S Periasamy, Chennai V. DCIT, Central Circle II(3), Chennai

ITSSA 1/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0945 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 22-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: M ABHISHEK
• Keywords: Recovery proceedings; Bonafide belief; Block assessment; Set aside
• Section: 263; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH, CHENNAI [ , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T (SS).A.NO.01/CHNY/2019 (BLOCK ASSESSMENT: 01.04.1996 10.07.2002) SHRI S. PERIASAMY , VICTOR GRACE & CO., SPENCER PLAZA, O-704,769, ANNA SALAI, CHENNAI 600 002. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(3), CHENNAI. PAN: AHIPP6991N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI M. ABHISHEK, CA / RESPONDENT BY : SHRI S. BHARATH, CIT /DATE OF HEARING : 03.09.2019 /DATE OF PRONOUNCEMENT : 03.09.2019 / O R D E R PER S.JAYARAMAN, AM: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI IN ITA NO.271/09-10 DATED 15.09.2011, WHEREIN THE LD.CIT(A) DISMISSED THE APPEAL FILED AGAINST THE PENALTY ORDER PASSED U/S.158BFA(2) DATED 29.04.2005, IN-LIMINE , WITHOUT CONDONING THE DELAY IN FILING THE APPEAL FOR 57 MONTHS AND 13 DAYS. 2 IT(SS)A NO.01/CHNY/2019 2. THE ASSESSEES APPEAL IS DELAYED BY 2685 DAYS. THE ASSESSEE FILED CONDONATION PETITION PLEADING THAT THE DELAY IN FILING THE APPEAL WAS OCCURRED DUE TO THE FOLLOWING REASON: 1. THAT THE COMMISSIONER OF INCOME TAX (APPEAL) - 11 HAD PASSED AN ORDER ON 15.09.2011. I STATE THAT APPEAL AGAINST THAT ORDER OUGHT TO HAVE BEEN FILED BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL WITHIN 60 DAYS I.E. ON OR BEFORE14.11.2011. THE APPEAL, HOWEVER, IS BEING FILED ONLY ON 15.03.2019 BELATEDLY BY 86 MONTHS. 2. THAT THE APPEAL AGAINST PENALTY WAS PENALTY INITIATED ON THE ORIGINAL ASSESSMENT ORDER (ASSESSMENT ORDER DATE 29/10/2004). THE PENALTY ORDER PASSED WAS DATED 29/04/2005. 3. THAT SUCH ORIGINAL ASSESSMENT ORDER WAS REPLACED BY ORDER U/S 263 (DATED 08/03/2007) DIRECTING FRESH ASSESSMENT AND SUCH ORDER WAS PASSED DATED 31/12/2007, WHERE PENALTY WAS INITIATED SEPARATELY. 4. THAT I WAS INFORMED BOTH PERSONALLY AND, UNDER BONAFIDE BELIEF AS PER LAW AND AS PER LEGAL OPINION, THAT PENALTY CANNOT BE LEVIED AS PER OLD ASSESSMENT ORDER WHICH HAS BEEN SUPERSEDED AND REPLACED BY FRESH ASSESSMENT GIVING EFFECT TO ORDER U/S 263, WHERE CLEARLY PENALTY HAS BEEN INITIATED SEPARATELY. 5. THAT I DID NOT GO ON APPEAL ON THE ABOVE BONAFIDE BELIEF AND AS IT IS AS PER LAW THAT OLD PENALTY IS NO LONGER APPLICABLE AND THE ASSESSING OFFICER HAS ALSO NOT INITIATED ANY FRESH PENALTY PROCEEDINGS IN CONSEQUENCE TO FRESH ASSESSMENT ORDER PASSED GIVING EFFECT TO ORDER U/S 263. HOWEVER, VIDE LETTER DATED 13/03/2019, THE TAX RECOVERY OFFICER HAS SOUGHT TO BRING TO TAX THE OLD AND VOIDED PENALTY AMOUNT. 6. THAT DUE TO SUCH COERCIVE AND INCORRECT RECOVERY PROCEDURES AGAINST VOIDED PENALTY AMOUNTS THAT I HAVE PREFERRED TO GO ON APPEAL AGAINST THE VOIDED PENALTY ORDER, AND HENCE THE DELAY. 7. THAT UPON RECENT REFERENCE TO OUR COUNSEL, M/S. VICTOR GRACE & CO., CHARTERED ACCOUNTANTS, FOR REGULARIZING THE ISSUE BY PROPER APPEAL AGAINST THE IMPUGNED ORDER THE APPEAL GROUNDS WERE PREPARED AND FILED ON 22/03/2019 RESULTING IN A DELAY OF 86 MONTHS. 3 IT(SS)A NO.01/CHNY/2019 3. THE LD.AR ALSO INVITED OUT ATTENTION TO THE SUMMARY AND TIMELINE AS A GIST AS UNDER:- ORDER / DOCUMENTS ORDER DATE DATE OF SEARCH 10/07/2002 ORIGINAL QUANTUM ASSESSMENT ORDER (BEFORE 263 ORDER) REPLACED Y 263 ORDER 29/10/2004 PENALTY DEMAND RAISED AFTER QUANTUM ORDER (NOW REPLACED BY 263 ORDER) 29/04/2005 263 ORDER PASSED DIRECTING FRESH ASSESSMENT TO BE DONE 08/03/2007 ASSESSMENT ORDER GIVING EFFECT TO 263 31/12/2007 PENALTY TIME-BARRING DATE 6 MONTHS FROM ORDER DATE 30/06/2008 DEMAND RAISED BY TRO (WITHOUT PENALTY) 18/12/2008 DEMAND SUBSEQUENTLY RAISED WITH THE ULTRA-VIRES PENALTY 13/03/2019 THEREAFTER, THE LD.AR SUBMITTED THAT THE DELAY IN FILING THE APPEAL BEING BONAFIDE, PLEADED TO CONDONE THE DELAY. WE HEARD THE RIVAL SUBMISSIONS. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES AND IN THE INTERESTS OF JUSTICE, WE CONDONE THE DELAY. 4. THE LD.AR SUBMITTED THAT IN THE ASSESSEES CASE, THE ASSESSMENT WAS COMPLETED U/S.144 R.W.S.158BD R.W.S.158BC ON 29.10.2004 DETERMINING THE UNDISCLOSED INCOME AT RS.78,12,820/-. THEREAFTER, THE ASSESSING OFFICER LEVIED PENALTY U/S.158BFA(2) DATED 29.04.2005 AT RS.49,22,077/-. SUBSEQUENTLY, THE COMMISSIONER OF INCOME TAX (CENTRAL), CHENNAI II, INVOKED THE JURISDICTION U/S.263 AND SET ASIDE THE BLOCK ASSESSMENT ORDER IN C.NO.2744/6/206-07/C.II 4 IT(SS)A NO.01/CHNY/2019 DATED 08.03.2007 AND INVITED OUR ATTENTION TO PARA 6 OF THE ORDER WHICH IS EXTRACTED AS UNDER:- 6. IN VIEW OF THE ABOVE FACTS, THE BLOCK ASSESSMENT COMPLETED ON 29.10.2004 U/S 144 READ WITH 158BC/158BD OF THE ACT IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF REVENUE. THEREFORE, I FIND THAT IT IS A FIT CASE FOR REVISION U/S 263 OF THE ACT. ACCORDINGLY, THE BLOCK ASSESSMENT DATED 29.10.2004 IS HEREBY SET ASIDE. THE ASSESSING OFFICER IS DIRECTED TO MAKE FRESH ASSESSMENT AFTER CORRECTLY WORKING OUT THE ASSESSEES INCOME FROM 1) GHUTKA BUSINESS WITH REFERENCE TO IMPOUNDED BOOK NO.6 2) PROFIT FROM M/S. KANNAN WINES AND M/S. MAHARANI WINES 3) CASH RECEIPTS OF RS.20,000/- 4) RENOVATION EXPENSES IN RESPECT OF THE ASSESSEES OLD RESIDENCE. 5) CASH DEPOSITS IN BANK ACCOUNT NOS.1065 AND 1195. THE ASSESSING OFFICER SHOULD AFFORD A REASONABLE OPPORTUNITY TO THE ASSESSEE BEFORE MAKING A FRESH ASSESSMENT. THE ASSESSEE SHOULD ALSO CO- OPERATE WITH THE ASSESSING OFFICER AND COMPLY WITH THE STATUTORY NOTICES. 4.1 THEREAFTER, THE LD.AR SUBMITTED THAT THOUGH THE ASSESSEE HAS TAKEN MANY GROUNDS IN THE GROUNDS OF APPEAL, HE SUBMITTED THAT THE PENALTY ORDER IS VOID FOR THE FOLLOWING REASONS. THE ORIGINAL ASSESSMENT ORDER WAS PASSED U/S.144 R.W.S.158BD R.W.S.158BC DATED 29.10.2004, DISCLOSING UNDETERMINED INCOME. CONSEQUENTLY, THE PENALTY ORDER IS PASSED U/S.158BFA(2) DATED 29.04.2005. SINCE, THE LD.CIT(CENTRAL), CHENNAI-II, HAS SET ASIDE THE ASSESSMENT ORDER IN PARA-6, SUPRA, DATED 08.03.2007, THE PENALTY ORDER PASSED U/S.158BFA(2) DATED 29.04.2005 BASED ON THAT ASSESSMENT ORDER, THE IMPUGNED PENALTY ORDER IS VOID AS IT HAS NO LEGS TO STAND AND 5 IT(SS)A NO.01/CHNY/2019 SINCE IT GOES TO THE ROOT OF THE MATTER AND ON THE JURISDICTION OF THE AO, THE LD.AR PLEADED TO ALLOW THE APPEAL ON THIS GROUND ALONE. 5. WE HEARD THE RIVAL SUBMISSIONS AND FIND MERIT IN THE ASSESSEES PLEA. WHEN THE COMMISSIONER OF INCOME TAX(CENTRAL), CHENNAI II, HAS SET ASIDE THE ORDER OF ASSESSMENT U/S.263 AND DIRECTED THE AO TO MAKE FRESH ASSESSMENT, THE PENALTY ORDER PASSED BASED ON THE ASSESSMENT ORDER WHICH WAS SET ASIDE U/S.263, SUPRA , HAS NO EXISTENCE AND IT IS NOT VALID. HENCE, WE ALLOW THE ASSESSEES APPEAL. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD SEPTEMBER, 2019 AT CHENNAI. SD/- SD/- /CHENNAI, /DATED 3 RD SEPTEMBER, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR 6. [ /GF ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER