ITO, Sirsa V. Sh. Subhash Chander Prop., Ellenabad

ITA 854/CHANDI/2007

• Counselvise Citation: 85421514 RSA 2007
• Duration Of Justice: 4 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1997-1998
• Appeal Filed On: 10-10-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: D K GOYAL
• Keywords: Period of limitation; Retrospective amendment; Initiation of penalty proceedings; Time period of passing order

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, CH ANDIGARH BEFORE HONBLE SHRI D K SRIVASTAVA, AM AND HONBLE MS. SUSHMA CHOWLA I T A NOS. 854, 855, 856/CHANDI/2007 (ASSESSMENT YEARS: 1997-97, 1998-99 AND 1999-2000) I.T.O. W-2, SIRSA V SUBHASH CHANDER PROP. M/S DHARAM CHAND ANAND KUMAR ELLENABAD (APPELLANT) (RESPONDENT-ASSESSEE) FOR THE DEPARTMENT: SHRI N K SAINI, FOR THE RESPONDENT-ASSESSEE: SHRI D K GOYAL ORDER D K SRIVASTAVA: THE DEPARTMENT HAS FILED THE PRESENT BUNCH OF THRE E APPEALS AGAINST THE COMMON ORDER PASSED BY THE LD. CIT(A) O N 3.8.2007 FOR ALL THE THREE ASSESSMENT YEARS UNDER APPEAL. THE ISSUE INVOLVED I N ALL THESE THREE APPEALS IS IDENTICAL. WE FIND IT CONVENIENT TO DISPOSE OF THE PRESENT BUNCH OF APPEALS BY A CONSOLIDATED ORDER. 2. THE DEPARTMENT HAS TAKEN IDENTICAL GROUND IN ALL THE THREE APPEALS. FOR THE SAKE OF CONVENIENCE, THE ONLY GROUND OF APPEAL TAKE N BY THE DEPARTMENT IN ASSESSMENT YEAR 1997-98 IS REPRODUCED BELOW: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CANCELING THE PENALTY OF RS. 2,50,000/- LEVIED U /S 271(1)(C) OF THE IT ACT WITHOUT APPRECIATING THE RATIO OF JUDGEMENT OF HON 'BLE HIGH COURT OF MADHYA PRADESH, INDORE BENCH IN THE CASE OF D.H. SECHERON ELECTODES (P) LTD V CIT REPORTED IN 196 CTR 289 AND THE PROVISIONS OF SECTI ON 292B OF IT ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE, WHO IS PROPRIETOR OF M/S DHARAM CHAND ANAND KUMAR, ELLENABAD, FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 1997-98 ON 31.8.1997 RETURNING TOTA L INCOME AT RS. 44,030/-, WHICH WAS PROCESSED U/S 143(1). SUBSEQUENTLY, THE ASSESSI NG OFFICER RECEIVED A REPORT FROM THE DY. DIRECTOR OF INCOME-TAX (INV) ROHTAK BY WHIC H THE ASSESSING OFFICER WAS APPRISED OF THE RESULTS OF SURVEY CARRIED OUT BY TH E INVESTIGATION WING OF THE DEPARTMENT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 17.2.1999. AFTER TAKING INTO ACCOUNT THE RESULTS OF SURVEY, THE ASSESSING OFFICE R COMPLETED THE ASSESSMENT FOR 2 ASSESSMENT YEAR 1997-98 ASSESSING THE TOTAL INCOME AT RS. 5,78,120/- AS AGAINST THE INCOME OF RS. 44,030/- RETURNED BY THE ASSESSEE. AG GRIEVED BY THE ADDITIONS MADE BY THE ASSESSING OFFICER TO THE RETURNED INCOME, THE A SSESSEE FILED APPEAL BEFORE THE CIT(A) WHICH WAS HOWEVER DISMISSED BY HIM AS IT WAS FILED AFTER THE EXPIRY OF THE LIMITATION PERIOD FIXED FOR FILING THE APPEAL. MATE RIAL FACTS ARE SIMILAR IN OTHER TWO ASSESSMENT YEARS UNDER APPEAL. 4. PERUSAL OF THE ASSESSMENT ORDER FOR ASSESSMENT Y EAR 1997-98 AND OTHER TWO ASSESSMENT YEARS UNDER APPEAL SHOWS THAT THE ASSESS ING OFFICER HAD ISSUED NOTICE U/S 271(1)(C) OF THE I-T ACT FOR CONCEALMENT OF INCOME AND FOR FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME. THERE IS A DIRECTION TO THE AFORESAID EFFECT AT THE END OF THE ASSESSMENT ORDERS FOR THE YEARS UNDER APPEAL. PURSU ANT TO THE AFORESAID DIRECTION, SHOW CAUSE NOTICE WAS ISSUED AND SERVED UPON THE AS SESSEE. IN REPLY, IT WAS STATED BEFORE THE ASSESSING OFFICER THAT THE ADDITIONS MAD E IN THE ASSESSMENT ORDER WERE BASED ON CONJECTURES, SURMISES AND ESTIMATES AND, T HEREFORE, THEY DID NOT ESTABLISH CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. THE ASSESSING OFFICER, HOWEVER, REJECTED THE AFORESAID SUBMISSIONS AND ACCORDINGLY LEVIED IMPUGNED PENALTIES ON THE ASSESSEE U/S 271(1)(C) OF THE INCOME-TAX ACT. 5. AGGRIEVED BY THE ORDERS OF PENALTY PASSED BY THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT(A). IT WAS STATED BEFORE THE LD. CIT(A) THAT THE VERY INITIATION OF PENALTY PROC EEDINGS WAS INVALID IN AS MUCH AS THE ASSESSING OFFICER HAD INITIATED PROCEEDINGS FOR LEV Y OF PENALTY WITHOUT RECORDING HIS SATISFACTION. THE LD. CIT(A) ACCEPTED THE AFORESAID SUBMISSIONS AND CANCELLED THE PENALTIES WITH THE FOLLOWING OBSERVATIONS: THE FACTS INVOLVED, ASSESSMENT ORDERS, PENALTY ORD ER AND THE SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CONSIDERED CAREFULL Y. A PERUSAL OF THE ASSESSMENT ORDERS SHOWS THAT THE ASSESSING OFFICER HAS NOT RECORDED SATISFACTION AS TO THE CONCEALMENT OF INCOME BY THE APPELLANT; HE HAS SIMPLY NOTED PENALTY PROCEEDING U/S 271(1)(C) HAS BEEN INI TIATED SEPARATELY, WHICH IS A MECHANICAL RECORDING OF INITIATION OF PENALTY PRO CEEDINGS AND IS NO RECORDING OF SATISFACTION AS REQUIRED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MANISH IRON STORE, 263 ITR 484, AND THE HON 'BLE DELHI HIGH COURT IN THE CASE OF CIT V. AUTO LAMPS LTD. 278 ITR 32 (DEL HI) AND FURTHER BY THE 3 HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROF F V. JCIT, 291 ITR 519 (S.C). ALTHOUGH THE ASSESSING OFFICER HAS REFERRED TO THE ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MANISH I RON STORE, 263 ITR 484, YET HE APPEARS TO HAVE NOT APPRECIATED THE RATIO OF THIS DECISION. IT MAY BE NOTED THAT IN THE CASE OF EVER-PLUS SECURITY & FINA NCE LTD. V. DCIT (2006) 285 ITR (AT) 112 (DELHI), THE TRIBUNAL HAD CANCELLED TH E PENALTY MERELY ON THE GROUND THAT THE SATISFACTION WAS NOT RECORDED BY TH E ASSESSING OFFICER AFTER APPLYING THE DECISIONS OF CIT V. RAM COMMERCIAL ENT ERPRISES LTD. 246 ITR 568 (DELHI); CIT V. SHARMA B.R. (2005) 275 ITR 303 (DEL HI) AND CIT V. SUPER METAL RE-ROLLER (2004) 265 ITR 82 (DELHI). BESIDES THIS THE RATIO OF DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROF F V. JCIT, 291 ITR 519 (S.C) AND OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. AUTO LAMPS LTD. 278 ITR 32 (DELHI) RELIED UPON BY THE APPELLANT AS NOTE D ABOVE ARE ALSO APPLICABLE IN THE CASE OF THE APPELLANT. IN VIEW OF THIS, THE PENALTY IMPOSED BY THE ASSESSING OFFICER IN ALL THE THREE ASSESSMENT YEARS ARE HEREBY CANCELLED. 6. AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A), THE DEPARTMENT IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL, THE LD. DR INVITED OUR ATTENTION TO SUB-SECTION (1B) INSERTED IN SECTION 271 OF THE I-T ACT BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.1989 WHICH READS AS U NDER: (1B) WHERE ANY AMOUNT IS ADDED OR DISALLOWED IN CO MPUTING THE TOTAL INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSES SMENT OR REASSESSMENT AND THE SAID ORDER CONTAINS A DIRECTIONS FOR INITIATION OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB-SEC (1), SUCH AN ORDER OF ASSESSM ENT OR REASSESSMENT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE ASSESSI NG OFFICER FOR INITIATION OF THE PENALTY PROCEEDINGS UNDER THE SAID CLAUSE (C). 7. ON THE STRENGTH OF THE AFORESAID PROVISIONS, THE LD. DR SUBMITTED THAT A DIRECTION GIVEN IN THE ASSESSMENT ORDER FOR INITIAT ION OF PENALTY PROCEEDINGS U/S 271(1)(C) WOULD NOW CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). HE FU RTHER SUBMITTED THAT SUB-SEC (1B) HAS BEEN GIVEN RETROSPECTIVE EFFECT WITH EFFECT FRO M 1.4.89 AND WOULD THEREFORE COVER THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEARS U NDER APPEAL ALSO. HE URGED THAT 4 THE MATTER SHOULD BE RESTORED TO THE FILE OF LD. CI T(A) FOR DECIDING THE MATTER AFRESH IN THE LIGHT OF SUB-SECTION (1B) OF SEC 271 OF THE I-T ACT. 8. IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE AGREE D WITH THE SUBMISSIONS MADE ON BEHALF OF THE DEPARTMENT AND URGED THAT THE MATT ER COULD BE RESTORED TO THE FILE OF LD. CIT(A) TO DECIDE THE ISSUE IN THE LIGHT OF SUB- SEC (1B) OF SEC 271 OF THE I-T ACT AND ALSO TO DECIDE AS TO WHETHER THE ASSESSEE HAS A CTUALLY CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. 9. WE HAVE HEARD THE PARTIES. THE LD. CIT(A) HAS PA SSED THE APPELLATE ORDER ON 3.8.2007. SUB-SECTION (1B) HAS BEEN INSERTED IN SEC 271 OF THE INCOME-TAX ACT BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 1. 4.1989. IT IS QUITE APPARENT THAT THE LD. CIT(A) HAD NO OCCASION TO CONSIDER THE APPL ICABILITY OF THE NEWLY INSERTED SUB- SECTION (1B) IN SECTION 271 OF THE I-T ACT WHILE PA SSING THE ORDER UNDER APPEAL. SECONDLY THE LD. CIT(A) HAS NOT DECIDED THE ISSUE O N MERIT ALSO IN THAT HE HAS NOT RECORDED ANY FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME IN T ERMS OF SECTION 271(1)(C) OF I-T ACT INCLUDING EXPLANATION (1) THERETO. BOTH THE PARTIES AGREE BEFORE US THAT THE MATTER SHOULD BE RESTORED TO THE FILE OF LD. CIT(A) TO ENA BLE HIM TO DECIDE THE MATTER AFRESH ON BOTH THE AFORESAID ISSUES. WE FIND FORCE IN THEI R SUBMISSIONS AND ACCORDINGLY RESTORE THE MATTER TO THE FILE OF THE LEARNED. CIT( APPEALS) WITH THE DIRECTION TO ADJUDICATE UPON THE ISSUE IN THE LIGHT OF THE PROVI SIONS OF SECTION 271(1B) AND ALSO UPON THE LEVIABLETY OF PENALTY U/S 271(1)(C) READ W ITH EXPLANATION (1) THERETO ON THE FACTS OF THE CASE AND IN CONFORMITY WITH THE APPLIC ABLE LAW. REASONABLE OPPORTUNITY OF HEARING SHALL BE PROVIDED TO BOTH THE PARTIES. THE APPEALS FILED BY THE DEPARTMENT ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 30.11.2010. SD/- SD/- (SUSHMA CHOWLA) (D.K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER CHANDIGARH, THE 30.11.2010 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 5