M/s. S.B. Packagings Pvt. Ltd., New Delhi V. Addl.CIT, New Delhi

ITA 6777/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6793 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Period of limitation; Reasonable cause
• Section: 27; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.6777/DEL./2014 ASSESSMENT YEAR 2005-2006 S.B. PACKAGINGS PVT. LTD., 3 RD FLOOR, VARDHMAN PLAZA CORNER, INDER ENCLAVE, PASCHIM VIHAR, NEW DELHI 110087 PAN AABCS3731Q VS. THE ADDL. CIT, RANGE-7, NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI ANIL KUMAR GUPTA, FCA FOR REVENUE : SHRI S.L. ANURAGI, SR. D.R. DATE OF HEARING : 1 0.0 7 .2018 DATE OF PRONOUNCEMENT : 12 .0 7 .2018 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-X, DELHI, DATED 30.09.2 014, FOR THE A.Y. 2005-2006, CHALLENGING THE LEVY OF PENALTY UND ER SECTION 271E OF THE I.T. ACT, 1961. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT RETURN O F INCOME DECLARING LOSS OF RS.(-)18.22 CRORE WAS FILED ON 30 .10.2005. THE 2 ITA.NO.6777/DEL./2014 S.B. PACKAGINGS PVT. LTD., NEW DELHI. ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) VIDE ORDER DATED 05.09.2009 AFTER MAKING CERTAIN ADJUSTM ENTS AT A LOSS OF (-) 13.23 CRORES. THE A.O. ISSUED NOTICE UN DER SECTION 148 ON 30.03.2012 ON THE REASON THAT ASSESSEE HAD M ADE REPAYMENT OF UNSECURED LOAN AMOUNTING TO RS.4 LAKHS IN CASH ON DIFFERENT DATES BUT HAS NOT BEEN SHOWN BY THE AS SESSEE AND ITS SOURCE IS NOT EXPLAINED. THE ASSESSEE IN RESPON SE TO NOTICE UNDER SECTION 148 SUBMITTED THAT RETURN ALREADY FIL ED MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE I.T. ACT. THE A.O. AFTER RECORDING SUBMISSIO NS OF THE ASSESSEE COMPLETED THE ASSESSMENT AT THE SAME LOSS AS DETERMINED EARLIER AT RS.13.23 CRORES. THE A.O. HOW EVER, NOTED IN THE ASSESSMENT ORDER THAT SINCE ASSESSEE MADE RE PAYMENT OF LOAN AMOUNT OF RS.4 LAKHS IN CASH, THEREFORE, PENAL TY UNDER SECTION 271E IS ATTRACTED FOR NON-COMPLIANCE OF THE PROVISIONS OF SECTION 269T OF THE I.T. ACT. THE RECORD WAS FOR WARDED TO ADDL. CIT FOR ISSUING NOTICE UNDER SECTION 271E OF THE I.T. ACT. THE A.O. IN THE PENALTY ORDER MENTIONED THAT PENALT Y PROCEEDINGS UNDER SECTION 271E OF THE ACT WERE INIT IATED AND 3 ITA.NO.6777/DEL./2014 S.B. PACKAGINGS PVT. LTD., NEW DELHI. NOTICE UNDER SECTION 271E WAS SENT TO THE ASSESSEE ON 24.12.2012 FOR COMPLIANCE ON 31.12.2012. THE A.O. W AS NOT SATISFIED WITH THE EXPLANATION OF ASSESSEE AND LEVI ED THE PENALTY UNDER SECTION 271E OF THE I.T. ACT IN A SUM OF RS.4 LAKHS VIDE ORDER DATED 24.05.2013. 3. THE PENALTY ORDER WAS CHALLENGED BEFORE THE LD. CIT(A). IT WAS CONTENDED THAT ASSESSEE HAS MADE A REFUND OF LOAN IN CASH TO THE EXTENT OF RS.95,073/-, THEREFOR E, PENALTY CAN BE IMPOSED FOR REPAYMENT OF LOAN TO THE SAID AMOUNT ONLY. IT WAS SUBMITTED THAT ASSESSEE HAD SOURCE OF MAKING TH E REPAYMENT. M/S. GROSS HOLDINGS PVT. LTD., IS A SIST ER CONCERN OF THE ASSESSEE-COMPANY AND IN EARLIER YEAR, THE SISTE R CONCERN HAD ADVANCED MONEY TO THE ASSESSEE-COMPANY AND THE OPENING BALANCE AS ON 01.04.2004 WAS RS.95,073/-. AGAINST THIS OPENING BALANCE, ASSESSEE-COMPANY PAID RS.1 LAKH EA CH ON FOUR DATES. THESE CASH AMOUNTS WERE PAID TO SISTER CONCERN IN URGENT NEED OF FUND. IT WAS A GENUINE TRANSACTION A ND THERE WERE NO INTENTION TO AVOID OR EVADE ANY TAX. COPY O F THE LEDGER 4 ITA.NO.6777/DEL./2014 S.B. PACKAGINGS PVT. LTD., NEW DELHI. ACCOUNT ETC., WERE FILED. IT WAS SUBMITTED THAT THE TRANSACTION BETWEEN ASSESSEE-COMPANY AND SISTER CONCERN ARE NOT IN NATURE OF LOAN OR DEPOSIT SO AS TO ATTRACT THE PENALTY. TH E ASSESSEE RELIED UPON SEVERAL DECISIONS IN SUPPORT OF THE CON TENTION. 4. THE LD. CIT(A) ACCEPTED THE EXPLANATION OF ASS ESSEE THAT REPAYMENT OF LOAN WAS MADE FOR A SUM OF RS.95, 073/- ONLY. THE LD. CIT(A) ALSO NOTED THAT ASSESSEE HAS NOT COM E UP WITH ANY REASONABLE CAUSE FOR UNDERTAKING THE TRANSACTIO N IN CASH. HOWEVER, MERELY THESE TRANSACTIONS WERE GENUINELY A DOPTED DOES NOT MAKE THE ASSESSEES CASE FOR WAIVER OF THE PENALTY. THE LD. CIT(A), ACCORDINGLY, RESTRICTED THE PENALTY TO THE AMOUNT OF RS.95,073/- ONLY AND FOR REMAINING CASH PAYMENT, A. O. WAS DIRECTED TO CONSIDER TO IMPOSE PENALTY UNDER SECTIO N 271D OF THE I.T. ACT FOR BALANCE PAYMENT OF CASH PAYMENT. T HE APPEAL OF ASSESSEE WAS ACCORDINGLY PARTLY ALLOWED. 5. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 5 ITA.NO.6777/DEL./2014 S.B. PACKAGINGS PVT. LTD., NEW DELHI. 6. LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET , SUBMITTED THAT PENALTY ORDER IS TIME BARRED. IN SUP PORT OF HIS CONTENTION, HE HAS REFERRED TO PROVISIONS OF SECTIO N 275(1)(C) OF THE I.T. ACT, WHICH READS AS UNDER : 275 (1) NO ORDER IMPOSING A PENALTY UNDER THIS CHA PER SHALL BE PASSED- (A) ------- ----------- ---------- (B) -------- ---------- ---------- (C) IN ANY OTHER CASE, AFTER THE EXPIRY OF THE FIN ANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH AC TION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE C OMPLETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH AC TION FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIO D EXPIRES LATER. 6.1. IN THIS CASE, THE RE-ASSESSMENT PROCEEDINGS W ERE COMPLETED ON 29.11.2012 AND SINCE NO ADDITION HAVE BEEN MADE TO THE RETURN OF INCOME, THEREFORE, ACCORDING TO TH E LEARNED COUNSEL FOR THE ASSESSEE, NO FURTHER APPEAL HAVE BE EN FILED 6 ITA.NO.6777/DEL./2014 S.B. PACKAGINGS PVT. LTD., NEW DELHI. BEFORE THE LD. CIT(A). THE A.O. IN THE PENALTY ORDE R HAS MENTIONED THAT NOTICE UNDER SECTION 271E WAS SENT T O THE ASSESSEE ON 24.12.2012 FOR COMPLIANCE ON 31.12.2012 . THE PENALTY ORDER IS PASSED ON 24.05.2013. ACCORDING TO SECTION 275(1)(C), WHEN THE ASSESSMENT ORDER WAS NOT SUBJEC T TO APPEAL I.E., IN ANY OTHER CASE, NO ORDER IMPOSING PENALTY UNDER THIS CHAPTER SHALL BE PASSED AFTER THE EXPIRY OF THE FIN ANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTIO N FOR IMPOSITION OF PENALTY HAS BEEN INITIATED OR COMPLET ED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FO R IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIO D EXPIRE LATER. 6.2. IN THIS CASE, ASSESSMENT ORDER WAS PASSED ON 29.11.2012 INITIATING PENALTY PROCEEDINGS UNDER SEC TION 271E AND THE SHOW CAUSE NOTICE FOR LEVY OF THE PENALTY W AS ISSUED ON 24.12.2012, THEREFORE, IT IS A LATER PERIOD WHICH I S APPLICABLE TO THE CASE OF THE ASSESSEE. SINCE PENALTY ORDER HAVE BEEN PASSED ON 24.05.2013, THEREFORE, IT IS PASSED WITHIN SIX M ONTHS FROM THE END OF THE MONTH IN WHICH THE ACTION FOR IMPOSI TION OF 7 ITA.NO.6777/DEL./2014 S.B. PACKAGINGS PVT. LTD., NEW DELHI. PENALTY IS INITIATED I.E., FROM THE DATE OF INITIAT ING THE PENALTY PROCEEDINGS THROUGH SENDING A SHOW CAUSE NOTICE TO THE ASSESSEE ON 24.12.2012. THEREFORE, THE PENALTY ORDE R IS PASSED WITHIN THE PERIOD OF LIMITATION. THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS ACCORDINGLY REJECTED. 6.3. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBM ITTED THAT RE-ASSESSMENT PROCEEDINGS COULD NOT BE INITIAT ED FOR INITIATING THE PENALTY PROCEEDINGS UNDER SECTION 27 1E OF THE I.T. ACT. THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS NOT ACCEPTABLE BECAUSE INITIATION OF RE-ASSESSMENT PROCEEDINGS IS ALTOGETHER DIFFERENT PROCEEDINGS AND ULTIMATELY RE- ASSESSMENT IS PASSED AT THE RETURNED INCOME, WHICH COULD NOT BE FURTHER CHALLENGED BY THE ASSESSEE IN ANY APPEAL . THEREFORE, THE RE-ASSESSMENT PROCEEDINGS HAVE NO CO-RELATION W ITH THE LEVY OF THE PENALTY UNDER SECTION 271E OF THE I.T. ACT. IT MAY BE NOTED THAT PROCEEDINGS UNDER SECTION 271E COULD HAVE BEEN INITIATED SEPARATELY FOR VIOLATION OF SECTION 269T OF THE I.T . ACT. IT HAS NO CO-RELATION WITH PASSING OF THE ASSESSMENT/RE-ASSES SMENT 8 ITA.NO.6777/DEL./2014 S.B. PACKAGINGS PVT. LTD., NEW DELHI. ORDER. THESE CAN BE INDEPENDENTLY INITIATED AGAINST THE ASSESSEE FOR VIOLATION OF PROVISIONS OF SECTION 269 T OF THE I.T. ACT. THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS ACCORDINGLY REJECTED. 6.4. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBM ITTED THAT IT WAS AN INTER-SE GENUINE TRANSACTION BETWEEN THE ASSESSEE-COMPANY AND THE SISTER CONCERN AND THAT IN CASE OF URGENT NEED THE REPAYMENT OF RS.95,073/- HAVE BEEN MADE. THE ASSESSEE RELIED UPON SEVERAL DECISIONS BEFORE LD. C IT(A) AND ALSO RELIED UPON SEVERAL DECISIONS IN THE WRITTEN SYNOPS IS AS WELL. THE LD. CIT(A) INSTEAD OF DECIDING THE ABOVE SUBMIS SIONS OF THE ASSESSEE HAS SUMMARILY REJECTED THAT FOR GENUINE TR ANSACTION, THE ASSESSEE CANNOT ASK FOR WAIVER OF THE PENALTY. HOWEVER, SEVERAL CASE LAWS SUPPORTS THE CLAIM OF THE ASSESSE E IN THIS REGARD. IT MAY ALSO BE NOTED HERE THAT THE LD. CIT( A) AFTER REDUCING THE SUBSTANTIAL PENALTY, DIRECTED THE A.O. TO CONSIDER THE BALANCE AMOUNT OF CASH PAYMENT FOR IMPOSING PEN ALTY UNDER SECTION 271D OF THE I.T. ACT I.E., FOR TAKING OR ACCEPTING 9 ITA.NO.6777/DEL./2014 S.B. PACKAGINGS PVT. LTD., NEW DELHI. ANY LOAN OR DEPOSIT IN CONTRAVENTION OF SECTION 269 SS OF THE I.T. ACT. FURTHER RESULT OF THE SAME IS NOT BROUGHT TO M Y NOTICE AS TO WHAT ACTION HAVE BEEN TAKEN IN THIS REGARD BY TH E A.O. IT MAY ALSO BE NOTED HERE THAT ASSESSEE PLEADED THAT IN CA SE OF URGENT NEED OF THE SISTER CONCERN, THE BALANCE AMOUNT WAS PAID TO THEM. THEREFORE, THIS ITSELF COULD DISCLOSE THAT AS SESSEE MIGHT HAVE ANY REASONABLE CAUSE IN THIS REGARD BUT IT APP EARS TO ME THAT NO EVIDENCE IN SUPPORT OF THE SAME HAVE BEEN F ILED BEFORE THE AUTHORITIES BELOW. THEREFORE, THE FACTS AND CIR CUMSTANCES OF THE CASE CLEARLY SHOW THAT THE AUTHORITIES BELOW SH OULD HAVE GIVEN A SPECIFIC FINDING ON THE EXPLANATION OF ASSE SSEE IN THE LIGHT OF THE CASE LAW BEFORE THEM. THE FACTS ALSO D ISCLOSE THAT ONE MORE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE T O PROVE ITS CASE IF THERE WAS ANY REASONABLE CAUSE FOR MAKING C ASH PAYMENT TO THE SISTER CONCERN THROUGH EVIDENCE AND MATERIAL ON RECORD. THEREFORE, I AM OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION TO THE ABOVE EXTENT ONLY. I, ACCORD INGLY, SET ASIDE THE ORDER OF THE LD. CIT(A) TO THE EXTENT OF RESTRICTED PENALTY AT RS.95,073/- ONLY WITH A DIRECTION TO RE- DECIDE THE 10 ITA.NO.6777/DEL./2014 S.B. PACKAGINGS PVT. LTD., NEW DELHI. APPEAL OF ASSESSEE FOR THE LIMITED PURPOSE TO VERIF Y IF ASSESSEE HAD GENUINELY ENTERED INTO TRANSACTION WITH ITS SIS TER CONCERN AND ITS EFFECT ON PENALTY, WHETHER ASSESSEE HAS ANY REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE PROVISIONS OF LAW AND WHETHER THE CASE LAWS RELIED UPON BY THE ASSESSEE A RE APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CA SE. THE LD. CIT(A) SHALL VERIFY AS TO WHAT ACTION HAVE BEEN TAK EN BY THE DEPARTMENT FOR VIOLATION OF SECTION 271D OF THE I.T . ACT AND ITS RESULT, IF ANY, HAVE ANY BEARING ON THE ISSUE. THE LD. CIT(A) SHALL GIVE REASONABLE, SUFFICIENT OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE AS WELL AS TO THE A.O. ASSESSEE IS AT LIB ERTY TO PRODUCE ALL RELEVANT AND COGENT EVIDENCE BEFORE THE LD. CIT (A) IN SUPPORT OF THE EXPLANATION. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) DELHI, DT. 12 TH JULY, 2018. JUDICIAL MEMBER VBP/- 11 ITA.NO.6777/DEL./2014 S.B. PACKAGINGS PVT. LTD., NEW DELHI. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.