ITO 14(1)(4), MUMBAI V. RAMAN V. DALAL, MUMBAI

ITA 6950/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7483 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-03-2010
• Assessment Year: 1995-1996
• Appeal Filed On: 05-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA RAMKRISHNAN
• Assessee Lawyers: ARVIND DALAL
• Keywords: Question of law; Assessment record
• Section: 271(1)(c); 143(3); 260A; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 6950/MUM/2008 (ASSESSMENT YEAR: 1995-96) INCOME TAX OFFICER 14(1)(4) SHRI RAMAN V. DALAL 203, 2ND FLOOR, EARNEST HOUSE 151-B, HEERA PANNA, 1 5TH FLOOR NARIMAN POINT, MUMBAI 400021 VS. BHULABHAI DESAI ROAD MUMBAI 400002 PAN - AADPA 3284 F APPELLANT RESPONDENT APPELLANT BY: SMT. CHANDRA RAMKRISHNAN RESPONDENT BY: SHRI ARVIND DALAL O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) XIV, MUMBAI DATED 06.10.2008. 2. REVENUE HAS RAISED TWO EFFECTIVE GROUNDS AS UNDER: - 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND F ACTS OF THE CASE. 2. (A) THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT ONCE AN AMENDMENT OF ORDER U/S. 254(2) IS PASSED, THEN ORDE R U/S. 254(1) LOSES ITS INDIVIDUAL EXISTENCE AND MERGES WI TH THE SAID ORDER. (B) THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT ORDER U/S. 254(2) IS THE FINAL ORDER WHILE CONSIDERING THE LIMITATION OF APPEALING TO THE ITAT U/S. 253. (C) THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT THE STARTING POINT OF LIMITATION U/S. 275(1)(A) WOULD HAVE TO BE TAKEN KEEPING IN MIND THE ORDER U/S. 254(2) OF THE I.T. ACT. 3. BRIEFLY STATED, THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON A TOTAL INCOME OF RS.28,00,000/- AS AGAINST RETURNE D INCOME OF RS.9,65,489/-. WHILE DETERMINING THIS INCOME THE A. O. HAS MADE ADDITIONS ON ACCOUNT OF BROKERAGE AND BUSINESS PROMOTION. THE A.O. INITIATED PROCEEDINGS UNDER SECTION 271(1)(C). AGAINST THE AS SESSMENT ORDER THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND ALSO BEFORE THE ITAT WHEREIN ITA NO. 6950/MUM/2008 SHRI RAMAN V. DALAL 2 THE ADDITIONS WERE CONFIRMED. THE A.O. LEVIED PENAL TY OF RS.4,66,362/- VIDE ORDER DATED 06.03.2006. APART FROM CONTESTING THE I SSUE ON MERITS, IT IS ONE OF THE CONTENTIONS OF THE ASSESSEE THAT THE ORDER P ASSED BY THE A.O. WAS BARRED BY LIMITATION. THE FACTS AS STATED BY THE AS SESSEE ARE AS UNDER: - SR. NO. PARTICULARS DATE ANNEXURE 1 DATE OF PASSING ORIGINAL ORDER 27.03.1998 - 2 ORDE OF CIT(A) 28.05.1999 - 3 ORDER GIVING EFFECT TO CIT(A)S ORDER 16.06.1999 A 4 ORDER OF ITAT 22.07.2004 B 5 ORDER OF ITAT ON MISCELLANEOUS APPLICATION 10.02.2005 C 6 PENALTY ORDER PASSED BY LD. ASSESSING OFFICER 06.03.2006 D 4. ON THE FACTS OF THE CASE THE CIT(A) HAS CONSIDERED THE ISSUE AND DECIDED AS UNDER: - 6. I HAVE CAREFULLY CONSIDERED THE ABOVE FACTS AND SUBMISSIONS AND HAVE ALSO GONE THROUGH THE ORDER OF THE AO. I FIND CONSIDERABLE FORCE AND MERIT IN THE CONTENTIONS OF THE APPELLANT. ADMITTED LY, THE PROVISIONS OF SECTION 275 RESTRICTS THE PASSING OF ORDER IMPOSING PENALTY UNDER CHAPTER XXI OF THE I.T. ACT BEYOND THE PRESCRIBED P ERIOD OF TIME. IN THE CASE OF THE APPELLANT THE AO IN HIS REPORT HAS ADMI TTED OF HAVING RECEIVED THE ORDER OF THE ITAT DATED 22.7.2004 BY T HE OFFICE OF CIT-16, MUMBAI ON 23.8.2004. THEREFORE, THE ORDER SHOULD HA VE BEEN PASSED WITHIN 6 MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER WAS RECEIVED IN THE OFFICE OF CIT. HOWEVER, IT IS ALSO SEEN THAT THE ORDER OF THE ITAT IS RECEIVED IN THE OFFICE OF CIT-16 AND NOT IN THE OFFICE OF CIT-14. TO ASCERTAIN THE FACTS, ASSESSMENT RECORD WAS CALLED F OR AND IT WAS SEEN THAT THE COPY OF THE ORDER OF ITAT WAS RECEIVED IN THE OFFICE OF CIT-14 ON 6.12.2004. EVEN IF THE LIMITATION OF ORDER IMPOSING PENALTY IS WORKED OUT FROM THIS DATE OF RECEIPT OF THIS ORDER IN THE OFFI CE OF CIT-14, THE LIMITATION EXPIRES IN THE MONTH OF NOVEMBER 2005. WHEREAS THE ORDER IMPOSING PENALTY IS PASSED BY THE AO IN THE MONTH OF MARCH 2 006. THE AOS PLEA THAT SINCE THE APPELLANT SUBSEQUENTLY FIELD A MISCE LLANEOUS APPLICATION BEFORE THE HON'BLE ITAT, AND THAT ORDER WHICH WAS D ISMISSED BY THE TRIBUNAL VIDE ORDER DATED 10.2.2005 WAS RECEIVED IN THE OFFICE OF CIT-15, MUMBAI ON 9.1.2007, THEREFORE, THE LIMITATION OF IM POSING PENALTY GETS EXTENDED HAS NO MERIT AT ALL. IT IS THE CASE OF THE APPELLANT WHEN THE HON'BLE ITAT DECIDED THE APPEAL AGAINST THE APPELLA NT ON 22.7.2004, THEREFORE, THE AO WAS REQUIRED TO IMPOSE PENALTY U/ S. 271(1)(C) WITHIN THE PRESCRIBED LIMIT OF TIME WHICH HE FAILED TO DO SO. THIS PLEA IS NOTHING BUT A FACE SAVING DEVICE RESORTED TO BY THE AO IN H IS REPORT BY STATING THAT SINCE MISCELLANEOUS APPLICATION OF THE APPELLA NT WAS RECEIVED IN THE OFFICE OF CIT-14 ON 9.1.2007, THE LIMITATION GETS E XTENDED. EVIDENTLY THIS ITA NO. 6950/MUM/2008 SHRI RAMAN V. DALAL 3 IS NOTHING BUT TAKING ADVANTAGE OF A SITUATION WHER E THOUGH THE QUANTUM APPEAL WAS DECIDED BY THE HON'BLE ITAT AND RECEIVED ALMOST ONE YEAR BEFORE THE DATE OF PASSING OF PENALTY ORDE R, THIS CERTAINLY ESTABLISHES THAT THE PENALTY IMPOSED IS BEYOND THE PRESCRIBED PERIOD OF TIME AS PER THE PROVISIONS OF I.T. ACT. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHAJJER PACKAGING & PLASTICS P. LTD. HA VE DEALT WITH THIS ISSUE IN GREAT DETAIL, THE HEAD NOTES OF WHICH ARE REPRODUCED AS UNDER: PENALTY-LIMITATION-EFFECT OF SECTION 275(1)(C) P ENALTY PROCEEDINGS TO BE COMPLETED BEFORE LIMITATION ASS ESSMENT ORDER ON 30.3.1999-PENALTY PROCEEDINGS STARTED ON 3 0.3.1999- ORDER IMPOSING PENALTY PASSED ON 13.3.2000-BARRED B Y LIMITATION- INCOME TAX ACT, 1961, S.271(1)(C). APPEAL TO HIGH COURT-COMPETENCY OF APPEAL-EFFECT OF CBDT CIRCULAR FIXING MONETARY LIMITS-CIRCULAR PROVIDING EXCEPTIONS- SUBSTANTIAL QUESTION OF LAW-INTERPRETATION OF PROVI SION-CASES INVOLVING SUBSTANTIAL QUESTION OF LAW-APPEAL MAINTA INABLE ON QUESTION OF SUCH INTERPRETATION-INCOME TAX ACT, 196 1, S. 260A .. 6.1 IN VIEW OF THE ABOVE DECISION OF HON'BLE ITAT ( SIC) WHICH IS SQUARELY APPLICABLE TO THE FACTS OF THE APPELLANTS CASE, I ALSO HOLD THAT THE PENALTY LEVIED BY THE AO IS BARRED BY LIMITATIO N OF TIME. THEREFORE, THE SAME IS QUASHED. AS THE PENALTY STANDS QUASHED ON THE LIMITATION MATTER, NO DECISION IS REQUIRED TO BE GIVEN ON MERI TS. AGGRIEVED BY THE ORDER THE REVENUE HAS RAISED THE ABOVE GROUND. 5. WE HAVE HEARD THE LEARNED D.R. AND THE LEARNED COUN SEL. 6. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDE R OF THE CIT(A) AS THE ORDER OF PENALTY WAS CLEARLY TIME BARRED. IT IS SUR PRISING THAT THE REVENUE IS CONTESTING THAT A MISCELLANEOUS APPLICATION ORDER W AS PASSED BY THE ITAT AND THE LIMITATION SHOULD BE RECKON FROM THE ORDER PASS ED UNDER SECTION 254(2). IT IS ON RECORD THAT THE MISCELLANEOUS APPLICATION WAS FILED AND THE MISCELLANEOUS APPLICATION WAS DISMISSED BY THE TRIB UNAL ON 10.02.2005. IT IS ALSO ON RECORD THAT THE SAID ORDER DATED 10.02.2005 WAS RECEIVED IN THE OFFICE OF CIT-14,MUMBAI ON 09.01.2007. IF THE ORDER WAS RE CEIVED ON 09.01.2007 AND ACCORDING TO THE REVENUE THE TIME LIMIT WAS AVA ILABLE, IT IS NOT EXPLAINED WHY THE A.O. HAS COMPLETED THE PENALTY PROCEEDING O N 06.03.2006 ITSELF, I.E. BEFORE THE RECEIPT OF THE MA ORDER, WHICH THE REVEN UE NOW REQUEST FOR CONSIDERATION. AT THE TIME OF PASSING THE ORDER BY THE A.O. THE ORDER OF THE ITAT DATED 22.07.2004 WAS THE ONLY ORDER IN EXISTEN CE AND BY THAT TIME THE TIME LIMIT FOR PASSING THE PENALTY ORDER WAS OVER. ADMITTEDLY, THE PROVISIONS ITA NO. 6950/MUM/2008 SHRI RAMAN V. DALAL 4 OF SECTION 275 RESTRICT THE PASSING OF ORDER IMPOSI NG PENALTY UNDER CHAPTER XXI OF THE I.T. ACT BEYOND THE PRESCRIBED PERIOD OF TIME. IN THE CASE OF THE ASSESSEE THE AO HAS ADMITTED OF HAVING RECEIVED THE ORDER OF THE ITAT DATED 22.7.2004 BY THE OFFICE OF CIT-16, MUMBAI ON 23.8.2 004. THEREFORE, THE ORDER SHOULD HAVE BEEN PASSED WITHIN 6 MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER WAS RECEIVED IN THE OFFICE OF CI T. HOWEVER, IT IS ALSO SEEN THAT THE ORDER OF THE ITAT IS RECEIVED IN THE OFFIC E OF CIT-16 AND NOT IN THE OFFICE OF CIT-14. AND THAT THE COPY OF THE ORDER OF ITAT WAS RECEIVED IN THE OFFICE OF CIT-14 ON 6.12.2004. EVEN IF THE LIMITATI ON OF ORDER IMPOSING PENALTY IS WORKED OUT FROM THIS DATE OF RECEIPT OF THIS ORDER IN THE OFFICE OF CIT-14, THE LIMITATION EXPIRES IN THE MONTH OF NOVE MBER 2005 WHEREAS THE ORDER IMPOSING PENALTY IS PASSED BY THE AO IN THE M ONTH OF MARCH 2006. THEREFORE, THE ORDER IMPOSING PENALTY PASSED ON 06. 03.2006 WAS BARRED BY LIMITATION. THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE WHO CONSIDERED THE FACTS AND THE LAW CORRECTL Y. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH 2010. SD/- SD/- (R.K. GUPTA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 19 TH MARCH 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XIV, MUMBAI 4. THE CIT XIV, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.