M/s United Traders, Street No. 3, Hoshiarpur V. The Dy. Commissioner of Income-tax, Hoshiarpur

ITSSA 2/ASR/2015

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3018 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-01-2017
• Assessment Year: misc
• Appeal Filed On: 04-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKARDR
• Assessee Lawyers: J S BHASIN
• Keywords: Principle of natural justice; Period of limitation
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: (CIRCUIT BENCH AT JALANDHAR) BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 (BLOCK PERIOD 01.04.1989 TO 08.02.2000) M/S UNITED TRADERS, STREET NO.3, HOSHIARPUR. (ASSESSEE) VS .. THE DCIT, HOSHIARPUR. (REVENUE) ASSESSEE BY SHRI . J. S. BHASIN, AR. REVENUE BY SHRI BHAWANI SHANKAR,DR. ORDER PER, A. D. JAIN, JUDICIAL MEMBER: IT (SS) 05/ASR/2012 THIS IS ASSESSEES APPEAL FOR THE BLOCK PERIOD 01.0 4.1989 TO 08.02.2000, TAKING THE FOLLOWING GROUNDS: 1. THAT THE LD. C1T(A) HAS ERRED BOTH LEGALLY & ON THE FACTS OF THE CASE ITS CONFIRMING THE TIME BARRED ASSESSMENT AGAI NST THE DATE OF HEARING 19.01.2017 DATE OF PRONOUNCEMENT 27 .03.2017 I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 2 PROVISIONS OF INCOME TAX ACT & THE IMPUGNED ORDER D ESERVES TO BE QUASHED. 2. THAT THE LD CIT(A) HAS ERRED IN CONFIRMING THE V ARIOUS ADDITIONS MADE BY THE LD AO DETAILED BELOW AGAINST THE FACTS & CIRCUMSTANCES OF THE CASE WITHOUT PROPERLY APPRECIA TING THE FACTS. HENCE IMPUGNED ORDER DESERVES TO BE QUASHED. (I)ADDITION ON ACCOUNT OF DIFFERENCE IN THE BALANCE SHEET AS DISCUSSED IN PARA-8 OF THE ORDER 83,63,436 /- (II) ADDITION ON ACCOUNT OF INADMISSIBLE EXPENSES A ND DISALLOWABLE AS DISCUSSED IN PARA-9 OF THE ORDER 1,93,818/- (III) ADDITION ON ACCOUNT OF RECEIPT IN ARJUN ACCOU NT AS DISCUSSED IN PARA 10 OF THE ORDER 8,22,639/- THE LD C1T(A) HAS NOT APPRECIATED THE FACTS AND HAS ERRED IN CONFIRMING THE INCOME OF THE PARTNERSHIP F IRM IN THE HANDS OF THE ASSESSEE,THE EXISTENCE HAS BEEN AC CEPTED BY THE LD AO.WHICH DESERVED TO BE QUASHED. 3. THAT THE ASSESSESMENT HAS BEEN FRAMED WITHOUT AF FORDING PROPER AND REASONABLE OPPORTUNITY WHICH IS AGAINST THE LAW OF NATURAL JUSTICE. I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 3 2. ON 08.02.2000, THE ASSESSEE'S PREMISES (P/SHIP F IRM) WERE SEARCHED U/S.132(1). ON 27.12.2001, ASSESSEE FILED APPLICATI ON BEFORE THE SETTLEMENT COMMISSION. ON 09.5.2002, ORDER U/S.245D(L) WAS PAS SED BY THE SETTLEMENT COMMISSION ADMITTING THE APPLICATION. HOWEVER, ADMI TTED TAX WAS NOT PAID BY THE ASSESSEE. W.E.F. 01.06.2007, SETTLEMENT PROVISIONS WERE AMENDED BY FINANCE ACT 2007. UNDER THE AMENDED PROVISIONS OF SECTION 245D( 2D), IF ADMITTED TAX WAS NOT PAID ON OR BEFORE 31.7.2007, APPLICATION WAS NOT AL LOWED TO BE FURTHER PROCEEDED WITH AND THEREUPON, AS PER AS PER SECTION 245HA (1) CLAUSE (II), READ WITH CLAUSE (B) OF EXPLANATION THERETO, IT WAS TO ABATE ON 31.0 7.2007. THEREAFTER, THE AO CONCERNED WAS TO FRAME ASSESSMENT, AS PER THE 2ND P ROVISO TO SECTION 153(4), AS AMENDED W.E.F. 1.6.2007, AFTER EXCLUDING THE PERIOD UNDER SUB-SEC (4) OF SEC 245HA, WITHIN ONE YEAR OF THE SPECIFIED DATE, I.E, UPTO 31.03.2008. HOWEVER, IN THIS CASE, THE ASSESSMENT ORDER WAS PASSED ON 31.03 .2009, BY RELYING ON CLAUSE (IV) OF SEC 245HA(1). APPEAL WAS FILED BEFORE THE CIT(A) , WHO DISMISSED IT BY ENDORSING THE VIEW OF AO. HENCE THIS APPEAL. 3. APROPOS GROUND NO. 1, THE LD. COUNSEL FOR THE AS SESSEE HAS CONTENDED THAT EVEN AFTER THE ADMISSION OF ASSESSEE'S APPLICATION ON 09.05.2002, THE ADMITTED TAX I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 4 HAD NOT BEEN PAID BY ASSESSEE, AS A RESULT OF WHICH , THE AMENDED PROVISIONS AS INSERTED BY FINANCE ACT 2007 W.E.F.01.06.2007, HAD THEIR CASCADING EFFECT ON ASSESSEES SETTLEMENT APPLICATION. 4. THE LD. DR PLACED RELIANCE ON THE IMPUGNED ORDER . 5. THE AO HELD AS UNDER: HOWEVER, FOLLOWING THE AMENDMENT IN THE ACT W.E.F. 01.06.2007, THE CASE GOT ABATED U/S 245HA(1)(IV) AN D THE JURISDICTION OVER THE ASSESSEE GOT TRANSFERRED BACK TO THE ASSESSING OFFICER, AND ORDER U/S 245BC(C) IS REQUIR ED TO BE PASSED BY 31.03.2009. 6. THE LD. CIT(A) HELD THAT: '4. HAVE CONSIDERED THE ISSUE RAISED BY THE APPELL ANT AND IT IS CLEAR THAT THE FACTS OF THE CASE UNDER CONSIDERATIO N FALL UNDER SUB-SECTION THE CASE OF THE APPELLANT HAD BEEN DULY ADMITTED BY THE HON'BLE SETTLEMENT COMMISSION BUT NO ORDER U/S. 245D(IV) COULD BE PASSED AND THE SPECIFIED DATE IN RESPECT O F HIS CATEGORY OF CASES IS AS PER CLAUSE 'D' OF EXPLANATI ON TO S.245HA, WHICH READS AS UNDER: I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 5 'IN RESPECT OF AN APPLICATION REFERRED TO CLAUSE IV ON THE DATE ON WHICH THE TIME OR PERIOD SPECIFIED IN SUB-SECTIO N 4A OF D 245D EXPIRES' IT THEREFORE BECOMES CLEAR THAT THE CLAIM OF THE AR ON THIS ISSUE IS NOT WARRANTED BY THE PROVISIONS OF LAW AS HIGHLI GHTED ABOVE. AS SUCH THIS GROUND OF THE APPEAL IS DISMISSED. ' 7. SECTION 245D (RELEVANT PORTION) OF THE I.T. ACT READS AS FOLLOWS: (2A) WHERE AN APPLICATION WAS MADE UNDER SECTION 2 45C BEFORE THE 1ST DAY OF JUNE, 2007, BUT AN ORDER UNDE R THE PROVISIONS OF SUB-SECTION (1) OF THIS SECTION, AS T HEY STOOD IMMEDIATELY BEFORE THE THEIR AMENDMENT BY THE FINAN CE ACT, 2007, HAS NOT BEEN PASSED BEFORE THE 1ST DAY OF JUN E, 2007, SUCH APPLICATION SHALL BE DEEMED TO HAVE BEEN ALLOW ED TO BE PROCEEDED WITH IF THE ADDITIONAL TAX ON THE INCOME DISCLOSED IN SUCH APPLICATION AND THE INTEREST THEREON, IS PAID ON OR BEFORE THE 31ST DAY OF JULY, 2007.' EXPLANATION - 'IN RESPECT OF THE APPLICATIONS REFER RED TO IN THIS SUB-SECTION, THE 31ST DAY OF JULY, 2007 SHALL BE DE EMED TO BE THE DATE OF THE ORDER OF REJECTION OR ALLOWING THE APPLICATION TO BE PROCEEDED WITH UNDER SUB-SECTION (1).' I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 6 (2D) WHERE AN APPLICATION WAS MADE UNDER SUB-SECTIO N (I) OF SEC 245C BEFORE THE 1ST DAY OF JUNE, 2007 AND AN OR DER UNDER THE PROVISIONS OF SUBSECTION (1) OF THIS SECTI ON, AS THEY STOOD IMMEDIATELY BEFORE THE THEIR\ AMENDMENT BY THE FINANCE ACT, 2007, ALLOWING THE APPLICATION TO HAVE BEEN PROCEEDED WITH, HAS BEEN PASSED BEFORE THE 1ST DAY OF JUNE, 2007, BUT AN ORDER UNDER THE PROVISIONS OF SUB-SECT ION (4) AS THEY STOOD IMMEDIATELY BEFORE THEIR AMENDMENT BY TH E FINANCE ACT, 2007 WAS NOT PASSED BEFORE THE 1ST DAY OF JUNE 2007, SUCH APPLICATION SHALL NOT BE ALLOWED TO BE FURTHER PROC EEDED WITH UNLESS THE ADDITIONAL TAX ON THE INCOME DISCLOSED I N SUCH APPLICATION AND THE INTEREST THEREON, IS, NOTWITHST ANDING ANY EXTENSION OF TIME, ALREADY GRANTED BY THE SETTLEMEN T COMMISSION, PAID ON OR BEFORE THE 31ST DAY OF JULY, 2007. 8. SECTION 245A (RELEVANT PORTION) IS AS FOLLOWS: 'ABATEMENT OF PROCEEDINGS BEFORE SETTLEMENT COMMISS ION' 245A(1) WHERE - I) AN APPLICATION MADE UNDER SECTION 245C ON OR AFTER THE 1ST DAY OF JUNE, 2007 HAS BEEN REJECTED UNDER SUB-S ECTION (1) OF SECTION 245D; OR I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 7 II) AN APPLICATION MADE UNDER SECTION 245C HA S NOT BEEN ALLOWED TO BE PROCEEDED WITH UNDER SUB-SECTION (2A) OR FURTHER PROCEEDED WITH UNDER SUB-SECTION (2D) OF SECTION 24 5D; OR III) AN APPLICATION MADE UNDER SECTION 245C HA S BEEN DECLARED AS INVALID UNDER SUB-SECTION (2C) OF SECTI ON 245D; OR IV) IN RESPECT OF ANY OTHER APPLICATION MADE U NDER SECTION 245C, AN ORDER UNDER SUB-SECTION (4) OF SECTION 245 D HAS NOT BEEN PASSED WITHIN THE TIME OR PERIOD SPECIFIED UND ER SUB- SECTION (4A) OF SECTION 245D, THE PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION SH ALL ABATE ON THE SPECIFIED DATE.' 9. THE EXPLANATION TO SECTION 245A IS AS UNDER: EXPLANATION - FOR THE PURPOSES OF THIS SUB-SECTION , 'SPECIFIED DATE' MEANS - A. IN RESPECT OF AN APPLICATION REFERRED TO IN CLA USE (I), THE DAY ON WHICH THE APPLICATION WAS REJECTED; B. IN RESPECT OF AN APPLICATION REFERRED TO IN CL AUSE (II), THE 31ST DAY OF JULY, 2007. C. IN RESPECT OF AN APPLICATION REFERRED TO IN CL AUSE (III), THE LAST DAY OF THE MONTH IN WHICH THE APPLICATION WAS DECLARED INVALID; I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 8 D. IN RESPECT OF APPLICATION REFERRED TO IN CLAUSE (IV), ON THE DATE ON WHICHTHE TIME OR PERIOD SPECIFIED IN SUB-SECTION (4 A) OF SECTION 245D EXPIRES. 10. AS PER SECTION 245D (4A): THE SETTLEMENT COMMIS SION SHALL PASS AN ORDER UNDER SUB-SECTION (4)- (I) IN RESPECT OF AN APPLICATION REFERRED TO IN SUB-SECTION (2A) OR SUBSECTION (2D), ON OR BEFORE THE 31ST DAY OF MARCH, 2008. 11. IT IS NOT IN DISPUTE THAT THE ASSESSEE'S APPLIC ATION WAS ADMITTED U/S. 245D(L) ON 9.05.2002, I.E., WELL BEFORE 1.6.2007. HOWEVER, ADMITTED TAX COULD NOT BE DEPOSITED TILL 1.6.2007. THEREFORE, IT WAS A CASE C OVERED BY SUB-SECTION (2D), WHICH APPLIED TO A SITUATION WHERE THE APPLICATION STOOD ADMITTED BEFORE 1.6.2007 BUT OWING TO NON PAYMENT OF ADDITIONAL TAX UPTO THE SAID DATE, IT WAS NOT FURTHER ALLOWED TO BE PROCEEDED WITH. 12. NOW, FOR ABATEMENT, IT WAS COVERED BY CLAUSE (I I) OF SECTION 245HA(1), WHICH, BESIDES COVERING SITUATION UNDER SUB-SEC (2A ), SPECIFICALLY COVERED THE SITUATION UNDER SUB-SEC (2D) APPLICABLE TO A CASE W HERE APPLICATION WAS NOT ALLOWED TO BE FURTHER PROCEEDED WITH. I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 9 13. FURTHER, THE SPECIFIED DATE IN CLAUSE (II) ABOV E, WAS TO APPLY AS PER CLAUSE (B) OF THE EXPLANATION, I.E., 31ST DAY OF JULY, 2007. 14. THEREFORE, THE ASSESSMENT HAD TO BE COMPLETED B Y 31.07.2008, WHEREAS IT HAS BEEN MADE ON 31.3.2009, BY VIRTUE OF 2 ND PROVISO TO SECTION 153(4). THE ID.AO MISCONSTRUED THE FACTS AND THE LAW, TO APPLY CLAUSE (IV) OF SEC 245HA(1) READ WITH CLAUSE (D) OF EXPLANATION, THEREBY WRONGLY EXTENDIN G THE LIMITATION FROM 31ST MARCH, 2008, AS GIVEN IN CLAUSE(I) OF SUB-SEC (4A). 15. THE POSITION BECOMES ABUNDANTLY CLEAR FROM TH E MEMORANDUM TO FINANCE ACT, 2007 UNDER THE REVISED SETTLEMENT SCHEME ( CLAUSE 53 TO 61 AND 75 TO 83) TO PARA (IV)(B), REPRODUCED BELOW: IN RESPECT OF APPLICATIONS WHICH WERE ADMITTED BEF ORE 1ST JUNE 2007, BUT ORDER OF SETTLEMENT WAS NOT PASSED BEFORE THE SAID DATE, THE TAX ON THE INCOME DECLARED IN THE APPLICA TION AND INTEREST THEREON SHALL HAVE TO BE PAID ON OR BEFORE 31' JULY, 2007. TAX AND INTEREST SHALL BE PAID BY THIS DATE E VEN IN CASES WHERE THE COMMISSION HAS ALREADY GRANTED ANY EXTENT ION OR INSTALLMENT FOR THE PAYMENT OF TAX BEYOND THE SAID DATE. IF THE TAX AND INTEREST IS NOT PAID ON OR BEFORE 31ST JULY 2007, THE APPLICATION SHALL NOT BE ALLOWED TO BE FURTHER PROC EEDED WITH, I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 10 AND THE PROCEEDINGS BEFORE THE COMMISSION SHALL ABA TE ON 31ST JULY, 2007' 16. IN APPRECIATION OF THE TRUE FACT SITUATION VIS A VIS THE ABOVE PROVISIONS OF LAW, AS ALSO THE BOARD MEMORANDUM, IT IS BEYOND DOU BT THAT THE ORDER UNDER APPEAL WAS TO BE PASSED ON OR BEFORE 31.7.2008, AND SINCE IT WAS PASSED MUCH THEREAFTER ON 31.3.2009, IT IS INVALID, BEING OUT OF TIME. IN RAJENDRA KUMAR VERMA VS. DGIT (INV), (2011) 237 CTR 86 (ALL), IT WAS HELD THAT T HERE WAS NO OCCASION FOR THE SETTLEMENT COMMISSION TO PASS ANY ORDER OF ABATEMEN T, AS THE ABATEMENT WAS BY OPERATION OF LAW, BUT IT WAS THE OBLIGATION OF THE AO TO PASS THE ASSESSMENT ORDER WITHIN THE STATUTORY PERIOD. LACK OF KNOWLEDGE ON P ART OF AO COULD NEVER BE A GOOD GROUND FOR EXTENDING THE PERIOD OF LIMITATION IN VIEW OF THE SPECIFIC STATUTORY PROVISION OF SEC. 153(4). 17. THE ID.CIT(A) CONCURRED WITH THE AO'S STANDPOIN T, AT PAGE 8, PARA 4 OF HIS ORDER, WITHOUT STATING AS TO HOW THE ASSESSEES ST AND POINT WAS NOT CORRECT. 18. AS SUCH, THE ASSESSMENT IS CLEARLY BARRED BY TI ME. IT IS, THEREFORE, HELD TO BE VOID AB INITIO, HIT BY LIMITATION. ACCORDINGLY, IT IS CANCELLED. AS A CONSEQUENCE, THE CIT(A)S ORDER ALSO DOES NOT SURVIVE AND IT IS ALSO CANCELLED. I.T.(SS) NO. (5)/ASR/2012 & IT. (SS) NO.02/ASR/2015 11 IT NO. (SS) 02/ASR/2015 19. THIS IS ASSESSEES APPEAL AGAINST THE PENALTY O F RS.61,90,730/- LEVIED U/S 158BFA (2) OF THE INCOME TAX ACT, AS A CONSEQUENCE OF THE ADDITIONS MADE BY THE AO, WHICH ADDITIONS ARE THE SUBJECT MATTER OF GROUN D NO.2 IN IT SS(5)/ASR/2012 (SUPRA). SINCE THE ASSESSMENT ITSELF STANDS CANCELL ED, AS ABOVE, THE PENALTY ALSO DOES NOT SURVIVE. IT IS ALSO CANCELLED. 20. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/03/2017. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 27/03/2017 *AKV* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT BY ORDER AR/SR.P.S./P.S.