACTION. IN OUR CONSIDERED OPINION , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD DULY FOLLOWED THE ITAT DIRECTION. HENCE , WE DO NOT FIND ANY INFIRMITY IN THE SAME. MOREOVER , IT IS NOT THE CASE THAT THE R EVENUE HAS CHALLENGED THE ABOVE ITAT DIRECTION IN THE HIGH COURT. WE , AS COORDINATE BENCH CA NNOT SIT IN JUDGMENT ON AN ORDER PASSED BY THE TRIBUNAL AND THE DIRECTIONS GIVEN THEREIN. ACCORDINGLY , WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 7 ITA NO. 4404/MUM/2016 M/S. ANAND SHREE IMPEX LTD. 7. IN THE RESULT , THIS APPEAL BY THE RE VENUE IS STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.3.2018 SD/ - SD/ - ( PAWAN SINGH ) (S HAMIM YAHYA ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 22.03.2018 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI