Durga Das Vyas, CHENNAI V. ITO, CHENNAI

ITA 869/CHNY/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7455 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-02-2017
• Assessment Year: 2000-2001
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R DURAI
• Assessee Lawyers: N V BALAJI
• Section: 246; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.867, 868, 869, 870, 871 & 872/MDS/2014 * +* / ASSESSMENT YEARS : 1998-99 TO 2003-04 SHRI DURGA DAS VYAS, NAROTTAM AGENCIES, 13, ERRABALU STREET, CHENNAI - 600 001. PAN : ADAPV 2591 C V. THE INCOME TAX OFFICER, RANGE IX(3), CHENNAI. (-./ APPELLANT) (/0-./ RESPONDENT) ./ ITA NOS.873 & 874/MDS/2014 * +* / ASSESSMENT YEARS : 2001-02 & 2002-03 SHRI D. SRINIVAS VYAS, 13, ERRABALU STREET, CHENNAI - 600 001. PAN : ABVPV 4760 G V. THE INCOME TAX OFFICER, RANGE IX(3), CHENNAI. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANTS BY : SHRI N.V. BALAJI, ADVOCATE /0-. 1 2 / RESPONDENT BY : SHRI R. DURAI PANDIAN, JCIT ' 1 3& / DATE OF HEARING : 20.02.2017 45+ 1 3& / DATE OF PRONOUNCEMENT : 23.03.2017 2 I.T.A. NOS.867 TO 874/MDS/14 I.T.A. NOS.873 & 874/MDS/20 14 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THESE APPEALS FILED BY TWO DIFFERENT ASSESSEE AR E DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER O F INCOME TAX (APPEALS) CONFIRMING THE PENALTY LEVIED BY THE ASSE SSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THESE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOS ING OF THE SAME BY THIS COMMON ORDER. 2. IN ALL THESE APPEALS, THE ASSESSEES HAVE RAISED ADDITIONAL GROUND OF APPEAL. IN THE ADDITIONAL GROUNDS, THE M AIN INTENTION OF THE ASSESSEES IS THAT WHILE ISSUING NOTICE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER DID NOT SPECIFY WHETHER THE PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3. SHRI N.V. BALAJI, THE LD.COUNSEL FOR THE ASSESSE ES, SUBMITTED THAT SINCE THE ASSESSING OFFICER HAS NOT SPECIFIED THE EXACT REASON FOR LEVY OF PENALTY IN THE SHOW CAUSE NOTICE, THE P ENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT JUSTIFIED. THE LD.COUNSEL FURTHER 3 I.T.A. NOS.867 TO 874/MDS/14 I.T.A. NOS.873 & 874/MDS/20 14 SUBMITTED THAT THE ASSESSMENTS WERE MADE IN THE HAN DS OF THE PRESENT ASSESSEES ON PROTECTIVE BASIS. THE SUBSTAN TIAL ASSESSMENTS WERE MADE IN THE HANDS OF OTHER PERSON. THEREFORE, WHEN THE ASSESSMENTS WERE MADE ON PROTECTIVE BASIS, ACCORDING TO THE LD. COUNSEL, PENALTY CANNOT BE LEVIED UNDER SEC TION 271(1)(C) OF THE ACT. THE LD.COUNSEL PLACED HIS RELIANCE ON THE JUDGMENT OF CALCUTTA HIGH COURT IN CIT V. SUPER STEEL (SALES) C O. (1989) 178 ITR 451 AND ON THE JUDGMENT OF GAUHATI HIGH COURT I N METAL STORES V. CIT 91990) 186 ITR 612. THE LD.COUNSEL HAS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF PUNJAB & HARYANA HIGH C OURT IN CIT V. BEHARI LAL PYARE LAL (1983) 141 ITR 32. 4. SHRI N.V. BALAJI, THE LD.COUNSEL FOR THE ASSESSE ES, FURTHER SUBMITTED THAT FOR ALL THE ASSESSMENT YEARS, EXCEPT ASSESSMENT FOR ASSESSMENT YEAR 2001-02, THE ASSESSMENTS WERE COMPL ETED ON 06.03.2006 IN THE CASE OF THE ASSESSEE-SHRI DURGA D AS VYAS AND ON 30.12.2008 IN THE CASE OF THE ASSESSEE-SHRI D. S RINIVAS VYAS. FOR THE ASSESSMENT YEAR 2001-02, THE ASSESSMENT WAS COMPLETED ON 31.03.2004 IN THE CASE OF SHRI DURGA DAS VYAS. THE PENALTY PROCEEDINGS WERE INITIATED IN RESPECT OF ALL THE AS SESSMENT YEARS. THE CIT(APPEALS) PASSED THE ORDERS ON 29.05.2009 AN D ON 31.03.2009 IN THE CASE OF SHRI DURGA DAS VYAS AND S HRI D. SRINIVAS 4 I.T.A. NOS.867 TO 874/MDS/14 I.T.A. NOS.873 & 874/MDS/20 14 VYAS RESPECTIVELY. THE ASSESSING OFFICER PASSED TH E CONSEQUENTIAL ORDER ON 30.06.2009 AND ON 16.06.2009 IN THE CASE O F THE ASSESSEES RESPECTIVELY. THE ITAT DISPOSED THE APPE AL BY ORDER DATED 14.11.2011 IN BOTH THE CASES. REFERRING TO S ECTION 275 OF THE ACT, THE LD.COUNSEL SUBMITTED THAT THE ASSESSING OF FICER WAS EXPECTED TO PASS ORDER WITHIN SIX MONTHS FROM THE E ND OF THE MONTH IN WHICH THE ORDER OF THIS TRIBUNAL WAS RECEIVED BY THE CIT OR PR. CIT AS THE CASE MAY BE. IN THIS CASE, THE PENALTY ORDER WAS PASSED ONLY ON 29.06.2012 IN BOTH THE CASES, WHICH IS BEYO ND THE PERIOD OF SIX MONTHS. ACCORDING TO THE LD. COUNSEL, THE ORDE R OUGHT TO HAVE BEEN PASSED ON OR BEFORE 31.03.2011 FOR ALL THE ASS ESSMENT YEARS. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE PENALT Y ORDER PASSED BY THE ASSESSING OFFICER IS BARRED BY LIMITATION. 5. ON THE CONTRARY, SHRI R. DURAI PANDIAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT WHILE PASSING THE AS SESSMENT ORDER ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, THE ASSESSING OFFICER CONCLUDED THAT NEI THER THE ASSESSEES NOR THEIR SUB-CONTRACTOR DONE ANY SERVICE TO THEIR PRINCIPAL. THEREFORE, THE PAYMENT MADE BY THE PRIN CIPAL TO THE ASSESSEES AND IN TURN, THE PAYMENT MADE BY THE ASSE SSEES TO THE SUB-CONTRACTOR IS NOT FOR BUSINESS PURPOSE. THEREF ORE, ACCORDING TO 5 I.T.A. NOS.867 TO 874/MDS/14 I.T.A. NOS.873 & 874/MDS/20 14 THE LD. D.R., THE ASSESSEES NOT ONLY FURNISHED INAC CURATE PARTICULARS OF THEIR INCOME BY CLAIMING THE PAYMENT MADE TO THE SUB-CONTRACTOR AS EXPENDITURE, BUT ALSO CONCEALED I NCOME OF THE ASSESSEES. THEREFORE, THE ASSESSING OFFICER HAS RI GHTLY LEVIED THE PENALTY. 6. REFERRING TO THE ADDITIONAL GROUND RAISED BY THE ASSESSEES REGARDING LIMITATION, THE LD. D.R. SUBMITTED THAT T HE PENALTY ORDER WAS PASSED FOR ALL THE ASSESSMENT YEARS ON 29.06.20 12. REFERRING TO PROVISO TO SECTION 271(1)(A) OF THE ACT, THE LD. D.R. SUBMITTED THAT WHEN THE CIT(APPEALS) DISPOSED OF THE APPEALS AFTER 01.06.2003, PENALTY CAN BE IMPOSED BEFORE EXPIRY OF FINANCIAL YEAR IN WHICH PROCEEDING IN THE COURSE OF SUCH IMPOSITIO N OF PENALTY WAS INITIATED OR WITHIN ONE YEAR FROM THE FINANCIAL YEA R IN WHICH THE ORDER OF THE CIT(APPEALS) WAS RECEIVED BY THE COMMISSIONE R OR PRINCIPAL COMMISSIONER AS THE CASE MAY BE. IN THE CASE BEFOR E US, THE DETAILS OF THE RECEIPT OF THE SAID ORDERS OF THE CI T(APPEALS) ARE NOT AVAILABLE ON RECORD, THEREFORE, BEFORE DECIDING THE ISSUE ON LIMITATION, THE DATE WHEN THE ORDERS OF THE CIT(APP EALS) WERE RECEIVED BY THE COMMISSIONER OR PRINCIPAL COMMISSIO NER NEEDS TO BE VERIFIED. IN THE ABSENCE OF ANY MATERIAL AVAILA BLE ON RECORD, 6 I.T.A. NOS.867 TO 874/MDS/14 I.T.A. NOS.873 & 874/MDS/20 14 ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIG HTLY CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE WAS A SURVEY IN THE PREMISES OF BOTH THE ASSESSEES ON 29.12.2003. ON THE BASIS OF INFORMATION AND MATERIAL EVIDENCE F OUND DURING THE COURSE OF SURVEY OPERATION, THE ASSESSING OFFICER C ONCLUDED THAT THE ASSESSEES HAVE NOT RENDERED ANY SERVICE TO THE PRINCIPAL COMPANY AND IT WAS ALSO FOUND THAT THE ASSESSEES HA VE NOT MADE ANY PAYMENT TO THE SUB-CONTRACTOR. THE CIT(APPEALS ) FOUND THAT THE ASSESSEES NOT ONLY FURNISHED THE FALSE INFORMAT ION BUT ALSO INFLATED THE EXPENSES TO ARRIVE AT THE TOTAL INCOME . THE CIT(APPEALS) ALSO FOUND THAT THE ASSESSEES WILLFULL Y FURNISHED INACCURATE PARTICULARS BECAUSE THE TRANSACTIONS WER E KNOWINGLY FOR PROVIDING ACCOMMODATIVE ENTRIES. THE ASSESSEES NO W CLAIMS THAT THE ORDER PASSED BY THE ASSESSING OFFICER LEVYING P ENALTY UNDER SECTION 271(1)(C) OF THE ACT IS BARRED BY LIMITATIO N. THIS ISSUE WAS NOT RAISED BEFORE BOTH THE AUTHORITIES BELOW. FOR THE FIRST TIME, THE ASSESSEES ARE RAISING BEFORE THIS TRIBUNAL. SINCE THE QUESTION OF LIMITATION GOES TO THE ROOT OF THE MATTER, THE ASSE SSEES CAN RAISE THIS ISSUE BEFORE THIS TRIBUNAL. 7 I.T.A. NOS.867 TO 874/MDS/14 I.T.A. NOS.873 & 874/MDS/20 14 8. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEES, THE PENALTY PROCEEDING WAS INITIATED IN THE COURSE OF ASSESSMEN T ORDER. THE CIT(APPEALS) DISPOSED OF THE APPEAL ON 29.05.2009 A ND 31.03.2009 IN THE CASE OF BOTH THE ASSESSEES. THE ITAT DISPOS ED OF THE APPEALS ON 14.11.2011 AND THE PENALTY ORDER WAS DIS POSED ON 29.06.2012 IN ALL THE CASES. 9. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 275(1) OF THE ACT WHICH READS AS UNDER:- BAR OF LIMITATION FOR IMPOSING PENALTIES 275 (1) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPT ER SHALL BE PASSED-- (A) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHE R ORDER IS THE SUBJECT-MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTION 246 OR SECTION 246A OR AN APPEAL TO THE APPELLATE TRIBUNAL UNDER SECTION 253, AFTER THE EXP IRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED, OR SIX MONTHS FROM THE END OF THE MON TH IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) OR, A S THE CASE MAY BE, THE APPELLATE TRIBUNAL IS RECEIVED BY THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER, WHICHEVER P ERIOD EXPIRES LATER : PROVIDED THAT IN A CASE WHERE THE RELEVANT ASSESSME NT OR OTHER ORDER IS THE SUBJECT-MATTER OF AN APPEAL TO T HE COMMISSIONER (APPEALS) UNDER SECTION 246 OR SECTION 246A , AND THE COMMISSIONER (APPEALS) PASSES THE ORDER ON OR AFTER THE 1ST DAY OF JUNE, 2003 DISPOSING OF SUCH APPEAL, AN ORDER 8 I.T.A. NOS.867 TO 874/MDS/14 I.T.A. NOS.873 & 874/MDS/20 14 IMPOSING PENALTY SHALL BE PASSED BEFORE THE EXPIRY O F THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COU RSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HAS BEEN INI TIATED, ARE COMPLETED, OR WITHIN ONE YEAR FROM THE END OF THE F INANCIAL YEAR IN WHICH THE ORDER OF THE COMMISSIONER (APPEAL S) IS RECEIVED BY THE PRINCIPAL CHIEF COMMISSIONER OR CHI EF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIO NER, WHICHEVER IS LATER ; (B) IN A CASE, WHERE THE RELEVANT ASSESSMENT OR OTH ER ORDER IS THE SUBJECT-MATTER OF REVISION UNDER SECTION 263 OR SE CTION 264, AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH SUCH ORDER OF REVISION IS PASSED ; (C) IN ANY OTHER CASE, AFTER THE EXPIRY OF THE FINAN CIAL 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 ACTION FO R IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIO D EXPIRES LATER. 10. FOR THE PURPOSE OF DECIDING THE ISSUE OF LIMITA TION, WHICH WAS RAISED AS ADDITIONAL GROUND FOR THE FIRST TIME BEFO RE THIS TRIBUNAL, THIS TRIBUNAL NEEDS TO ASCERTAIN THE EXACT DATE OF THE O RDER OF THE CIT(APPEALS) AND ORDER OF THIS TRIBUNAL SERVED ON T HE COMMISSIONER OR PRINCIPAL COMMISSIONER AS THE CASE MAY BE. AS RIGHTLY SUBMITTED BY THE LD. DEPARTMENTAL REPRESENT ATIVE, THESE DETAILS ARE NOT AVAILABLE ON RECORD. SINCE THE ISS UE OF LIMITATION GOES TO VERY ROOT OF THE MATTER, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS TO RECONSIDE R THE MATTER AFTER ASCERTAINING THE EXACT DATE ON WHICH THE ORDERS OF THIS TRIBUNAL AND 9 I.T.A. NOS.867 TO 874/MDS/14 I.T.A. NOS.873 & 874/MDS/20 14 THE ORDERS OF THE CIT(APPEALS) WERE SERVED ON THE C OMMISSIONER OR PRINCIPAL COMMISSIONER AS THE CASE MAY BE. 11. MOREOVER, THE ASSESSEES HAVE ALSO RAISED AN ISS UE WITH REGARD TO FAILURE OF THE ASSESSING OFFICER TO SPECI FY IN THE SHOW CAUSE NOTICE WHETHER HE INITIATED PENALTY PROCEEDIN G FOR CONCEALING THE PARTICULARS OF INCOME OR FOR FURNISHING INACCUR ATE PARTICULARS OF SUCH INCOME. THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THE ASSESSEES SHALL BE GIVEN AN OPPORTUNITY TO EXPLAIN WHY PENALTY SHOULD NOT BE LEVIED BEFORE PASSING THE ORDER. THE REFORE, THE ASSESSING OFFICER IS INCUMBENT UPON TO SPECIFY THE REASONS FOR INITIATING PENALTY PROCEEDING. IN OTHER WORDS, THE ASSESSING OFFICER HAS TO SPECIFY WHETHER THE PENALTY PROCEEDING WAS I NITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR CONCEALING ANY PART OF SUCH INCOME. 12. SINCE THE ISSUE OF LIMITATION IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER, THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT THIS ISSUE ALSO NEEDS TO BE CONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE FOR ALL THE ASSESSMENT YEARS AND THE ENTIRE ISSUE IS REMITT ED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFIC ER SHALL RE- 10 I.T.A. NOS.867 TO 874/MDS/14 I.T.A. NOS.873 & 874/MDS/20 14 EXAMINE THE MATTER AFRESH AND BRING ON RECORD THE A CTUAL DATE ON WHICH THE ORDERS OF THE CIT(APPEALS) AND THE ORDERS OF THE TRIBUNAL IN THE CASE OF BOTH THE ASSESSEES, WERE SERVED ON T HE COMMISSIONER OR PRINCIPAL COMMISSIONER AS THE CASE MAY BE. THE ASSESSING OFFICER SHALL ALSO BRING ON RECORD THE RE ASONS FOR INITIATING PENALTY PROCEEDING EITHER FOR CONCEALMENT OF INCOME OR FOR PROVIDING INACCURATE PARTICULARS OF SUCH INCOME AND ALSO EXAM INE WHETHER PENALTY CAN BE LEVIED WHEN THE ASSESSMENTS WERE MAD E ON PROTECTIVE BASIS, AND THEREAFTER DECIDE THE ISSUE A FRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPO RTUNITY TO THE ASSESSEES. 13. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 23 RD MARCH, 2017 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 23 RD MARCH, 2017. KRI. 11 I.T.A. NOS.867 TO 874/MDS/14 I.T.A. NOS.873 & 874/MDS/20 14 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-13, CHENNAI 4. PRINCIPAL CIT-8, CHENNAI 5. 8; /3 /DR 6. * < /GF.