Kirti Kumar, Lucknow V. The Additional Commissioner Of Income Tax, Lucknow

ITA 81/LKW/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4697 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 12-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Initiation of penalty proceedings; Reasonable cause
• Section: 143(3); 27; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.81/LKW/2014 ASSESSMENT YEAR:2007-08 ADDL.C.I.T., RANGE-II, LUCKNOW. VS SHRI KIRTI KUMAR, PROPRIETOR, RONALD AGENCIES, MANAGING DIRECTOR-1/163, LDA COLONY, KANPUR ROAD, LUCKNOW. PAN:ABZPK3196K (RESPONDENT) (APPELLANT) SHRI S. C. AGARWAL, ADVOCATE APPELLANT BY SHRI AMIT NIGAM, D. R. RESPONDENT BY 18/01/2016 DATE OF HEARING 19 /02/2016 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE OR DER PASSED BY LEARNED CIT(A)-I, LUCKNOW DATED 06/12/2013 FOR THE ASSESSME NT YEAR 2007-08. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: 1. THAT THE LEVY OF PENALTY U/S 271D OF THE INCOM E TAX ACT, 1961 IS BEYOND JURISDICTION AND UNTENABLE IN LAW. 2. THAT THE PENALTY ORDER IS BARRED BY LIMITATION A ND IS LIABLE TO CANCELLED. 3. THAT NO CAUSE OF ACTION AROSE TO LEVY PENALTY AS THE ASSESSMENT ORDER, WHICH WAS THE FOUNDATION OF THE PENALTY PROCEEDINGS WAS NOT IN EXISTENCE AT THE TIM E WHEN SUCH PENALTY ORDER WAS PASSED. 2 4. THAT THE ORDER PASSED U/S 263 OF THE INCOME TAX ACT, 1961 GIVING RISE TO ASSESSMENT ORDER DATED 28.12.20 11 WAS SET ASIDE BY HON'BLE ITAT LUCKNOW VIDE ORDER DA TED 18.01.2012 MAKING THE ASSESSMENT ORDER DATED 28.12.2011 CEASED TO EXIST IN THE EYES OF LAW. 5. THAT THE APPELLANT DID NOT CONTRAVENE THE PROVIS IONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961 RENDERING THE PENALTY ORDER ERRONEOUS AND UNWARRANTED. 6. THAT THE LEARNED CIT (A) WAS WRONG IN HOLDING AN D IN COMING TO THE CONCLUSION THAT : (A) THAT THE PENALTY PROCEEDINGS U/S 271D ARE INDEPENDE NT FROM ASSESSMENT ORDER. (B) THAT EVEN IF ASSESSMENT ORDER IS QUASHED, THE PENAL TY ORDER WILL NOT BE AFFECTED PASSED ON THE BASIS OF S UCH ASSESSMENT ORDER. 7. THAT THE LEARNED CIT(A) WAS WRONG IN CONTENDING THAT THE PENALTY PROCEEDINGS U/S 271D DID NOT ARISE FROM ASSESSMENT ORDER IGNORING THE FACT SECTION 269SS AN D SECTION 271D ARE PART AND PARCEL OF INCOME TAX ACT, 1961 MAKING THE PENALTY ORDER INVALID. 8. THAT THE LEARNED CIT (A) DID NOT CONSIDER THE FA CT THAT WHILE PASSING THE ORIGINAL ASSESSMENT ORDER DATED 08.10.2009 THE LEARNED AO WAS SATISFIED THAT THE ASSESSEE'S DEFAULT, IF ANY, STOOD EXONERATED U/S 27 3B OF THE INCOME TAX ACT, 1961. 9. THAT THE LEARNED CIT(A) ERRED IN HOLDING THAT TH ERE WAS NO REASONABLE CAUSE FOR MAKING THE PAYMENT IN CASH ON THE GROUND OF NON FURNISHING OF EVIDENCE. 10. THAT THE LEARNED CIT(A) WAS WRONG IN NOT GIVING ANY FINDING ON THE FOLLOWING GROUND TAKEN BEFORE HIM: '8. THAT THE LEARNED ADDITIONAL CIT WAS WRONG TO LE VY PENALTY WITHOUT GIVING A FINDING ABOUT THE GENUINE NESS OF THE TRANSACTIONS INVOLVED AND BUSINESS EXPEDIENC Y.' 11. THAT THE PENALTY IS AGAINST FACTS AND LAW. 3 3. IT WAS SUBMITTED BY LEARNED A. R. OF THE ASSESSE E THAT THE PRESENT ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER IN THE CASE OF BALDEV SINGH VS. ADDL. CIT IN I.T.A. N O.1125 & 1126/CHD/2011 DATED28/02/2012. HE SUBMITTED A COPY OF THIS TRIBU NAL ORDER. 4. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE ONLY ISSUE IN DISPUTE IN THE PRESENT CASE IS REGARDING I MPOSITION OF PENALTY BY THE ASSESSING OFFICER U/S 271D OF THE ACT. THE CASE OF THE ASSESSEE IS THAT THE ORIGINAL ASSESSMENT ORDER WAS PASSED BY THE ASSESSI NG OFFICER U/S 143(3) ON 08/10/2009 AND THEREAFTER, LEARNED CIT PASSED OR DER U/S 263 OF THE ACT AS PER WHICH LEARNED CIT SET ASIDE THE SAID ASSESSM ENT ORDER DATED 08/10/2009 AND DIRECTED THE ASSESSING OFFICER TO RE DO THE ASSESSMENT. SUBSEQUENTLY, THE ORDER OF LEARNED CIT U/S 263 OF T HE ACT WAS SET ASIDE BY THE TRIBUNAL AND THEREFORE, NOW THE SURVIVING ORDER IS THE ORIGINAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/ S 143(3) ON 08/10/2009. THIS IS ALSO THE CONTENTION OF THE AS SESSEE THAT IN THIS ASSESSMENT ORDER DATED 08/10/2009, THERE IS NO INDI CATION THAT THE LOAN AGGREGATING TO RS.3.04 LAC WAS RECEIVED IN CASH FRO M VARIOUS PERSONS IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS AN D THERE IS NO WHISPER ABOUT INITIATION OF PROCEEDINGS FOR PENALTY U/S 271 D OF THE ACT. AS PER THE PENALTY ORDER PASSED U/S 271D ON 27/11/2012, WE FIN D THAT THE SAME IS ON THE BASIS OF FRESH ASSESSMENT ORDER PASSED BY THE A SSESSING OFFICER U/S 144/263 ON 28/12/2011, WHICH DOES NOT SURVIVE BECAU SE THE ORDER OF LEARNED CIT U/S 263 WAS SET ASIDE BY THE TRIBUNAL A ND THEREFORE, THE CONSEQUENTIAL ORDER OF THE ASSESSING OFFICER U/S 14 4/263 DOES NOT SURVIVE. IT IS ALSO SEEN THAT THE NOTICE U/S 271D WAS ISSUED ON 11/05/2012 AND 4 12/10/2012 AND THE ORDER U/S 271D WAS PASSED ON 27/ 11/2012. AFTER NOTING THESE FACTS, WE NOW EXAMINE THE APPLICABILIT Y OF THE TRIBUNAL ORDER RENDERED IN THE CASE OF BALDEV SINGH (SUPRA). THE ISSUE BEFORE THE TRIBUNAL IN THAT CASE WAS AS TO WHETHER, WHERE NO PROCEEDING S WERE INITIATED OR PENDING IN RESPECT OF THE CAPTIONED ASSESSMENT YEAR , PENALTY PROCEEDINGS U/S 271D OR 271E CAN BE INITIATED. IT WAS HELD BY THE TRIBUNAL IN THIS CASE THAT THE PENALTY PROCEEDINGS IN ASSESSMENT YEAR 200 5-06 U/S 271D AND 271E WERE INITIATED WHILE COMPLETING THE ASSESSMENT RELATING TO ASSESSMENT YEAR 2007-08 AND THEREFORE, THERE IS NO MERIT IN TH E SAID INITIATION OF PENALTY PROCEEDINGS U/S 271D AND 271E OF THE ACT RELATING T O ASSESSMENT YEAR 2005-06. THE TRIBUNAL HAS REFERRED TO A JUDGMENT O F HON'BLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF CIT VS. MANOHAR LAL THAKRAL IN I.T.A. NO.812 OF 2010 DATED 14/01/2011. IN THIS CA SE, THE QUESTION BEFORE HON'BLE HIGH COURT WAS AS TO WHETHER THE INITIATION OF PROCEEDINGS U/.S 271E WERE LEGAL OR ILLEGAL AS NO PROCEEDINGS WERE PENDIN G BEFORE THE ASSESSING OFFICER AND HON'BLE HIGH COURT UPHELD THE FINDING R ECORDED BY THE TRIBUNAL AS PER WHICH IT WAS HELD BY THE TRIBUNAL THAT THE G RIEVANCE OF THE ASSESSEE IS CORRECT BECAUSE THE PENALTY PROCEEDINGS WERE INI TIATED BY THE ASSESSING OFFICER ON THE BASIS OF FINDING IN THE CASE OF ASS ESSEES WIFE. THE TRIBUNAL HELD THAT THERE IS NO MERIT IN INITIATION OF PENALT Y PROCEEDINGS U/S 271D AND 271E BECAUSE NO PROCEEDINGS FOR THE RELEVANT YEAR W ERE PENDING AT THE RELEVANT POINT OF TIME. IN THE PRESENT CASE ALSO, W HEN PROCEEDINGS WERE INITIATED U/S 271D ON 01/05/2012, NO PROCEEDINGS WE RE PENDING IN RESPECT OF THE PRESENT ASSESSMENT YEAR. IN FACT, THE ORIGI NAL ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER U/S 143(3) ON 08/10 /2009 AND SUBSEQUENT ASSESSMENT YEAR U/S 144/263 WAS ALSO ALREADY PASSED ON 28/12/2011 AND THIS IS ADMITTED POSITION THAT IN COURSE OF ORIGINA L ASSESSMENT PROCEEDINGS COMPLETED ON 08/10/2009, THERE WAS NO WHISPER ABOUT INITIATION OF PROCEEDINGS U/S 271D OF THE ACT. IN OUR CONSIDERED OPINION, UNDER THE FACTS 5 OF THE PRESENT CASE, THIS TRIBUNAL ORDER RENDERED I N THE CASE OF BALDEV SINGH (SUPRA) AND ALSO THE JUDGMENT OF HON'BLE PUNJAB & H ARYANA HIGH COURT RENDERED IN THE CASE OF MANOHAR LAL (SUPRA) ARE SQU ARELY APPLICABLE AND HENCE, RESPECTFULLY FOLLOWING THESE JUDGMENTS, WE H OLD THAT THE PENALTY IMPOSED BY THE ASSESSING OFFICER IN THE PRESENT CAS E IS NOT VALID BECAUSE THE INITIATION OF PENALTY PROCEEDINGS IS NOT VALID IN THE EYES OF LAW. WE, THEREFORE, DELETE THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GAROD IA ) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED:19/02/2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR