RMG Benefit Fund Ltd., CHENNAI V. ACIT Central Circle 2(1), CHENNAI

ITA 632/CHNY/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5200 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Period of limitation; Time period of passing order
• Section: 143(3); 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.628, 629, 630, 631, 632, 633 & 634/CHNY/201 8 ' (' / ASSESSMENT YEARS : 2008-09 TO 2014-15 M/S RMG BENEFIT FUND LTD., NO.38, JEENIS ROAD, SAIDAPET, CHENNAI - 600 015. PAN : AAACR 5172 K V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI G. BASKAR, ADVOCATE ,-*+ . / / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT 0 . 1$ / DATE OF HEARING : 23.05.2018 2!( . 1$ / DATE OF PRONOUNCEMENT : 14.06.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-18, CHENNAI, DATED 20.12.2017, CONFIRMING THE PENALTY L EVIED BY THE ASSESSING OFFICER UNDER SECTION 271D OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT') FOR THE ASSESSMENT YEARS 2008- 09 TO 2014-15. 2 I.T.A. NOS.628 TO 634/CHNY/18 THEREFORE, WE HEARD ALL THE APPEALS TOGETHER AND DI SPOSING OF THE SAME BY THIS COMMON ORDER. 2. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THERE WAS A SEARCH UNDER SECTION 132 OF THE AC T IN THE CASE OF ONE SHRI A.N. RADHAKRISHNAN, WHO IS A TRUSTEE IN M/ S MEENAKSHI AMMAL TRUST AND SRI MUTHUKUMARAN EDUCATIONAL TRUST. ACCORDING TO THE LD. COUNSEL, THE SEARCH WAS CONDUCTED ON 10. 10.2008. BASED UPON THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION AT THE RESIDENT OF SHRI A.N. RADHAKRISHNA N, AN ASSESSMENT WAS COMPLETED UNDER SECTION 153C OF THE ACT IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2002-03 T O 2009-10. ACCORDING TO THE LD. COUNSEL, THE PREMISES OF THE A SSESSEE WAS ALSO SEARCHED ON 30.07.2013. SUBSEQUENTLY, A SEARC H WAS CARRIED ON IN THE CASE OF M/S MEENAKSHI AMMAL TRUST AND M/S SRI MUTHUKUMARAN EDUCATIONAL TRUST. AN ORDER UNDER SEC TION 153A OF THE ACT WAS PASSED ON 23.03.2016 FOR THE ASSESSMENT YEARS 2008- 09 TO 2014-15. THE ASSESSING OFFICER INITIATED PEN ALTY PROCEEDING UNDER SECTION 271D OF THE ACT ON 23.03.2016. ACCOR DING TO THE LD. COUNSEL, EVEN THOUGH THERE WAS NO LIMITATION PROVID ED IN THE ACT FOR INITIATING PENALTY PROCEEDING UNDER SECTION 271D OF THE ACT, IT 3 I.T.A. NOS.628 TO 634/CHNY/18 SHOULD BE INITIATED WITHIN A REASONABLE PERIOD. PE NALTY PROCEEDING CANNOT BE ALLOWED TO HANG OVER THE HEAD OF THE ASSE SSEE WITHOUT ANY LIMITATION. IN FACT, THE ASSESSMENT WAS COMPLE TED ON 30.12.2010 AFTER THE SEARCH IN THE HANDS OF SHRI A. N. RADHAKRISHNAN. A COPY OF THE ASSESSMENT ORDER IS A VAILABLE AT PAGE 1 OF THE PAPER-BOOK. ACCORDING TO THE LD. COU NSEL, THE DEPOSIT WAS CONSIDERED BY THE ASSESSING OFFICER IN THE ASSE SSMENT ORDER DATED 31.12.2010. THEREFORE, THE SO-CALLED CASH RE CEIPT FOR WHICH PENALTY PROCEEDING UNDER SECTION 271D OF THE ACT WA S INITIATED FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 WAS WITHIN THE KNOWLEDGE OF THE ASSESSING OFFICER, AT LEAST FROM T HE DATE OF THE ASSESSMENT ORDER, I.E. 31.12.2010. 3. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER INITIATED PENALTY PROCEE DING ONLY ON 23.09.2016 FOR THE ASSESSMENT YEARS 2008-09 AND 200 9-10. THEREFORE, THERE WAS A DELAY OF ALMOST SIX YEARS. ACCORDING TO THE LD. COUNSEL, EVEN THOUGH NO LIMITATION WAS PRESCRIB ED FOR INITIATING PROCEEDING UNDER SECTION 271D OF THE ACT, IT SHOULD BE INITIATED WITHIN A REASONABLE TIME AND AT ANY STRETCH OF IMAG INATION, A PERIOD OF SIX YEARS CANNOT BE CONSTRUED AS REASONABLE PERI OD FOR INITIATING 4 I.T.A. NOS.628 TO 634/CHNY/18 PROCEEDING UNDER SECTION 271D OF THE ACT. THEREFOR E, FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10, ACCORDING TO THE LD. COUNSEL, THE PENALTY PROCEEDING WAS BARRED BY LIMIT ATION. THE LD.COUNSEL PLACED HIS RELIANCE ON THE JUDGMENT OF M ADRAS HIGH COURT IN M. SRINIVASA RAO V. ACIT (2007) 295 ITR 13 6 AND SUBMITTED THAT THE MADRAS HIGH COURT FOUND THAT THO UGH TIME LIMIT WAS NOT PRESCRIBED UNDER SECTION 143(3) OF THE ACT, THE PROCEEDING INITIATED BY THE ASSESSING OFFICER AFTER A LAPSE OF SIX YEARS COULD NOT BE ALLOWED TO CONTINUE. ACCORDINGLY, THE ORDER WAS QUASHED. IN VIEW OF THIS JUDGMENT OF MADRAS HIGH COURT, ACCORDI NG TO THE LD. COUNSEL, THE ORDER PASSED BY THE ASSESSING OFFICER LEVYING PENALTY UNDER SECTION 271D OF THE ACT AFTER A PERIOD OF SIX YEARS CANNOT BE ALLOWED TO CONTINUE. 4. SHRI G. BASKAR, LD.COUNSEL FOR THE ASSESSEE, SUB MITTED THAT THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER I S BARRED FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. ACCORDIN G TO THE LD. COUNSEL, THE ASSESSING OFFICER BY LETTER DATED 23.0 9.2016, INTIMATED THE ADDITIONAL COMMISSIONER OF INCOME TAX FOR INITI ATING PROCEEDING UNDER SECTION 271D OF THE ACT. THE NOTICE WAS, IN FACT, ISSUED BY THE ADDITIONAL COMMISSIONER ONLY ON 28.10.2016. RE FERRING TO THE 5 I.T.A. NOS.628 TO 634/CHNY/18 JUDGMENT OF DELHI HIGH COURT IN PRINCIPAL CIT V. MA HESH WOOD PRODUCTS (P.) LTD. (394 ITR 312), THE LD.COUNSEL SU BMITTED THAT THE LIMITATION PERIOD HAS TO BE COMPUTED FROM THE DATE OF LETTER WRITTEN BY THE ASSESSING OFFICER, I.E. ON 23.09.2016. THER EFORE, ACCORDING TO THE LD. COUNSEL, IT IS BEYOND THE PERIOD OF LIMI TATION PROVIDED FOR PASSING THE ORDER UNDER SECTION 271D OF THE ACT. 5. COMING TO THE MERIT OF THE APPEAL, SHRI G. BASKA R, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASS ESSEE-COMPANY IS ACCEPTING CAUTION / MESS DEPOSIT FROM STUDENTS O F EDUCATIONAL INSTITUTIONS RUN BY M/S MEENAKSHI AMMAL TRUST AND M /S SRI MUTHUKUMARAN EDUCATIONAL TRUST. ACCORDING TO THE L D. COUNSEL, THE DEPOSIT FROM THE STUDENTS COMES TO NEARLY 15000/- PER STUDENT. THIS WAS DEPOSITED BY THE HEAD OF THE INSITUTITIONS ON BEHALF OF STUDENTS. THE DEPOSITS WERE MADE AT THE LATE HOURS OF THE DAY AND ON WEEKENDS SINCE THE STUDENTS ARE COMING FROM OUTS KIRTS OF CHENNAI. ACCORDING TO THE LD. COUNSEL, THE ASSESSE E WAS FORCED TO ACCEPT THE DEPOSIT IN CASH. MOREOVER, WHEREVER THE TRUST WAS DEPOSITING, IT WAS ONLY ENTERED IN THE BOOKS OF ACC OUNT AND THERE WAS NO PHYSICAL CASH DEPOSIT. PLACING RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. IDHAYAM PUBLICATIONS LT D. (2006) 285 6 I.T.A. NOS.628 TO 634/CHNY/18 ITR 221, THE LD.COUNSEL SUBMITTED THAT WHAT WAS REC EIVED BY THE ASSESSEE FROM THE STUDENTS AND FROM THE TRUST ON BE HALF OF STUDENTS WAS DEPOSIT. THE TRUSTEES ARE DIRECTORS I N THE ASSESSEE- COMPANY. ACCORDING TO THE LD. COUNSEL, THE TRANSAC TION BETWEEN THE ASSESSEE-COMPANY AND THE TRUST CANNOT BE CONSID ERED TO BE A LOAN OR DEPOSIT. THE TRUST WAS HOLDING CURRENT ACC OUNT. NO INTEREST WAS PAID TO THE TRUSTEES OR THE TRUST. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER IS NOT JUSTIFIED IN LEVYING PENALTY UNDER SECTION 271D OF THE ACT. 6. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THERE I S NO LIMITATION PRESCRIBED UNDER THE INCOME-TAX ACT FOR INITIATING PENALTY PROCEEDING. IN THE ABSENCE OF ANY PROVISION IN THE ACT, ACCORDING TO THE LD. D.R., THE ADDL. COMMISSIONER MAY INITIATE T HE PENALTY PROCEEDING UNDER SECTION 271D OF THE ACT AT ANY TIM E. THEREFORE, IMPORTING LIMITATION INTO THE INCOME-TAX ACT, WHEN THE PARLIAMENT HAS NOT PROVIDED SO, IS BEYOND THE SCOPE OF INTERPR ETATION. ACCORDING TO THE LD. D.R., EQUITY AND HARDSHIP HAVE NO ROLE TO PLAY IN THE INCOME-TAX PROCEEDING. THEREFORE, THE ASSES SING OFFICER, 7 I.T.A. NOS.628 TO 634/CHNY/18 ACCORDING TO THE LD. D.R., HAS RIGHTLY INITIATED TH E PENALTY PROCEEDING. 7. COMING TO THE MERIT OF THE APPEAL, THE LD. DEPAR TMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE CLAIMS T HAT THE STUDENTS ARE COMING FROM OUTSKIRTS OF CHENNAI IN TH E LATE HOURS AND WEEKENDS, THEREFORE, THEY ARE FORCED TO RECEIVE THE DEPOSITS IN CASH. ACCORDING TO THE LD. D.R., THE TRUST IS HAVI NG BANK ACCOUNT. THEY CANNOT SAY THERE WAS NO BANK ACCOUNT AT ALL. THEREFORE, IT COULD HAVE TRANSFERRED THE AMOUNT BY MEANS OF CHEQU ES OR OTHER KNOWN METHOD. THEREFORE, ACCORDING TO THE LD. D.R. , THERE IS NO REASON FOR DEPOSIT OF CASH WITH THE ASSESSEE-COMPAN Y. HENCE, THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE PENALTY LEVI ED BY THE ASSESSING OFFICER UNDER SECTION 271D OF THE ACT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN SOME CASES, THE ASSESSEE HAS RECEIVED CASH EXCEEDING 20,000/- FROM THE TRUST. THE TRUST APPEARS TO HAVE GIVEN A LIST OF S TUDENTS FROM WHOM THE MONEY WAS COLLECTED. THE CLAIM OF THE ASS ESSEE- COMPANY IS THAT THE STUDENTS ARE COMING FROM OUTSKI RTS OF CHENNAI ON WEEKENDS, THEREFORE, THE TRUST HAS TO COLLECT MO NEY IN CASH AND 8 I.T.A. NOS.628 TO 634/CHNY/18 TRANSFER THE SAME TO THE ASSESSEE. ADMITTEDLY, THI S APPEARS TO BE A REASONABLE EXPLANATION. WHEN THE TRUST IS COLLECTI NG MONEY FOR MESS AND OTHER DEPOSITS FROM THE STUDENTS IN THE LA TE HOURS OF THE WORKING DAY AND WEEK DAYS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT TRANSFERRING THE AMOUNT TO THE ASSESSE E-COMPANY WHOSE DIRECTOR IS ALSO ONE OF THE TRUSTEES IN THE T RUST CANNOT BE FOUND TO BE FAULT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE IS NO VIOLATION OF SECTION 271D OF THE ACT. 9. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF M ADRAS HIGH COURT IN IDHAYAM PUBLICATIONS LTD. (SUPRA). I N THE CASE BEFORE MADRAS HIGH COURT, THE ASSESSEE WAS ENGAGED IN THE PUBLICATION OF BOOKS. THE ASSESSEE ACCEPTED CASH LOAN OF 2,94,000/- FROM M/S MANIAN CREATION, A SISTER CONCERN, IN VIOLATION OF SECTION 269SS OF THE ACT. THE REVENUE LEVIED PENALTY UNDER SECTION 271D OF THE ACT. THE ASSESSEE CONTENDED BEFORE THE ASSESSING O FFICER THAT THERE WAS NO LOAN OR DEPOSIT. THE ASSESSING OFFICE R REJECTED THE CLAIM OF THE ASSESSEE AND LEVIED PENALTY. THE TRIB UNAL, HOWEVER, FOUND THAT THE PROPRIETOR OF THE SISTER CONCERN, WH ICH DEPOSITED THE FUNDS, WAS ONE OF THE DIRECTORS OF THE COMPANY AND THERE WAS A RUNNING CURRENT ACCOUNT IN HIS NAME. THEREFORE, TH ERE IS NO 9 I.T.A. NOS.628 TO 634/CHNY/18 VIOLATION OF SECTION 271D OF THE ACT. IN THIS CASE ALSO, SHRI A.N. RADHAKRISHNAN IS ONE OF THE DIRECTORS IN THE ASSESS EE-COMPANY AND HE IS ALSO A TRUSTEE IN OTHER TWO TRUSTS. THEREFOR E, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE FO R LEVYING PENALTY UNDER SECTION 271D OF THE ACT. 10. MOREOVER, FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10, THE PENALTY PROCEEDING WAS INITIATED ALMOST AFTER S IX YEARS. IN VIEW OF THE JUDGMENT OF MADRAS HIGH COURT IN M. SRINIVAS A RAO (SUPRA), THE PENALTY PROCEEDING SHOULD HAVE BEEN INITIATED W ITHIN REASONABLE TIME EVEN THOUGH NO LIMITATION WAS PROVIDED IN THE INCOME-TAX ACT. THE THREAT OF INITIATING PENALTY PROCEEDING CANNOT BE ALLOWED TO HANG OVER THE HEAD OF THE ASSESSEE FOR AN UNREASONA BLE PERIOD OF TIME. THERE SHOULD BE AN END TO THE PROCEEDING, TH AT ALSO WITHIN A REASONABLE PERIOD. HENCE, IN VIEW OF THE JUDGMENT OF MADRAS HIGH COURT IN M. SRINIVASA RAO (SUPRA), THE PENALTY PROC EEDING INITIATED BY THE ASSESSING OFFICER FOR ASSESSMENT YEARS 2008- 09 AND 2009- 10, AFTER THE EXPIRY OF ALMOST SIX YEARS, IS BARRED BY LIMITATION. 11. IN VIEW OF THE ABOVE DISCUSSION, WE ARE UNABLE TO UPHOLD THE ORDERS OF AUTHORITIES BELOW. ACCORDINGLY, THE ORDE RS OF THE LOWER 10 I.T.A. NOS.628 TO 634/CHNY/18 AUTHORITIES ARE SET ASIDE. THE PENALTY LEVIED BY T HE ASSESSING OFFICER AS CONFIRMED BY THE CIT(APPEALS) IS DELETED . 12. IN THE RESULT, ALL THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED ON 14 TH JUNE, 2018 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 14 TH JUNE, 2018. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-18, CHENNAI-34 4. PRINCIPAL CIT, CENTRAL-2, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.