Manoj Shantilal chordiya, Nashik V. Addl CIT Rg - I Nashik, Nashik

ITA 726/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6708 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 12-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: SANJEEV MUTHA
• Keywords: Period of limitation; Initiation of penalty proceedings; Block assessment; Time period of passing order

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS.725 & 726/PN/2012 (BLOCK PERIOD : 01.04.1995 TO 27.12.2001) MANOJ SHANTILAL CHORDIYA, 1 & 2, GITASHREE APARTMENTS, CANADA CORNER, NASHIK. PAN : ACPPC4344Q . APPELLANT VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE-1, NASHIK. . RESPONDENT ASSESSEE BY : MR. SANJEEV MUTHA DEPARTMENT BY : MR. S. P. WALIMBE DATE OF HEARING : 07-05-2014 DATE OF PRONOUNCEMENT : 28-05-2014 ORDER PER G. S. PANNU, AM THESE CAPTIONED TWO APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER O F THE INCOME TAX (APPEALS)-I, NASHIK DATED 21.02.2012 AND 22.02.2012 WHEREBY PENALTIES IMPOSED BY THE ADDL. COMMISSIONER OF INCOME TAX (IN SHORT THE ADDL. COMMISSIONER), RANGE-1, NASHIK DATED 30.03.2011 UND ER SECTIONS 271D & 271E OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) AMOUNTING TO RS.13,91,000/- AND RS.43,06,000/- RESPECTIVELY HAVE BEEN AFFIRMED. 2. THE FACTS AND CIRCUMSTANCES IN BOTH THE APPEALS ARE SIMILAR, THEREFORE, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CON SOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. IN BRIEF, THE FACTS RELEVANT TO THE CONTROVERSY CAN BE SUMMARIZED AS FOLLOWS. A SEARCH ACTION U/S 132(1) OF THE ACT WAS CONDUCTED AT THE RESIDENTIAL AS WELL AS BUSINESS PREMISES OF THE ASSESSEE ON 27. 12.2001 WHICH LED TO A ITA NOS.725 & 726/PN/2012 BLOCK ASSESSMENT U/S 158BC OF THE ACT DATED 26.12.2 003 COMPRISING OF THE BLOCK PERIOD 01.04.1995 TO 27.12.2001. IN TERMS OF PARA 2 OF THE IDENTICALLY WORDED RESPECTIVE PENALTY ORDERS PASSED BY THE ADDL . COMMISSIONER DATED 30.03.2011 (SUPRA), IT IS EMERGING THAT DURING THE COURSE OF SUCH ASSESSMENT PROCEEDINGS, ASSESSEE WAS FOUND TO HAVE RECEIVED AN D ALSO REPAID CERTAIN ADVANCES AND LOANS IN CASH, WHICH WAS VIOLATIVE OF THE PROVISIONS OF SECTIONS 269SS AND 269T OF THE ACT RESPECTIVELY. THE ADDL. COMMISSIONER FURTHER OBSERVES THAT THE ASSESSING OFFICER MADE A REFERENC E FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTIONS 271D AND 271E OF THE ACT VIDE SEPARATE COMMUNICATIONS DATED 29.06.2010 FOR CONTRAVENTION O F SECTIONS 269SS AND SECTION 269T OF THE ACT RESPECTIVELY. PARA 10 OF T HE RESPECTIVE ORDERS PASSED BY THE ADDL. COMMISSIONER BRING OUT THE DETAILS OF TRANSACTIONS WHICH ARE IN VIOLATION OF SECTIONS 269SS AND 269T OF THE ACT IN TERMS OF WHICH PENALTY UNDER SECTIONS 271D AND 271E OF THE ACT AMOUNTING T O RS.13,91,000/- AND RS.43,06,000/- RESPECTIVELY HAVE BEEN LEVIED. THE CIT(A) HAS ALSO CONFIRMED THE SAID LEVY OF PENALTIES, AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. AT THE TIME OF HEARING, THE LEARNED REPRESENTATI VE FOR THE ASSESSEE RAISED A PRELIMINARY OBJECTION WHICH IS TO THE EFFE CT THAT THE ORDERS PASSED BY THE ADDL. COMMISSIONER DATED 30.03.2011 (SUPRA) ARE BEYOND THE PERIOD OF LIMITATION PRESCRIBED IN SECTION 275(1)(C) OF THE A CT AND THEREFORE THE ORDERS ARE BARRED BY LIMITATION AND THE SAME BE CANCELLED. SINCE THE AFORESAID ISSUE GOES TO THE ROOT OF THE MATTER, THE APPEALS WERE HE ARD IN RELATION TO THE AFORESAID OBJECTION. 5. BEFORE WE DEAL WITH THE FACTUAL MATRIX ON THIS I SSUE, IT WOULD BE APPROPRIATE TO REFER TO SECTION 275(1)(C) OF THE AC T WHICH PRESCRIBES THAT NO ORDER IMPOSING PENALTY SHALL BE PASSED BEYOND THE P ERIOD PRESCRIBED THEREIN. FOR THE PURPOSES OF CONSIDERATION OF LIMITATION FOR THE LEVY OF PENALTIES UNDER ITA NOS.725 & 726/PN/2012 SECTIONS 271D AND 271E OF THE ACT, WHICH IS THE CON TROVERSY BEFORE US, THE RELEVANT PERIOD IS PRESCRIBED IN SUB-CLAUSE (C) OF SECTION 275(1) OF THE ACT AND THE SAME IS REPRODUCED HEREINAFTER :- 275 (1) NO ORDER IMPOSING A PENALTY UNDER THI S CHAPTER SHALL BE PASSED (A) . (B) . (C) IN ANY OTHER CASE, AFTER THE EXPIRY OF THE FINA NCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTIO N FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPL ETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTIO N FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIO D EXPIRES LATER. 6. IN THIS CASE, THE ASSESSMENT U/S 158BC OF THE AC T WAS FINALIZED ON 26.12.2003. THE ASSESSING OFFICER MADE A REFERENCE TO THE ADDL. COMMISSIONER FOR INITIATING PENALTY PROCEEDINGS ON 29.06.2010. THE ADDL. COMMISSIONER INITIATED THE PROCEEDINGS BY ISSUANCE OF NOTICE ON 13.07.2010. THE ASSESSEE CONTESTED THE PENALTY PROCEEDINGS BUT THE ADDL. COMMISSIONER REJECTED THE PLEA OF THE ASSESSEE AND IMPOSED THE P ENALTIES BY WAY OF AN ORDER DATED 30.03.2011. THE STAND OF THE ASSESSEE IS THAT THE SHOW-CAUSE NOTICE WAS ISSUED ON 13.07.2010, WHEREAS THE PENALT Y ORDER (DATED 30.03.2011) HAS BEEN PASSED BEYOND THE PERIOD OF SI X MONTHS FROM THE END OF THE MONTH IN WHICH THE PENALTY PROCEEDINGS HAVE BEE N INITIATED AND THEREFORE IT WAS BEYOND THE PERIOD PRESCRIBED U/S 275(1)(C) O F THE ACT. THE AFORESAID POSITION WAS RAISED BY THE ASSESSEE BEFORE THE CIT( A), BUT THE SAME HAS BEEN REJECTED BY THE CIT(A). EVEN BEFORE US, THE REVENU E HAS OPPOSED THE PLEA OF THE ASSESSEE BY POINTING OUT THAT THE PENALTY ORDER COULD BE PASSED EITHER WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHIC H THE NOTICE WAS ISSUED I.E. WITHIN SIX MONTHS FROM 31.07.2010 OR BEFORE THE END OF THE FINANCIAL YEAR IN WHICH SUCH PROCEEDINGS WERE INITIATED, WHICHEVER PE RIOD EXPIRES LATER AND SINCE THE FINANCIAL YEAR IN THIS CASE EXPIRED ON MA RCH 31 ST , 2011, THE PENALTY ORDER PASSED ON 30.03.2011 WAS WITHIN THE TIME-PERI OD AFORESAID. ITA NOS.725 & 726/PN/2012 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL STANDS. SECTION 275(1)(C) OF THE ACT, WHICH WE HAVE EXTRACTED ABOVE, PROVIDES A PERI OD OF LIMITATION FOR CASES OF PENALTY WHICH DO NOT FIT WITHIN SUB-CLAUSE (A) O R (B) OF SECTION 275(1) OF THE ACT. SUB-CLAUSE (C) OF SECTION 275(1) OF THE ACT P RESCRIBES TWO SETS OF LIMITATION FOLLOWED BY THE EXPRESSION WHICHEVER PERIOD EXPIRES LATER . THE SIGNIFICANCE OF THE AFORESAID EXPRESSION IS IN CASE WHERE TWO PERIOD OF LIMITATION ARE TRIGGERED, ONE BEING LATER THAN THE OTHER. THE FIRST PERIOD PRESCRIBED IN SUB-CLAUSE (C) OF SECTION 275(1) OF T HE ACT IS IN RELATION TO THOSE CATEGORY OF CASES WHERE ACTION FOR IMPOSITION OF PE NALTY HAS BEEN INITIATED IN THE COURSE OF THE SAME PROCEEDINGS. IN SUCH A SITU ATION, THE PERIOD OF LIMITATION PRESCRIBED IS UP TO THE END AND INCLUDIN G THE FINANCIAL YEAR IN WHICH SUCH PROCEEDINGS ARE COMPLETED. IN THE PRESENT CAS E, THE ASSESSMENT PROCEEDINGS U/S 158BC OF THE ACT HAD BEEN COMPLETED ON 26.12.2003. IN PARA 4 OF HIS ORDER, THE ADDL. COMMISSIONER HAS REF ERRED TO THE OBSERVATIONS OF THE ASSESSING OFFICER MADE IN THE ASSESSMENT ORDER FOR THE BLOCK ASSESSMENT TO THE EFFECT THAT SEPARATE PROCEEDINGS UNDER SECTIONS 271D AND 271E OF THE ACT FOR CONTRAVENTION OF PROVISIONS OF SECTIONS 269 SS AND 269T OF THE ACT . THOUGH THE SAID ASSESSMENT ORDER IS DATED 26.12.200 3, THE ADDL. COMMISSIONER RECORDS THAT A REFERENCE WAS MADE TO H IM BY THE ASSESSING OFFICER TO INITIATE THE PENALTY PROCEEDINGS UNDER S ECTIONS 271D AND 271E OF THE ACT ON 29.06.2010. THE PENALTY PROCEEDINGS HAV E BEEN INITIATED BY THE ADDL. COMMISSIONER BY ISSUANCE OF NOTICE DATED 13.0 7.2010. EVEN IF ONE IS TO UNDERSTAND THAT THE IMPUGNED PROCEEDINGS IS A CATEG ORY OF CASES WHERE ACTION FOR THE IMPOSITION OF PENALTY IS TO BE INITI ATED IN THE COURSE OF SAME PROCEEDINGS, THEN THE PERIOD OF LIMITATION IS UP TO THE END OF THE FINANCIAL YEAR IN WHICH SUCH PROCEEDINGS ARE COMPLETED I.E. 31.03. 2004. AS THE CHRONOLOGY WOULD SHOW THE ORDER LEVYING PENALTY HAS BEEN PASSE D ON 30.03.2011, WHICH IS OBVIOUSLY BARRED BY LIMITATION, IF ONE WERE TO G O BY THE FIRST PERIOD OF LIMITATION PRESCRIBED IN SUB-CLAUSE (C) OF SECTION 275(1) OF THE ACT. ITA NOS.725 & 726/PN/2012 8. THE SECOND PART OF SECTION 275(1)(C) OF THE ACT PERTAINS TO ALL OTHER CASES WHICH ARE COVERED BY SUB-CLAUSE (C). IT IS S O BECAUSE THE SECOND PART OF THE LIMITATION IS LINKED TO ISSUANCE OF NOTICE B Y THE INCOME-TAX AUTHORITIES FOR IMPOSITION OF PENALTY. IN TERMS OF SECOND PART, TH E ONLY THING TO BE CONSIDERED IS THE POINT OF TIME AS TO WHEN THE ACTION OF PENAL TY IS INITIATED. IN THE PRESENT CASE, THE NOTICE HAS BEEN ISSUED ON 13.07.2010. TH E SECOND PART OF SUB- CLAUSE (C) OF SECTION 275(1) OF THE ACT PRESCRIBES THAT THE ORDER IMPOSING PENALTY SHALL NOT BE PASSED AFTER SIX MONTHS FROM T HE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED . IF, WE WERE TO APPLY THE SECOND CATEGORY OF LIMITATION, THEN THE PENALTY HAV ING BEEN INITIATED ON 13.07.2010, THE ORDER IMPOSING PENALTY WAS TO HAVE BEEN PASSED WITHIN SIX MONTHS FROM THE END OF THE MONTH, WHICH WOULD MEAN 31.01.2011. ON THIS SCORE ALSO THE PENALTY ORDER PASSED BY THE ADDL. CO MMISSIONER ON 30.03.2011 IS BARRED BY LIMITATION PRESCRIBED IN SECTION 275(1 )(C) OF THE ACT. 9. WE HAVE CONSIDERED BOTH THE PERIODS OF LIMITATIO N PRESCRIBED IN SECTION 275(1)(C) OF THE ACT. IF ONE IS TO CONSIDER THAT T HE IMPUGNED CASES OF PENALTY ARE COVERED BY THE FIRST CATEGORY OF LIMITATION PRE SCRIBED IN SUB-CLAUSE (C) THEN THE APPLICABLE PERIOD OF LIMITATION WOULD BE RELATA BLE EITHER TO THE DATE OF INITIATION OF PROCEEDINGS OR TO THE DATE OF COMPLET ION OF PROCEEDINGS IN THE COURSE OF WHICH THE ACTION FOR IMPOSITION OF PENALT Y HAVE BEEN INITIATED. IN SUCH A SITUATION, IT WOULD BE THE PERIOD WHICH EXPI RES LATER THAT WOULD DETERMINE THE LIMITATION PERIOD. CONSIDERED IN THA T LIGHT, WE HAVE ANALYZED ABOVE AND FOUND THAT THE PENALTY IS BARRED BY LIMIT ATION. 10. ON THE OTHER HAND, IF THE PRESENT CASE IS TO BE CONSIDERED A CASE WHERE THE INITIATION OF ACTION OF PENALTY IS NOT IN THE C OURSE OF SOME OTHER PROCEEDINGS, THEN AS PER THE HONBLE DELHI HIGH COU RT IN THE CASE OF SUBODHKUMAR BHARGAWA VS. CIT, 309 ITR 31 (DEL), IN SUCH A SITUATION THE FIRST PART OF LIMITATION PRESCRIBED IN SUB-CLAUSE (C) OF SECTION 275(1) OF THE ACT WOULD ITA NOS.725 & 726/PN/2012 NOT APPLY AND IT IS ONLY THE PERIOD OF LIMITATION P RESCRIBED IN THE SECOND PART WHICH WOULD APPLY. CONSIDERED IN THIS LIGHT TOO, A S PER OUR AFORESAID FACTUAL ANALYSIS, THE IMPUGNED ORDER IS BEYOND LIMITATION. OSTENSIBLY, IN SUCH A SITUATION THE EXPRESSION WHICHEVER PERIOD EXPIRES LATER CONTAINED IN SECTION 275(1)(C) OF THE ACT HAS BEEN UNDERSTOOD BY THE HON BLE DELHI HIGH COURT TO MEAN AS THAT VERY PERIOD OF LIMITATION , MEANING THAT THE ORDER IMPOSING PENALTY SHALL NOT BE PASSED AFTER SIX MONTHS FROM T HE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED . 11. IN VIEW OF THE AFORESAID DISCUSSION AND THE FAC TUAL MATRIX, IN OUR VIEW, THE ORDERS PASSED BY THE ADDL. COMMISSIONER DATED 3 0.03.2011 IMPOSING PENALTY UNDER SECTIONS 271D AND 271E OF THE ACT ARE HIT BY THE BAR OF LIMITATION PRESCRIBED IN SECTION 275(1)(C) OF THE A CT, AND THE SAME ARE ACCORDINGLY CANCELLED. THUS, ASSESSEE SUCCEEDS IN ITS BOTH APPEALS. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MAY, 2014. SD/- SD /- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 28 TH MAY, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE