G.Akila, CHENNAI V. DCIT, CHENNAI

ITSSA 13/CHNY/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0058 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-01-2014
• Assessment Year: misc
• Appeal Filed On: 01-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: K RAVI
• Keywords: Opportunity of being heard; Period of limitation; Block assessment; Time period of passing order
• Section: 32; 246; 132; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER IT(SS)A. NO. 13/MDS/2013 BLOCK AY.1991-92 TO 2000-01 AND PART OF 2001-02 SMT.G. AKILA, C/O.N.S.R. BALU & CO., CAS, NEW NO.22, OLD NO.20, GOVINDU STREET, T.NAGAR, CHENNAI 600 017 [PAN: AFWPA 6960 N] ( !& /APPELLANT) VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II(5), CHENNAI-600 034 ( '(!& /RESPONDENT) / APPELLANT BY : SHRI K. RAVI / RESPONDENT BY : SHRI S. DASGUPTA, JCIT / DATE OF HEARING : 30-01-2014 /DATE OF PRONOUNCEMENT : 11-02-2014 #) / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, CHENN AI DATED 11-03-2013 RELEVANT TO THE BLOCK ASSESSMENT YEAR (A Y) 1991-92 TO 2000-01 AND PART OF 2001-02. THE IMPUGNED ORDER HAS BEEN IT(SS)A. NO. 13/MDS/2013 2 PASSED U/S.158BD R.W.S. 158BC OF THE INCOME TAX ACT , 1961 (HEREIN AFTER REFERRED TO AS THE ACT) CONFIRMING THE PENALTY LEVIED ON THE ASSESSEE. 2. THE FACTS IN BRIEF ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUYING AND SELLING OF AUDIO, VIDEO EQUI PMENTS AND RELATED ACCESSORIES. ON 06-12-2000, A SEARCH WAS C ONDUCTED U/S.132 OF THE ACT IN THE CASE OF SHRI P.GANESAN, P ROPRIETOR M/S.SARAVANA VIDEO CENTRE. SHRI P.GANESAN IS THE F ATHER OF THE ASSESSEE. CONSEQUENT TO SEARCH, ASSESSMENT U/S.158 BD R.W.S.158BC OF THE ACT WAS COMPLETED ON 29-10-2004 DETERMINING UN-DISCLOSED INCOME OF THE ASSESSEE AS ` 36,14,731/-. PENALTY PROCEEDINGS U/S.158BFA WERE ALSO INITIATED AGAINST THE ASSESSEE. NOTICE U/S.158BFA(2) WAS ISSUED ON 29-10-2004. HOW EVER, AFTER ISSUANCE OF NOTICE NO ACTION WHAT SO EVER WAS TAKEN IN PENALTY PROCEEDINGS. THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(APPEALS) AGAINST THE ASSESSMENT ORDER AFTER THE DELAY OF TWO HUNDRED TWENTY ONE DAYS. THE CIT(APPEALS) AFTER CO NDONING THE DELAY IN FILING OF THE APPEAL, DISMISSED THE APPEAL OF THE ASSESSEE ON MERITS VIDE ORDER DATED 30-03-2009. AFTER THE D ISMISSAL OF QUANTUM APPEAL OF THE ASSESSEE, A FRESH NOTICE U/S. 158BFA(2) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 17-09-2009. THE DY.CIT, IT(SS)A. NO. 13/MDS/2013 3 CENTRAL CIRCLE-II, CHENNAI VIDE ORDER DATED 23-10-2 009 LEVIED A PENALTY OF ` 18,97,142/-. AGGRIEVED AGAINST THE PENALTY ORDER, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE ASSESSEE CH ALLENGED THE PENALTY ORDER INTER-ALIA ON THE GROUND OF LIMITATION. THE CIT(APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE A ND CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. AGAIN ST THIS ORDER OF CONFIRMING PENALTY, THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. SHRI K. RAVI, APPEARING ON BEHALF OF THE ASSESSE E SUBMITTED THAT THE BLOCK ASSESSMENT WAS COMPLETED ON 29-10-20 04. THE ASSESSEE HAD FILED APPEAL AGAINST THE ASSESSMENT OR DER ON 07-07-2005 WITH THE DELAY OF TWO HUNDRED AND TWENTY ONE DAYS. ON 30-03-2009, THE APPEAL OF THE ASSESSEE WAS DISM ISSED AFTER CONDONATION OF DELAY. FIRST, NOTICE U/S.158BFA(2) WAS ISSUED TO THE ASSESSEE ON 29-10-2004. ON THE SAID NOTICE NO ACTION WAS TAKEN. THE SECOND NOTICE U/S.158BFA(2) WAS ISSUED TO THE ASSESSEE ON 17-09-2009. THE LD.AR SUBMITTED THAT T HE SECOND NOTICE IS NOT VALID AND IS BARRED BY LIMITATION. M OREOVER, NO PROCEEDINGS WERE PENDING BEFORE ANY AUTHORITY WHEN THE SECOND IT(SS)A. NO. 13/MDS/2013 4 NOTICE WAS ISSUED. AS FAR AS FIRST NOTICE IS CONCE RNED, IT ABATED AFTER THE PERIOD OF SIX MONTHS FROM THE DATE OF ISS UE. THEREFORE, THE ACTION OF THE AUTHORITIES BELOW IN LEVYING PENA LTY IS BARRED BY LIMITATION. THE LD.AR FURTHER SUBMITTED THAT A PER USAL OF NOTICE ISSUED U/S.158BFA(2) WOULD SHOW THAT IT IS A STEREO TYPED NOTICE AND NO REASON WAS RECORDED BY THE ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDINGS. THE LD.AR FURTHER CONTENDED T HAT THE ASSESSEE HAD PAID THE ENTIRE TAX AMOUNT AND NO AMOU NTS WHAT-SO- EVER IS DUE. IN ORDER TO STRENGTHEN HIS CONTENTION S, THE LD.AR PLACED RELIANCE ON THE ORDER OF THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF NEMICHAND VS. ACIT REPORTED AS 93 TTJ 564. 4. ON THE OTHER HAND, SHRI S. DASGUPTA, APPEARING O N BEHALF OF THE REVENUE SUBMITTED THAT THE ACTION OF THE REVENU E AUTHORITIES IS WITHIN THE PERIOD OF LIMITATION. THE QUANTUM APPEA L OF THE ASSESSEE WAS DISMISSED BY THE CIT(APPEALS), THUS, T HE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED. A PEN ALTY OF ` 18,97,142/- HAS BEEN LEVIED ON THE ASSESSEE IN ACCO RDANCE WITH LAW. THERE IS NO DELAY ON THE PART OF DEPARTMENT I N INITIATING PENALTY PROCEEDINGS AGAINST THE ASSESSEE. THE LD.D R STRONGLY IT(SS)A. NO. 13/MDS/2013 5 SUPPORTED THE IMPUGNED ORDER AND PRAYED FOR THE DIS MISSAL OF THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECI SION OF THE BANGALORE BENCH OF THE TRIBUNAL RELIED UPON BY THE LD.AR. BEFORE WE PROCEED WITH THE FACTS OF THE CASE, IT WOULD BE APPROPRIATE TO FIRST SEE THE PROVISIONS OF THE ACT WITH RESPECT TO LEVY OF PENALTY IN SEARCH CASES. SECTION 158BFA DEALS WITH LEVY OF IN TEREST AND PENALTY IN SEARCH MATTERS. SUB-SECTIONS 2 & 3 OF S ECTION 158BFA DEALS WITH THE LEVY OF PENALTY. THE SAME ARE RE-PR ODUCED HEREIN BELOW: SECTION158BFA (2) THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IN THE COURSE OF ANY PROCEED INGS UNDER THIS CHAPTER, MAY DIRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN THE A MOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES TH E AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOM E DETERMINED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTIO N 158BC. PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MA DE IN RESPECT OF A PERSON IF IT(SS)A. NO. 13/MDS/2013 6 (I) SUCH PERSON HAS FURNISHED A RETURN UNDER CLAUSE (A) OF SECTION 158 BC; (II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HA S BEEN PAID OR, IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSESSEE OFFERS THE MONEY SO SEIZED TO BE ADJUSTED AGAINST THE TAX PAYABLE; (III) EVIDENCE OF TAX PAID IS FURNISHED ALONG WITH THE RETURN; AND (IV) AN APPEAL IS NOT FILED AGAINST THE ASSESSMENT OF THAT PART OF INCOME WHICH IS SHOWN IN THE RETURN; PROVIDED FURTHER THAT THE PROVISIONS OF THE PRECEDI NG PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERM INED BY THE ASSESSING OFFICER IS IN EXCESS OF THE INCOME SH OWN IN THE RETURN AND IN SUCH CASES THE PENALTY SHALL BE I MPOSED ON THE PORTION OF UNDISCLOSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN. (3) NO ORDER IMPOSING A PENALTY UNDER SUB-SECTION ( 2) SHALL BE MADE, (A) UNLESS AN ASSESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD; (B) BY THE ASSISTANT COMMISSIONER 39[OR DEPUTY COMMISSIONER] OR THE ASSISTANT DIRECTOR 39[OR DEPUT Y DIRECTOR], AS THE CASE MAY BE, WHERE THE AMOUNT OF PENALTY EXCEEDS TWENTY THOUSAND RUPEES EXCEPT WITH THE PREV IOUS IT(SS)A. NO. 13/MDS/2013 7 APPROVAL OF THE 40[JOINT] COMMISSIONER OR THE 40[JO INT] DIRECTOR, AS THE CASE MAY BE; (C) IN A CASE WHERE THE ASSESSMENT IS THE SUBJECT- MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SE CTION 246 41[OR SECTION 246A] OR AN APPEAL TO THE APPELLA TE TRIBUNAL UNDER SECTION 253, AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHI CH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, A RE COMPLETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OR THE COMMISSIONER, WHICHEVER PERIOD EXPIRES LATER; (D) IN A CASE WHERE THE ASSESSMENT IS THE SUBJECT-M ATTER OF REVISION UNDER SECTION 263, AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH SUCH ORDER OF REVISIO N IS PASSED; (E) IN ANY CASE OTHER THAN THOSE MENTIONED IN CLA USES (C) AND (D), AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHIC H THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED, OR SIX M ONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES LATER; (F) IN RESPECT OF SEARCH INITIATED UNDER SECTION 1 32 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS REQUISITIONE D UNDER SECTION 132A, AFTER THE 30TH DAY OF JUNE, 1995 BUT BEFORE THE 1ST DAY OF JANUARY, 1997. IT(SS)A. NO. 13/MDS/2013 8 6. THE CHRONOLOGY OF THE EVENTS IN THE PRESENT CASE ARE: I. 06-12-2000: SEARCH U/S.132 WAS CONDUCTED IN THE CASE OF SHRI P.GANESAN, PROPRIETOR M/S.SARAVANA VIDEO CENTRE WHO IS THE FATHER OF THE ASSESSEE-APPELLANT; II. 01-10-2002: NOTICE U/S.158BD WAS ISSUED TO THE ASSESSEE; III. 26-12-2002: THE ASSESSEE FILED HER RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S.158BD RETURNING UNDISCLOSED INCOME OF ` 9,12,250/-; IV. 29-10-2004: ASSESSMENT U/S.158BD R.W.S.158BC WAS COMPLETED; V. 29-10-2004: NOTICE U/S.158BFA FOR LEVY OF PENALT Y WAS ISSUED TO THE ASSESSEE; VI. 07-07-2005: THE ASSESSEE FILED APPEAL BEFORE TH E CIT(APPEALS) WITH THE DELAY OF 221 DAYS IMPUGNING THE ASSESSMENT ORDER; VII. 30-03-2009: APPEAL OF THE ASSESSEE WAS DISMISSED ON MERITS BY CIT(APPEALS) AFTER CONDONING THE DELAY IN FILING OF THE APPEAL; IT(SS)A. NO. 13/MDS/2013 9 VIII. 17-09-2009: SECOND NOTICE U/S.158BFA OF THE A CT FOR IMPOSING PENALTY WAS ISSUED; IX. 23-10-2009: PENALTY ORDER U/S.158BFA(2) PASSED BY THE DY.CIT, CENTRAL CIRCLE-II, CHENNAI; X. 11-07-2011: ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) AGAINST THE PENALTY ORDER; XI. 11-03-2013: CIT(APPEALS) DISMISSED THE APPEAL O F THE ASSESSEE IN PENALTY ORDER. 7. A PERUSAL OF SUB-SECTION 3 OF SECTION 158BFA WOU LD SHOW THAT PENALTY PROCEEDINGS SHOULD BE COMPLETED WITHIN THE FINANCIAL YEAR OR WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE PROCEEDINGS ARE INITIATED, WHICHEVER IS LATER. IN CASE OF PENDING APPEAL BEFORE FIRST APPELLATE AUTHORITY (CIT(A) OR TRIBUNAL, TIME LIMIT FOR COMPLETION OF ASSESSMENT IS EXTENDED TILL EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ASSES SEE RECEIVES THE ORDER OF THE CIT(A) OR THE TRIBUNAL OR THE REVI SIONAL ORDER OF THE ASSESSEE IS PASSED. IN THE CASE OF FIRST APPEAL OR APPEAL BEFORE THE TRIBUNAL, PENALTY PROCEEDINGS CAN BE COMPLETED, IF IT IS IN THE SAME FINANCIAL YEAR OF SUCH RECOMPUTATION CONSEQUEN T ON APPEAL, IT(SS)A. NO. 13/MDS/2013 10 BUT IF IT IS NOT COMPLETED WITHIN THE SAME FINANCIA L YEAR, IT HAS TO BE COMPLETED WITHIN SIX MONTHS FROM THE END OF THE MON TH IN WHICH THE ORDER WAS RECEIVED. 8. IN THE PRESENT CASE, AFTER ISSUANCE OF NOTICE U/ S.158BFA(2) ON 29-10-2004, THE REVENUE HAS NOT TAKEN ANY ACTION WITHIN THE TIME LIMIT PRESCRIBED UNDER THE ACT FOR LEVY OF PEN ALTY AGAINST THE ASSESSEE. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(APPEALS) MUCH AFTER THE PERIOD OF EXPIRY OF LIMITATION. BY THE TIME ASSESSEE PREFERRED AN APPEAL, THE PERIOD OF SIX MONTHS FROM THE DATE OF ISSUANCE OF NOTICE HAD ALREADY ELAPSED. THE REVEN UE WAS UNDER NO OBLIGATION TO WAIT FOR THE ASSESSEE TO FILE AN A PPEAL AGAINST ASSESSMENT ORDER AFTER THE LIMITATION PERIOD WAS OV ER. AFTER ISSUANCE OF NOTICE, THE REVENUE OUGHT TO HAVE COMPL ETED PENALTY PROCEEDINGS WITHIN THE PERIOD PRESCRIBED UNDER THE ACT WITHOUT WAITING FOR THE ASSESSEE TO FILE APPEAL AGAINST THE ASSESSMENT ORDER BEYOND THE PERIOD OF LIMITATION. THE SECOND NOTICE ISSUED U/S.158BFA(2) DATED 17-09- 2009 DOES NOT CONFER ANY POWER TO REVENUE TO DENOVO PENALTY PROCEEDINGS AGAINST THE ASSESSEE. THE ACT SPECIFIC ALLY PROVIDES FOR THE TIME LIMIT WITHIN WHICH ORDER IMPOSING PENA LTY HAS TO BE IT(SS)A. NO. 13/MDS/2013 11 PASSED. THE STATUTORY TIME LIMIT CANNOT BE ENLARGE D WITH THE ISSUANCE OF FRESH NOTICE. 9. IN VIEW OF THE FACT THAT THE REVENUE AUTHORITIES HAVE FAILED TO COMPLETE PENALTY PROCEEDINGS WITHIN THE STATUTORY T IME FRAME, THE PENALTY ORDER DATED 23-10-2009 IS BAD IN LAW. THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED ON TUESDAY, THE 11 TH FEBRUARY, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 11 TH FEBRUARY, 2014 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR