M/s Dewan Engg. Works, Sirhind V. DCIT, Mandi Gobindgarh

ITA 553/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81064 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-11-2014
• Assessment Year: 1990-1991
• Appeal Filed On: 15-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: R R THAKUR
• Keywords: Reassessment proceedings
• Section: 68; 246; 27; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD ACCOUNTANT MEMBER ITA NO. 553/CHD/2013 ASSESSMENT YEAR : 1990-91 M/S DEWAN ENGINEERING WORKS, VS THE DCIT, G.T.ROAD, SIRHIND CIRCLE, PAN : BLLPS 7443 F MANDI GOBINDGARH (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.R.THA KUR RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 27.11.2014 DATE OF PRONOUNCEMENT : 09.12.2014 ORDER PER T.R.SOOD, AM THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF LD. CIT(A), PATIALA DATED 26.2.2013. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUND OF APPE AL : 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEAL) HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) IMPOSED WHICH IS ILLEGAL AND A GAINST THE PROVISIONS OF LAW. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EAL) HAS ERRED IN HOLDING THAT THE PENALTY U/S 271(1)(C) WAS NOT BARRED BY TI ME LIMIT AT THE TIME WHEN THE ASSESSING OFFICER IMPOSED THE PENALTY, BECAUSE NO A PPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL FOR QUANTUM IN TIME WAS FILED AN D TIME OF IMPOSITION OF PENALTY WAS TO BE CALCULATED FROM THE RECEIPT OF QUANTUM ORDER OF THE LD. CIT(A).. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EAL) HAS ERRED IN HOLDING THAT THE AMOUNT OF RS. 10,99,000/- WHICH WAS A DEDU CTION U/S 68, WHERE NO BOOKS OF ACCOUNTS MAINTAINED ON WHICH THE PENALTY U/S 271(1) (C) HAS BEEN IMPOSED THE ADDITION IS ILLEGAL ON WHICH THE PENALTY HAS BEEN IMPOSED. 3. BOTH THE PARTIES WERE HEARD IN DETAIL. 4 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND T HAT THAT THE FACTS AND ISSUES INVOLVED IN THIS CASE ARE IDENTICA L TO THE FACTS 2 AND ISSUES INVOLVED IN ASSESSMENT YEAR 1991-92 IN ASSESSEES OWN CASE WHICH WAS ADJUDICATED BY US IN ITA NO. 963 /CHD/2011. THIS ISSUE WAS DECIDED VIDE PARA 12 TO 14 WHICH ARE AS UNDER: 12 WE HAVE GONE THROUGH THE RIVAL SUBMISSIONS CAREF ULLY. IN THIS CASE ORIGINAL ASSESSMENT ORDER WAS PASSED ON 27.3.1 997. ULTIMATELY THE APPEAL WAS FILED BEFORE THE TRIBUNAL WHICH WAS LATE BY 108 DAYS. THE TRIBUNAL DISMISSED THE APPEAL IN ITAS NO. 883,8 84,885 & 886 FOR ASSESSMENT YEARS 1986-87, 1990-91, 1991-92 & 1992-9 3 BY REFUSING TO CONDONE THE DELAY BECAUSE NO PLAUSIBLE EXPLANATI ON WAS GIVEN FOR LATE FILING OF THE APPEAL VIDE ORDER DATED 25.6.200 3. THIS ORDER IS STATED TO HAVE BEEN RECEIVED BY THE LD. COMMISSIONE R ON 8.8.2003. PARA 5 OF THE PENALTY ORDER HAS DISCUSSED THESE FAC TS IN DETAIL. IT HAS BEEN NOTED THAT ORIGINAL SHOW CAUSE NOTICE FOR LEVY OF PENALTY WAS ISSUED ON 5.6.1998 AGAINST WHICH NO REPLY WAS F ILED. ANOTHER NOTICE WAS ISSUED ON 8.7.1998 AGAINST WHICH THE ASS ESSEE SUBMITTED A LETTER DATED 16.7.1998 REQUESTING THE ASSESSING O FFICER TO KEEP PENALTY PROCEEDINGS PENDING TILL THE FINAL DISPOSAL OF THE APPEAL. THUS IT BECOMES CLEAR THAT THE ASSESSEE HIMSELF REQ UESTED THE DEPARTMENT TO KEEP PENALTY PROCEEDINGS IN ABEYANCE TILL THE FINAL DISPOSAL OF THE APPEAL. AS NOTED EARLIER THE APPEA L IN QUANTUM PROCEEDINGS WAS DISMISSED BY THE TRIBUNAL BY REFUSI NG TO CONDONE THE DELAY. THE ASSESSEE CANNOT TAKE U TURN AND C ONTEND THAT THE ORDER OF THE TRIBUNAL CANNOT BE RECKONED FOR THE PU RPOSE OF SEC 275(1)(A) BECAUSE THIS HAS BEEN DISMISSED IN LIMIN E. THIS IS SO BECAUSE THE ASSESSEE HAS HIMSELF TAKING A SHELTER O N THE PROCEEDINGS WHICH WAS PENDING BEFORE THE TRIBUNAL I N QUANTUM APPEAL. FURTHER NO DISTINCTION IS MADE IN SEC 275( 1)(A) IN THE ORDER OF THE TRIBUNAL PASSED IN LIMINE BY REFUSING TO CON DONE THE DELAY OR OTHERWISE. SEC 275(1)(A) READS AS UNDER: NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHA LL BE PASSED - [(A) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OT HER ORDER IS THE SUBJECT-MATTER OF AN APPEAL TO THE [***] COMMISSIONER (APPEALS) UNDER SECTION 246 [OR SECTION 246A ] 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 ACTIO N FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED OR SIX 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 P ERIOD EXPIRES LATER :SEC 275(1)(A). THE ABOVE CLEARLY SHOWS THAT LIMITATION FOR PASSING THE PENALTY ORDER IN CASE WHERE THE APPEALS ARE PENDING WOULD BE SIX MONTHS FROM THE END OF THE MONTH IN WHICH ORDER U/S 254 IS RECEIVED BY THE LD. COMMISSIONER. THEREFORE CLEARLY A TIME OF SIX MONT HS IS AVAILABLE TO THE REVENUE. SINCE THE ORDER OF THE TRIBUNAL WAS R ECEIVED BY THE DEPARTMENT ON 8.8.2003 AND THE LIMITATION WOULD EXP IRE ON 28.2.2004. PENALTY ORDER HAS BEEN PASSED ON 26.2.2 004 AND THEREFORE SAME IS NOT TIME BARRED. ACCORDINGLY WE REJECT THE FIRST CONTENTION OF THE ASSESSEE THAT THE PENALTY ORDER I S TIME BARRED. 13 THE ASSESSEE HAS MAINLY CONTESTED THE ADDITIONS MADE IN THE ASSESSMENT ORDER BY SAYING THAT THE SURRENDER WAS M ADE ON ADVICE OF THE DEPARTMENT AND ADDITION ON ACCOUNT OF ADVANC ES ETC. WAS NOT POSSIBLE U/S 68 BECAUSE NO BOOKS WERE MAINTAINED. I T IS SETTLED LAW THAT THE PENALTY PROCEEDINGS ARE INDEPENDENT FROM T HE ASSESSMENT PROCEEDINGS. DURING PENALTY PROCEEDINGS THE ASSESS MENT PROCEEDINGS CANNOT BE AGITATED. THIS BECOMES ABSOL UTELY CLEAR FROM THE DECISION OF HON'BLE MADHYA PRADESH HIGH COURT IN CASE OF S.S. RATANCHAND BHOLANATH VS. CIT, 210 ITR 682. IN THAT CASE TWO QUESTIONS WERE RAISED WHICH ARE AS UNDER: 3 (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ITOS ORDER DATED SEPT 4, 1976 WAS LEGALLY VALID? (2) IF THE ANSWER TO QUESTION NO. (1) IS IN THE AFF IRMATIVE WHETHER THE QUESTION OF LEGALITY OF THE ASSESSMENT COULD BE CONE INTO IN PENALTY PROCEEDINGS? IN RESPECT OF QUESTION (2) THE CONTENTION AND FIND INS AOF THE HON'BLE HIGH COURT ARE AS UNDER: QUESTION NO. 2: IT IS CONTENDED FOR THE REVENUE THA T EVEN ASSUMING THAT THE ADDITION OF RS. 11,027 IN THE INCOME WAS ERRONEOUS, THE ASSESSE E CANNOT RAISE THIS QUESTION IN PENALTY PROCEEDINGS SINCE THE REASSESSMENT ORDER WA S NOT CHALLENGED IN APPEAL. THE ANSWER OF THE ASSESSEE IS THAT PENALTY PROCEEDINGS ARE QUASI-CRIMINAL IN NATURE, THAT THE DEPARTMENT HAS TO ESTABLISH IN PENALTY PROCEEDINGS THAT THERE HAS BEEN CONCEALMENT OF INCOME, THAT THOUGH THE FINDINGS IN THE ASSESSMENT ORDER CONSTITUTE EVIDENCE IN PENALTY PROCEEDINGS THEY ARE NOT CONCLUSIVE AND THE MATTER HAS TO BE DECIDED AFRESH IN PENALTY PROCEEDINGS. THEREFORE, IT IS SUBMITTED THAT THE AS SESSEE CAN CHALLENGE THE ASSESSMENT ORDER IN THE PENALTY PROCEEDINGS. THE ASSESSEE RELI ED ON THE DECISION OF THE BOMBAY HIGH COURT IN JAINARAYAN BABULAL V. CIT [1988] 170 ITR 3 99. THIS DECISION RELIES ON AN EARLIER DECISION OF THE BOMBAY HIGH COURT IN CIT V. GOKULDA S HARIVALLABHDAS [1958] 34 ITR 98, WHICH IS APPROVED BY THE SUPREME COURT IN CIT V. AN WAR ALI [1970] 76 ITR 696. IN ANWAR ALIS CASE [1970] 76 ITR 696, THE SUPREME COURT HAS INDICATED THAT THE PROVISION IN QUESTION IS PENAL IN THE SENSE THAT ITS CONSEQUE NCES ARE INTENDED TO BE AN EFFECTIVE DETERRENT WHICH WILL PUT A STOOP TO PRACTICES WHICH THE LEGISLATURE CONSIDERS TO BE AGAINST THE PUBLIC INTEREST AND HELD THAT IF THERE IS NO EV IDENCE ON THE RECORD EXCEPT THE EXPLANATION GIVEN BY THE ASSESSEE, WHICH EXPLANATIO N HAS BEEN FOUND TO BE FALSE, IT DOES NOT FOLLOW THAT THE RECEIPT CONSTITUTES HIS TAXABLE INCOME. THE COURT OBSERVED (AT PAGE 701): IT MUST BE REMEMBERED THAT THE PROCEEDINGS UNDER S ECTION 28 ARE OF A PENAL NATURE AND THE BURDEN IS ON THE DEPARTMENT TO PROVE THAT A PAR TICULAR AMOUNT IS A REVENUE RECEIPT. IT WOULD BE PERFECTLY LEGITIMATE TO SAY THAT THE MERE FACT THAT THE EXPLANATION OF THE ASSESSEE IS FALSE DOES NOT NECESSARILY GIVE RISE TO THE INFE RENCE THAT THE DISPUTED AMOUNT REPRESENTS INCOME. IT CANNOT BE SAID THAT THE FINDING GIVEN IN THE ASSESSMENT PROCEEDINGS FOR DETERMINING OR COMPUTING THE TAX IS CONCLUSIVE. HOW EVER, IT IS GOOD EVIDENCE. BEFORE PENALTY CAN BE IMPOSED THE ENTIRETY OF CIRCUMSTANCE S MUST REASONABLY POINT TO THE CONCLUSION THAT THE DISPUTED AMOUNT REPRESENTED INC OME AND THAT THE ASSESSEE HAD CONSCIOUSLY CONCEALED THE PARTICULARS OF HIS INCOME OR HAD DELIBERATELY FURNISHED INACCURATE PARTICULARS. (EMPHASIS * SUPPLIED). A READING OF THE ABOVE OBSERVATIONS SHOWS THAT WHIL E ASSESSMENT PROCEEDINGS MAY CONSTITUTE GOOD EVIDENCE IN PENALTY PROCEEDINGS, TH EY ARE NOT CONCLUSIVE. THE STATUTORY AUTHORITY DEALING WITH PENALTY PROCEEDINGS MUST BE SATISFIED THAT THE ASSESSEE HAD CONSCIOUSLY CONCEALED THE PARTICULARS OF HIS INCOME WHICH ATTRACTS THE PENAL PROVISIONS OF THE ACT. IN THE PRESENT CASE, THE ASSESSEE HIMSLEF TOLD THE ASSESSING OFFICER THAT THERE WAS A SUPPRESSION OF INCOME TO THE EXTENT OF RS. 11,027 . THIS WAS ALSO VERIFIED BY THE ASSESSING OFFICER, AND HENCE THE QUESTION OF THE AU THORITY IN PENAL PROCEEDINGS COMING TO ANY CONCLUSION DIFFERENT FROM THE ONE ARRIVED AT IN THE REASSESSMENT PROCEEDINGS DOES NOT ARISE. THE ABOVE DECISION IS NOT AN AUTHORITY FOR T HE POSITION THAT WHERE THE REASSESSMENT IS NOT CHALLENGED IN APPEAL, THE ORDER AS SUCH CAN BE COLLATERALLY CHALLENGED IN PENALTY PROCEEDINGS. IF THE ASSESSMENT ORDER OR REASSESSMEN T ORDER BECOMES FINAL, THAT IS BINDING ON BOTH THE PARTIES AND NEITHER PARTY CAN SEEK TO R EOPEN IT IN A PENALTY PROCEEDING. THIS CONCLUSION, OF COURSE, DOES NOT AFFECT THE SETTLED POSITION OF LAW THAT THE ASSESSMENT ORDER OR REASSESSMENT ORDER IS NOT CONCLUSIVE IN PENALTY PROCEEDINGS. WE, THEREFORE, HOLD THAT QUESTION NO. 2 HAS TO BE ANSWERED IN FAVOUR OF THE REVENUE. ABOVE CLEARLY SHOWS THAT PENALTY PROCEEDINGS AND AS SESSMENT PROCEEDINGS ARE INDEPENDENT, THEREFORE DURING PENAL TY PROCEEDINGS THE ASSESSMENT PROCEEDINGS CANNOT BE AGITATED. 14 THE LD. COUNSEL FOR THE ASSESSEE HAD RELIED ON T HE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN CASE OF HA RIGOPAL SINGH VS. CIT (SUPRA). IN THAT CASE THE ASSESSEE FILED R ETURN OF INCOME ON ESTIMATE BASIS DECLARED INCOME OF RS. 52,000/-. TH E INCOME WAS FINALLY ASSESSED AT RS. 2,07,500/- BY ESTIMATING A SSESSEES SALES 4 AND GROSS PROFITS, THE INCOME WAS REVISED TO RS. 1 ,50,000/- BY THE TRIBUNAL. AGAINST THIS ADDITION PENALTY WAS IMPOSE D WHICH WAS DELETED BY THE HON'BLE HIGH COURT BY OBSERVING THA T THIS IS A CASE OF ESTIMATED INCOME, THEREFORE PENALTY CANNOT BE LEVIE D. IN THE CASE BEFORE US, THE ASSESSEE HAD OFFERED A SUM OF RS. 23 LAKHS DURING SEARCH WHICH HAS NOT BEEN INCLUDED IN THE RETURNED INCOME. SIMILARLY ANOTHER SUM OF RS. 43,25,000/- STATED TO HAVE RECEIVED FROM CUSTOMERS FOR WHICH NO EVIDENCE WAS GIVEN. EV EN IN PENALTY PROCEEDINGS NO EXPLANATION HAS BEEN GIVEN IN RESPEC T OF THESE TWO ITEMS BEFORE THE ASSESSING OFFICER OR CIT(A) OR EVE N BEFORE US. THE ONUS WAS ON THE ASSESSEE TO GIVE SOME EXPLANATION T O PROVE THAT THIS INCOME IS NOT CONCEALED INCOME. THE HON'BLE SUPREME COURT IN CASE OF KP MADHUSUDANAN VS. CIT (SUPRA) HAS CLEARLY HELD THAT ONCE A SHOW CAUSE NOTICE IS GIVEN THEN ONUS IS ON THE ASSE SSEE TO GIVE EXPLANATION THAT A PARTICULARLY ITEM IS NOT INCOME . THE HEAD NOTE READS AS UNDER: THE EXPLANATION TO SECTION 271(1)(C) IS A PART OF SECTION 271. WHEN THE ASSESSING OFFICER OR THE APPELLATE ASSISTA NT COMMISSIONER ISSUES A NOTICE U/S 271, HE MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THEREOF ARE TO BE USED AG AINST HIM. THESE PROVISIONS INCLUDE THE EXPLANATION. BY VIRTU E OF THE NOTICE U/S 271 THE ASSESSEE IS PUT TO NOTICE THAT I F HE DOES NOT PROVE, IN THE CIRCUMSTANCES STATED IN THE EXPLANATI ON, THAT HIS FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT, HE SHALL BE DEEMED TO HAVE CONCEALED THE P ARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS T HEREOF, AND, CONSEQUENTLY BE LIABLE TO THE PENALTY UNDER THE SEC TION. NO EXPRESS INVOCATION OF THE EXPLANATION TO SECTION 27 1 IN THE NOTICE U/S 271 IS NECESSARY BEFORE THE PROVISIONS O F THE EXPLANATION ARE APPLIED. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE OPIN ION THAT THE LD. CIT(A) HAS CORRECTLY CONFIRMED THE PENALTY AND ACCO RDINGLY WE CONFIRM HIS ORDER. FOLLOWING HE ABOVE ORDER, WE DECIDE THE ISSUE RAISE D IN THIS APPEAL AGAINST THE ASSESSEE AND CONFIRM THE ORDER O F THE LD. CIT(A). 5 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 9.12.2014 SD/- SD/- (BHAVENSH SAINI) (T.R.SOO D) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 09.12.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/DR 5