Arvind Kumar Jain, Firozabad V. A.C.I.T., Firozabad

ITSSA 6/AGR/2011

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8327 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-09-2012
• Assessment Year: misc
• Appeal Filed On: 27-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S C JAIN
• Keywords: Unexplained expenditure; Period of limitation; Block assessment; Time period of passing order
• Section: 246; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER IT(SS)A NO. 06/AGRA/2011 BLOCK PERIOD : 01.04.1990 TO 29.11.2000 ARVIND KUMAR JAIN, VS. A.C.I.T., CIRCLE-5, 18, CHAWKI GATE, FIROZABAD. FIROZABAD. (PAN : ABGPJ 1460 J). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.C. JAIN, C.A. RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 05.09.2012 DATE OF PRONOUNCEMENT OF ORDER : 07.09.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-II, AGRA DATED 10.05.2011 FOR THE ABOVE BLOCK PERIOD, C HALLENGING THE CONFIRMATION OF LEVY OF PENALTY U/S. 158BFA(2) OF THE IT ACT ON THE FOLLOWING GROUNDS : THE ORDER PASSED BY LEARNED CIT(A), WHEREBY PENALT Y OF A SUM OF RS.51,425/- U/S. 158 BDA(2) OF THE ACT HAS B EEN SUSTAINED, IS ERRONEOUS, UNJUSTIFIED, UNWARRANTED AND AS SUCH DES ERVES TO QUASHED UNDER LAW IN THE FACTS AND CIRCUMSTANCES OF THE CAS E BECAUSE (1). THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE IMPUGNED ORDER WAS A NULLITY ON ACCOUNT OF ITS BEING TIME BA RRED SINCE PASSED BEYOND THE TIME SPECIFIED IN CLAUSE (C) OF SUB-SECT ION (3) OF SECTION 158BFA IN AS MUCH AS HE HAS BEEN GUIDED BY FACTORS NOT KNOWN TO LAW OR OTHERWISE IRRELEVANT. IT(SS)A NO. 06/AGRA/2011 2 (2). IN ANY CASE AND WITHOUT PREJUDICE, THE LEARNE D CIT HAS FAILED TO APPRECIATE THAT PENALTY WAS NOT LEVIABLE EVEN ON MERITS UNDER LAW IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT SEARCH A ND SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSE SSEE BY THE REVENUE DEPARTMENT ON 29.11.2000. DURING THE COURSE OF SEARCH, CERTAIN UNEXPLAINED EXPENDITURE ON MARRIAGE OF MS. AMITA JAIN, DAUGHTER OF THE ASSESSE E WHICH TOOK PLACE ON 24.02.2000 AND ALSO 10 FDRS OF RS.20,000/- EACH WER E FOUND. ADDITIONS IN THE ASSESSMENT ORDER FOR THE BLOCK ASSESSMENT TO THE EX TENT OF RS.1,50,000/- WERE MADE. ON APPEAL FILED BEFORE THE LD. CIT(A), THE AS SESSEE GOT RELIEF OF RS.28,000/-. THE ASSESSEE PREFERRED APPEAL BEFORE THE ITAT, AGRA BENCH WHO HAD DETERMINED UNDISCLOSED INCOME OF THE ASSESSEE AT RS.85,708/-. ON THESE FACTS, THE AO INITIATED PENALTY PROCEEDINGS AND LEVIED THE PENALTY OF RS.51 ,425/- ON THE ASSESSEE. THE PENALTY ORDER WAS CHALLENGED BEFORE THE LD. CIT(A) AND HIS WRITTEN SUBMISSION IS REPRODUCED IN THE IMPUGNED ORDER IN WHICH THE ASSES SEE SUBMITTED THAT THE TRIBUNAL PASSED THE ORDER ON 03.11.2004 WHICH MUST HAVE BEEN RECEIVED BY THE AUTHORITIES SOMEWHERE IN THE END OF THE YEAR 2004 O R BEGINNING OF THE YEAR 2005. THE TIME FOR LEVY OF PENALTY U/S. 158BFA(3)(C) CANN OT BE EXTENDED ON ANY EXCUSE EVEN ON THE REQUEST OF THE ASSESSEE. THE AO ISSUED SHOW CAUSE NOTICE ON 08.12.2005 AND KEPT THE PENALTY PROCEEDINGS IN ABEY ANCE ON THE REQUEST OF THE ASSESSEE, BUT HE SHOULD HAVE PASSED THE PENALTY ORD ER WITHIN THE TIME STIPULATED U/S. IT(SS)A NO. 06/AGRA/2011 3 158BFA(3)(C). IT WAS, THEREFORE, SUBMITTED THAT THE PENALTY ORDER IS TIME BARRED AND MAY BE CANCELLED. THE LD. CIT(A), HOWEVER, DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARA 2.1 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 2.1. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSION OF THE LD. AR. AS REGARDS THE PLEA OF THE LD. AR TH AT THE PENALTY ORDER BARRED BY LIMITATION CANNOT BE ACCEPTED IN VIEW OF THE FACT THAT ON RECEIPT OF HONBLE ITAT, AGRA ORDER DATED 3.11.04 A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AS TO WHY PENALTY U/S. 158BFA(2) SHOULD NOT BE IMPOSED AND IN RESPONSE TO WHICH THE ASSESSEE HAD HIMSELF REQUESTED THAT PENALTY PROCEEDINGS MAY PLEA SE BE KEPT IN ABEYANCE AS HE HAD PREFERRED A MISC. APPLICATION BE FORE THE TRIBUNAL. THE ORDER OF THE ITAT DECIDING THE MISCELLANEOUS AP PLICATION WAS RECEIVED BY THE CONCERNED CIT ON 2.2.07 AND THE PEN ALTY ORDER HAS BEEN PASSED ON 28.8.07, AS THE ORIGINAL ORDER OF TH E TRIBUNAL MERGED WITH THE ORDER DECIDING THE MISCELLANEOUS APPLICATI ON FILED BY THE ASSESSEE. THUS, THE LIMITATION PERIOD HAS TO BE REC KONED FROM THE ORDER WHICH WAS RECEIVED BY THE CONCERNED COMMISSIO NER ON 2.2.07 AND PENALTY ORDER COULD BE VALIDLY PASSED UPTO 31.8 .07, I.E., WITHIN SIX MONTHS FROM THE END OF THE MONTHS WHEN THE FINAL OR DER OF THE ITAT WAS RECEIVED BY THE COMMISSIONER. THEREFORE, I AM O F THE OPINION THAT IT CANNOT BE SAID THAT THE PENALTY ORDER HAS BEEN P ASSED BEYOND LIMITATION PERIOD. AS PER THE PROVISIONS OF SEC. 15 8BFA(2), THE PENALTY WILL BE IMPOSED ON THAT PORTION OF UNDISCLOSED INCO ME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INC OME SHOWN IN THE RETURN. AS THE ADDITION MADE BY THE AO HAS BEEN PAR TLY CONFIRMED BY THE ITAT, THEREFORE, ON THAT PORTION OF THE INCOME WHICH IS IN EXCESS OF THE RETURNED INCOME, THE ASSESSEE IS LIABLE TO PENA LTY U/S. 158BFA(2) OF THE ACT, THEREFORE, THE PENALTY IMPOSED BY THE A O IS UPHELD. GROUNDS ARE DISMISSED. 3. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE TRIBUNAL D ECIDED THE APPEAL OF THE IT(SS)A NO. 06/AGRA/2011 4 ASSESSEE IN IT(SS)A NO. 38/2004 ALONG WITH DEPARTME NTAL APPEAL IN IT(SS)A NO. 57/2004 VIDE ORDER DATED 03.11.2004. HE HAS SUBMITT ED THAT HE HAS OBTAINED CERTIFICATE FROM THE OFFICE OF AGRA BENCH DATED 04. 06.2012, WHEREBY IT WAS CONVEYED TO THE ASSESSEE THAT THE COPY OF THE TRIBU NAL ORDER WAS POSTED TO THE RESPONDENT ON 18.03.2005 AND THE SAME WAS ALSO SENT TO THE AO BY HAND. HE HAS, THEREFORE, SUBMITTED THAT THE ORDER OF THE TRIBUNAL MUST HAVE BEEN DELIVERED TO THE REVENUE DEPARTMENT AT LEAST BY THE END OF MARCH, 20 05. THEREFORE, PENALTY ORDER IS TIME BARRED AS PER SECTION 158BFA(3)(C) OF THE ACT. HE HAS SUBMITTED THAT THE AO INITIATED PENALTY ON 29.11.2002 AND FURTHER ISSUED SHOW CAUSE NOTICE ON 08.12.2005, BUT PASSED THE ORDER ULTIMATELY ON 28.0 8.2007. THEREFORE, THE PENALTY ORDER IS TIME BARRED AND THE PERIOD OF LIMITATION C ANNOT BE RECKONED FROM THE DATE OF PASSING OF THE ORDER OF THE TRIBUNAL IN M.A. NO. 103/AGRA/2005 DATED 29.12.2006. ON THE OTHER HAND, THE LD. DR RELIED UP ON THE ORDER OF THE LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE TRIBUNAL DISPOSED OF THE AP PEAL OF THE ASSESSEE AND THE DEPARTMENT VIDE ORDER DATED 03.11.2004.AS PER INFOR MATION RECEIVED FROM THE OFFICE OF THE TRIBUNAL, THE ORDER WAS POSTED TO THE RESPONDENT ON 18.03.2005 AND COPY OF ORDER WAS SENT TO THE AO BY HAND. THUS, THE LD. COUNSEL FOR THE ASSESSEE RIGHTLY CONTENDED THAT THE IMPUGNED ORDER MUST HAVE BEEN RECEIVED IN THE OFFICE OF IT(SS)A NO. 06/AGRA/2011 5 THE COMMISSIONER AT LEAST BY MARCH, 2005. SECTION 1 58BFA(3)(C) PROVIDES AS UNDER : 158BFA (3). NO ORDER IMPOSING A PENALTY UNDER SUB- SECTION (2) SHALL BE MADE, (A) .. (B) .. (C) IN A CASE WHERE THE ASSESSMENT IS THE SUBJECT- MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTION 246 OR SEC TION 246A OR AN APPEAL TO THE APPELLATE TRIBUNAL UNDER SECTION 253, AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITI ATED, ARE COMPLETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH TH E ORDER OF THE COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OR T HE COMMISSIONER, WHICHEVER PERIOD EXPIRES LATER ACCORDING TO THE ABOVE PROVISION, NO ORDER IMPOSING PENALTY SHALL BE MADE WHERE ASSESSMENT IS SUBJECT MATTER OF AN APPEAL TO THE AP PELLATE TRIBUNAL U/S. 253 AFTER EXPIRY OF FINANCIAL YEAR IN WHICH THE PROCEEDINGS I N THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPL ETED OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) OR THE APPELLATE TRIBUNAL IS RECEIVED BY THE CCIT OR THE CIT, WHICHE VER PERIOD EXPIRES LATER. IN THIS CASE, PENALTY WAS INITIATED BY THE AO INITIALLY ON 29.11.2002 AND THEREAFTER ON 08.12.2005 AS PER THE FACTS MENTIONED IN THE PENALT Y ORDER. HOWEVER, PROCEEDINGS WERE KEPT IN ABEYANCE BECAUSE THE ASSESSEE FILED M. A. U/S. 254(2) OF THE IT ACT IT(SS)A NO. 06/AGRA/2011 6 BEFORE THE TRIBUNAL. THEREFORE, WHEN THE PENALTY P ROCEEDINGS WERE INITIATED IN NOVEMBER, 2002, PENALTY SHOULD NOT BE IMPOSED AFTER EXPIRY OF THE FINANCIAL YEAR, IN WHICH ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED. I.E., BY MARCH, 2003 AND THE SECOND PROVISO FURTHER PROVIDES OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE TRIBUNAL IS REC EIVED BY CCIT OR THE CIT WHICHEVER IS LATER. THE ORDER OF THE TRIBUNAL IS RE CEIVED BY THE COMMISSIONER BY MARCH, 2005, THEREFORE, PENALTY COULD HAVE BEEN LEV IED WITHIN FURTHER SIX MONTHS, I.E., UPTO THE MONTH OF SEPTEMBER, 2005. HOWEVER, T HE PENALTY ORDER IS PASSED ON 28.08.2007 AND AS SUCH, IT WAS PASSED BEYOND THE PE RIOD OF LIMITATION AS PROVIDED U/S. 158BFA(3)(C) OF THE IT ACT. THE AO AND THE LD. CIT(A) HAVE, HOWEVER, NOTED IN THE IMPUGNED ORDERS THAT WHEN PENALTY PROCEEDING S WERE INITIATED, THE ASSESSEE HIMSELF REQUESTED IN RESPONSE TO THE SHOW CAUSE NOT ICE TO KEEP THE PENALTY PROCEEDINGS IN ABEYANCE BECAUSE THE M.A. WAS PENDIN G BEFORE THE TRIBUNAL. IT IS ALSO NOTED IN THE IMPUGNED ORDER THAT THE FINAL ORD ER OF THE TRIBUNAL IN M.A. WAS RECEIVED BY THE CONCERNED CIT ON 02.07.2007. THEREF ORE, PENALTY ORDER PASSED ON 28.08.2007 IS PASSED WITHIN THE PERIOD OF LIMITATIO N PROVIDED UNDER THE ABOVE PROVISIONS. WE DO NOT AGREE WITH THE FINDINGS OF TH E AUTHORITIES BELOW IN THIS REGARD. SECTION 158BFA(3)(C) WITH REGARD TO THE PER IOD OF LIMITATION FOR PASSING THE PENALTY ORDER REFERS TO THE ASSESSMENT WHICH RE MAINED SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL U/S. 253 OF THE IT ACT, I.E., T HE MAIN APPEAL FILED BY THE IT(SS)A NO. 06/AGRA/2011 7 ASSESSEE CHALLENGING THE QUANTUM ADDITION. THE SAID ORDER ON QUANTUM, WHICH WAS SUBJECT MATTER OF APPEAL WAS PASSED ON 03.11.2004. THERE IS NO REFERENCE OF SECTION 254(2) OF THE IT ACT IN THE ABOVE PROVISION FOR EXTENDING PERIOD OF LIMITATION FOR PASSING THE PENALTY ORDER. THE M.A. FILED BY THE ASSESSEE AND DECIDED ON 29.12.2006 FALLS IN THE PROVISIONS OF SE CTION 254(2) OF THE IT ACT AND HAS NO CONCERN WITH THE MAIN APPEAL FILED U/S. 253 OF THE IT ACT. SINCE, THERE IS NO REFERENCE OF ANY ORDER PASSED U/S. 254 (2) IN THE P ROVISIONS OF SECTION 158BFA (3)(C), THEREFORE, THE AUTHORITIES BELOW HAVE WRONG LY CONSIDERED THE ISSUE FOR THE PURPOSE OF CALCULATING THE PERIOD OF LIMITATION. FU RTHER, IT IS NOTED IN THE IMPUGNED ORDERS THAT SINCE THE ASSESSEE REQUESTED IN RESPONS E TO THE SHOW CAUSE NOTICE THAT PENALTY PROCEEDINGS MAY BE KEPT IN ABEYANCE, AS THE ASSESSEE IS FILING M.A. U/S. 254(2) OF THE IT ACT, THEREFORE, THE LIMITATION PER IOD WOULD BE EXTENDED. THE EXPLANATION TO SECTION 158BFA(3) IS INSERTED, WHICH PROVIDES THAT IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSE OF THIS SECTIO N, (I) THE TIME TAKEN IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129, (II) THE PERIOD DURING WHICH THE IMMUNITY GRANTED UNDER SECT ION 245H REMAINED IN FORCE AND (III) THE PERIOD DURING WHICH THE PROCEEDINGS U NDER SUB-SECTION (2) ARE STAYED BY AN ORDER OR INJUNCTION OF ANY COURT, SHALL BE EX CLUDED. NONE OF THE ABOVE CLAUSES ARE APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. MERELY BECAUSE THE ASSESSEE HIMSELF STATED THAT PROCEEDINGS MAY BE KEP T IN ABEYANCE ON FILING THE IT(SS)A NO. 06/AGRA/2011 8 M.A., THE AO SHOULD NOT HAVE WAITED FOR THE RESULT OF M.A. AND SHOULD HAVE PROCEEDED WITH THE LEVY OF PENALTY IN THE MATTER. I F THE AO IS MISGUIDED BY THE ASSESSEE, THE PERIOD OF LIMITATION CANNOT BE EXTEND ED UNDER SUCH CIRCUMSTANCES BECAUSE THERE IS NO PROVISION IN LAW TO TAKE CARE O F SUCH SITUATION. THE AUTHORITIES BELOW, THEREFORE, WRONGLY COMPUTED THE PERIOD OF LI MITATION FROM THE DATE OF THE ORDER RECEIVED ON PASSING THE ORDER ON MISCELLANEOU S APPLICATION. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE PENAL TY ORDER DATED 28.08.2007 IS CLEARLY PASSED AFTER THE PERIOD OF LIMITATION AS AG AINST THE PROVISIONS OF SECTION 158BFA(3)(C) OF THE IT ACT. WE ACCORDINGLY HOLD THE PENALTY ORDER SO PASSED IS TIME BARRED. RESULTANTLY, NO PENALTY COULD BE LEVIE D AGAINST THE ASSESSEE. IN VIEW OF THE ABOVE, THERE IS NO NEED TO CONSIDER THE LEVY OF PENALTY ON MERITS. WE, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW LEVYING AND CONFIRMING THE PENALTY, AND ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- IT(SS)A NO. 06/AGRA/2011 9 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY