DCIT, CC-II, Ludhiana V. M/s Sportking India Ltd., Ludhiana

MA 148/CHANDI/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8815 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 22-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: Opportunity of being heard
• Section: 153A; 274; 254(2); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B CHANDIGARH BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M M.A. NOS. 147 & 148/CHD/2019 ( IN ITA NOS.490 & 491 /CHD/2018) ASSESSMENT YEARS : 2013-14 & 2014-15 THE DCIT, CC-II, LUDHIANA VS. M/S SPORTKING INDIA LTD. G.T. ROAD, VILLAGE- KANECH NEAR SAHNEWAL, LUDHIANA PAN NO: AAACS3037Q / APPELLANT / RESPONDENT ASSESSEE BY : SHRI ASHWANI KUMAR, CA REVENUE BY : SHRI ASHOK KHANNA, SR. DR DATE OF HEARING : 19/12/2019 DATE OF PRONOUNCEMENT : 07/01/2020 ORDER PER N.K. SAINI, VICE PRESIDENT THESE TWO MISCELLANEOUS APPLICATIONS ARISING OUT OF THE COMMON ORDER DT. 22/04/2019 IN ITA NO. 490 & 491/CHD/2018 FOR THE A. YS 2013-14 & 2014-15 HAVE BEEN FILED BY THE DEPARTMENT. 2. THE COMMON CONTENTION IN BOTH THESE MISCELLANEOU S APPLICATIONS READ AS UNDER: THAT A SEARCH U/S 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE DIRECTORS OF THE COMPANY ON 24.10.2 013. THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S 153A R.W.S. 143(3)OF THE INCOME TAX A CT, 1961 ON 31.03.2016 AT RETURN INCOME ACCEPTED. FURTHER, A PENALTY U/S 271AAB AMOU NTING TO RS.20,00,000/- WAS IMPOSED ON THE ASSESSEE ON THE UNDISCLOSED INCOME AMOUNTING TO RS.2,00,00,000/- ADMITTED BY THE ASSESSEE U/S 132(4) OF THE INCOME TAX ACT BY ORDER DATED 29.09.2016. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A)-5, LU DHIANA. 2. THAT THE LD. CIT(A)-5, LUDHIANA VIDE ORDER DATED 22 .02.2018 IN APPEAL NO.407/16- 17/CIT(A)-5/LDH HAD CONFIRMED THE LEVY OF THE PENAL TY U/S 271AAB. AGGRIEVED WITH THIS ORDER,THE ASSESSEE FILED APPEAL BEFORE THE HON'BLE ITAT, CHANDIGARH VIDE ITA NO.490/CHD/2018. 3. THAT THE HON'BLE ITAT PASSED ORDER ON THE ASSESSEES APPEAL, WHICH WAS RECEIVED IN THE OFFICE OF PR. CIT(C), LUDHIANA ON 04.06.2019. T HE HON'BLE ITAT HELD THE PENALTY ORDER VOID ABINITIO ON THE ONLY GROUND THAT PENALLY WAS L EVIED VIDE ORDER DATED 29.09.2016 2 BEFORE OBTAINING APPROVAL OF THE JCIT AS THE STATUT ORY APPROVAL OF THE JOINT COMMISSIONER OF INCOME TAX, CENTRAL RANGE, LUDHIANA WAS ACCORDED ON 30.09.2016. 4. THAT WHILE ADJUDICATION OF THE APPEAL IN CASE OF ASSESSEE IN ITA NO.490 & 491/CHD/2018 FOR THE A.Y.2013-14, THE HON'BLE ITAT HAD HELD AS U NDER:- 'FROM THE ABOVE PROVISIONS CONTAINED IN SECTION 274 OF THE ACT, IT IS CRYSTAL CLEAR THAT THE PENALTY UNDER SECTION 271AAB OF THE ACT, WHICH FALL S IN CHAPTER XXI OF THE ACT SHALL NOT BE IMPOSED BY THE ASSESSING OFFICER UNTIL AND UNLESS P RIOR APPROVAL IS TAKEN FROM THE CONCERNED JOINT COMMISSIONER OF INCOME TAX(JCIT). T HE USE OF WORD 'SHALL' MAKE IT MANDATORY TO TAKE THE PRIOR APPROVAL OF THE JCIT/AD DITIONAL CIT BEFORE PASSING THE ORDER IMPOSING THE PENALTY UNDER SECTION 271AAB OF THE AC T. IN THE PRESENT CASE IT IS CRYSTAL CLEAR FROM THE PENALTY ORDER PASSED BY THE ASSESSING OFFI CER THAT THE ORDER WAS PASSED ON 29/09/2016 WHILE THE APPROVAL FROM THE ADDITIONAL C IT, RANGE LUDHIANA WAS ACCORDED VIDE LETTER NO. 1036 DATED 30.09.2016, WHICH CLEARL Y ESTABLISHED THAT THE PENALTY ORDER WAS PASSED BY THE ASSESSING OFFICER ON 29/09/2016 BEFOR E TAKING THE APPROVAL FROM THE CONCERNED ADDITIONAL CIT,JCIT. THEREFORE, THE PENAL TY ORDER PASSED BY THE ASSESSING OFFICER FOR LEVYING THE PENALTY UNDER SECTION 271AA B OF THE ACT WAS VOID ABINITIO. IN THAT VIEW OF THE MATTER THE IMPUGNED PENALTY LEVIED U/S 271AAI3 OF THE ACT BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) IS DELETED. ' 5. THAT THE PERUSAL OF THE RECORDS SHOW THAT THE AS SESSING OFFICER HAD FORWARDED THE DRAFT PENALTY ORDER U/S 271AAB OF THE I.T.ACT, 1961 FOR A PPROVAL OF JCIT, CENTRAL RANGE, LUDHIANA AS PER THE PROVISIONS OF SECTION 274 OF THE I.T.ACT , 1961. THE DRAFT ORDER WAS DATED AS 29.09.2016 AND THE APPROVAL WAS ACCORDED BY THE JCI T ,CENTRAL RANGE, LUDHIANA TO THE ASSESSING OFFICER VIDE LETTER NO. 1036 DATED 30.09. 2016. INADVERTENTLY, THE DATE OF ORDER ON THE PENALTY ORDER ISSUED REMAINED UNCHANGED AS 29.0 9.2016 WHEREAS IN THE PENALTY ORDER THE ASSESSING OFFICER HAD CLEARLY INDICATED THAT TH E PRIOR APPROVAL UNDER SECTION 274(2) OF THE INCOME TAX ACT WAS ACCORDED BY THE ADDL./JOINT CIT, CENTRAL RANGE, LUDHIANA VIDE HIS LETTER NO. 1036 DATED 30.09.2016. THUS, THE ERR OR IN THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER IS ONLY TYPOGRAPHICAL AS THE DATE RECORDED ON THE DRAFT PENALTY ORDER SENT TO THE JCIT, CENTRAL RANGE, LUDHIANA CLEARLY R EMAINED UNCHANGED ON THE ORDER WHICH WAS PASSED AFTER PRIOR APPROVAL ON 30.09.2016 . THE ABOVE FACTS COULD BE SUMMARIZED AS BELOW: NAME OF THE ASSESSEE A.Y. DATE OF SUBMISSION OF DRAFT ORDER DATE OF PENALTY ORDER IN DRAFT ORDER DATE OF APPROVAL DATE MENTIONED IN PENALTY ORDER (FINAL ORDER DATE OF SERVICE M/S SPORTKING INDIA LTD. 2013-14 29/09/2016 29/09/2016 30/09/2016 29/09/2016 30/09/2016 6. THAT IT MAY ALSO BE NOTED THAT IN THE LAST PARA THE PENALTY ORDER HAS A CLEAR MENTION OF DISPATCH NO AND DATE OF JCIT'S LETTER CONVEYING THE APPROVAL U/S 274(2)(B) OF THE INCOME TAX ACT, 1961 WHICH CANNOT BE MENTIONED A DAY BEFOR E OF ITS ISSUANCE BY JCIT. MOREOVER, THE PENALTY ORDER AND RELEVANT NOTICE OF DEMAND HAS BEEN SERVED UPON ASSESSEE ON 30.09.2016 I.E. THE DAY ON WHICH APPROVAL WAS ISSUE D BY JCIT AND ALSO BEFORE EXPIRING OF LIMITATION. IT MAY ALSO NOT BE OUT OF PLACE TO MENT ION THAT THE CORRECT PARTICULARS OF JCIT'S APPROVAL IS MENTIONED IN THE PENALTY ORDER SERVED U PON ASSESSEE BEFORE EXPIRY OF LIMITATION. AS SUCH NOT CHANGING OF DATE OF ORDER ( FROM THE DATE OF DRAFT ORDER SUBMITTED BY ASSESSING OFFICER TO THE JCIT FOR APPROVAL U/S 2 74(2) OF THE INCOME TAX ACT, 1961) IS AN INADVERTENT CLERICAL MISTAKE WHICH IS OTHERWISE COV ERED U/S 29215 OF THE INCOME TAX ACT, 1961. 7. THAT IN VIEW OF THESE FACTS THERE WAS NO OCCASIO N FOR THE HON'BLE ITAT TO DELETE THE PENALTY ORDER AS THE PENALTY ORDER WAS P ASSED AFTER THE REQUISITE PRIOR APPROVAL OF THE JCIT/ADDITIONAL CIT AS PER THE PROV ISIONS OF THE SECTION 274(2) 3 OF THE INCOME TAX ACT. ALSO THE ABOVE MENTIONED ERR OR IN THE PENALTY ORDER IS ONLY TYPOGRAPHICAL, WHICH COULD BE CURED AS PER THE PROVISIONS OF SECTION 29215 OF THE I.T.ACT, 1961 WHICH IS PRODUCED AS UNDER:- 'NO RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS O R OTHER PROCEEDING, FURNISHED OR MADE OR ISSUED OR TAKEN OR PURPORTED TO HAVE BEEN F URNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHAL L BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT.' 8. THAT THE HON'BLE CALCUTTA HIGH COURT WHILE DECIDING THE MATTER OF MULCHAND RAMPURIA VS ITO(2001)252 ITR 758(CAL) HAS HELD THAT 'AFTER ENACTMENT OF SECTION 292B WHICH CAME INTO FORCE ON 01.10.1 975, NO NOTICE SHA LL BE DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION THEREIN I F THE NOTICE IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURP OSE OF THE ACT.' 9. THAT THE RATIO OF THIS CASE IS SQUARELY APPLICABLE ON THE FACTS OF THE INSTANT CASE ALSO WHEREIN, THE SUBSTANCE AND EFFECT OF THE PENAL TY ORDER IS IN CONFORMITY OF THE PROVISION OF THE ACT AND AS SUCH THE INADVERTENT MISTAKE IS C OVERED BY THE PROVISION OF SECTION 292B OF THE INCOME TAX ACT, 1961. IN THE LIGHT OF THE ABOVE, IT IS PRAYED THAT THE HO N'BLE ITAT BENCH MAY RECTIFY THE MISTAKE IN ITS ORDER. 3. DURING THE COURSE OF HEARING THE LD. SR. DR REIT ERATED THE CONTENTS OF THE AFORESAID MISCELLANEOUS APPLICATIONS AND STATED THA T THE ERROR IN THE PENALTY ORDER PASSED BY THE A.O. WAS ONLY TYPOGRAPHICAL AND THAT THE DATE IN DRAFT ORDER I.E; THE DATE 29/09/2016 REMAINED UNCHANGED W HILE THE APPROVAL WAS ACCORDED BY THE JCIT VIDE HIS LETTER DT. 1036 DT. 3 0/09/2016 AND INADVERTENTLY THE DATE IN FINAL PENALTY ORDER UNDER SECTION 271AA B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) WAS WRONGLY MENTIONED AS 29/09/2016 INSTEAD OF 30/09/2016. 4. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER DT. 22/04/2019 HAS BEEN PASSED BY THE ITAT AF TER CONSIDERING ALL THE FACTS ON RECORD AND THAT DURING THE COURSE OF HEARING IT WAS SPECIFICALLY CLARIFIED THAT THE PENALTY ORDER WAS PASSED BY THE A.O. ON 29/09/2 016 AND THE APPROVAL WAS ACCORDED BY THE ADDITIONAL COMMISSIONER, RANGE LUDH IANA ON 30/09/2016, SO THERE IS NO MISTAKE IN THE ORDER PASSED BY THE ITAT AND THE DEPARTMENT IS SEEKING REVIEW OF ORDER WHICH IS NOT PERMISSIBLE. 4 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE IT IS AN ADMITTED FACT THAT THE A.O. PASSED THE PENALTY ORDER UNDER SECTION 271 AAB OF THE ACT, ON 29/09/2016 WHILE THE APPROVAL WAS GRANTED BY THE JO INT COMMISSIONER / ADDITIONAL COMMISSIONER OF INCOME TAX, CENTRAL RANG E ON 30/09/2016 AND THE ORDER DATED 22/04/2019 WAS PASSED AFTER CONSIDERING THOSE FACTS ON RECORD, SO THERE IS NO MISTAKE APPARENT FROM THE RECORD FOR TH E PURPOSE OF RECTIFICATION UNDER SECTION 254 OF THE ACT. IN THE PRESENT CASE I T APPEARS THAT THE DEPARTMENT SEEKS THE REVIEW OF THE ORDER DT. 22/04/2019 IN ITA NOS. 490 & 491/CHD/2018 FOR THE A.YS 2013-14 & 2014-15 RESPECTIVELY. IT IS WELL SETTLED THAT A MISTAKE APPARENT FROM THE RECORD CAN BE RECTIFIED UNDER SECTION 254 OF THE ACT, HOWEVER THE TRIBUNAL HAS NO POWER TO REVIEW ITS OWN ORDER. 5.1 ON A SIMILAR ISSUE THE HON'BLE MADHYA PRADESH H IGH COURT IN THE CASE OF CIT VS. KEDIA LEATHER AND LIQUOR LTD. REPORTED IN ( 2007) 293 ITR 95 HELD AS UNDER : SUB-SECTION (2) OF SECTION 254 CLEARLY EMPOWERS TH E TRIBUNAL AT ANY TIME WITHIN FOUR YEARS FROM THE DATE OF THE ORDER TO RECTIFY ANY MISTAKE A PPARENT FROM THE RECORD AND AMEND ANY ORDER PASSED BY IT UNDER SUB-SECTION(1) AND TO MAKE SUCH AMENDMENT IF A MISTAKE IS BROUGHT TO ITS NOTICE BY THE ASSESSEE OR THE ASSESS ING OFFICER. HOWEVER, THE TRIBUNAL CANNOT REVIEW ITS ORDER. 5.2 A SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE DE LHI HIGH COURT IN THE CASE OF CIT VS. HONDA SIEL POWER PRODUCTS LTD. REPORTED IN (2007) 293 ITR 132 WHEREIN IT HAS BEEN HELD AS UNDER: A PLAIN READING OF THE PROVISION INDICATES THAT IN ORDER TO EXERCISE THE POWER VESTED IN IT UNDER SECTION 254(2) OF THE INCOME-TAX ACT, 1961, T HE TRIBUNAL HAS TO ENSURE THAT THE FOLLOWING FACTORS ARE PRESENT: (A) THE APPLICATION IS MADE WITHIN 4 YEARS FROM THE DATE OF THE ORDER SOUGHT TO BE RECTIFIED. (B) THERE IS A MI STAKE APPARENT FROM THE RECORD WHICH IS BROUGHT TO ITS NOTICE BY EITHER THE ASSESSEE OR THE ASSESSING OFFICER. AS REGARDS THE PROCEDURE TO BE FOLLOWED, IF THE AMENDMENT SOUGHT H AS THE EFFECT OF ENHANCING THE ASSESSMENT OR REDUCING A REFUND OR INCREASING THE L IABILITY OF THE ASSESSEE, THE TRIBUNAL HAS TO GIVE PRIOR NOTICE TO THE ASSESSEE AND ALSO ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. IT IS PLAIN THAT THE POWER TO RECTI FY A MISTAKE IS NOT EQUIVALENT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RECTIFIED. RECTIFICATION IS A SPECIES OF THE LARGER CONCEPT OF REVIEW. ALTHOUGH IT IS POSSIBLE THAT THE PREREQUISITE FOR EXERCISE OF EITHER POWER MAY BE SIMILAR (A MISTAKE APPARENT FROM THE RECORD) , BY ITS VERY NATURE THE POWER TO RECTIFY A MISTAKE CANNOT RESULT IN THE RECALL AND REVIEW OF THE ORDER SOUGHT TO BE RECTIFIED OTHERWISE, WHAT CANNOT BE DONE DIRECTLY BY SEEKING A REVIEW OF AN ORDER CAN. BE ACHIEVED INDIRECTLY, BY SEEKING A RECTIFICATION OF THAT ORDER. THIS IS EVEN MORE SIGNIFICANT IN 5 THE LIGHT OF THE FACT THAT UNDER THE ACT THERE IS N O EXPRESS POWER GIVEN TO THE TRIBUNAL TO REVIEW. 5.3 SIMILARLY IN THE CASE OF CIT VS. HINDUSTAN COCA COLA BEVERAGES P. LTD. REPORTED IN (2007) 293 ITR 163(DELHI), THE HON'BLE DELHI HIGH COURT HELD AS UNDER: UNDER SECTION 254(2) OF THE INCOME TAX ACT, 1961, THE TRIBUNAL HAS THE POWER TO RECTIFY MISTAKES IN ITS ORDER. HOWEVER, IT IS PLAIN THAT TH E POWER TO RECTIFY A MISTAKE IS NOT EQUIVALENT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RECTIFIED. RECTIFICATION IS A SPECIES OF THE LARGER CONCEPT OF REVIEW. ALTHOUGH IT IS POSSIB LE THAT THE PREREQUISITE FOR EXERCISE OF EITHER POWER MAY BE SIMILAR (A MISTAKE APPARENT FRO M THE RECORD), BY ITS VERY NATURE THE POWER TO RECTIFY A MISTAKE CANNOT RESULT IN THE REC ALL AND REVIEW OF THE ORDER SOUGHT TO BE RECTIFIED. 6. WE THEREFORE BY KEEPING IN VIEW THE RATIO LAID D OWN IN THE AFORESAID REFERRED TO CASES DO NOT SEE ANY MERIT IN THESE MIS CELLANEOUS APPLICATIONS OF THE DEPARTMENT, ACCORDINGLY THE SAME ARE DISMISSED. 7. IN THE RESULT, MISCELLANEOUS APPLICATIONS OF THE DEPARTMENT ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 07/01/2020) SD/- SD/- (SANJAY GARG ) ( N.K. SAINI) JUDICIAL MEMBER VICE PRESIDENT AG DATE: 07/01/2020 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. THE CIT(A) 5. DR, ITAT, CHANDIGARH 6. GUARD FILE