The ITO, Ward-6(1), Ahmedabad V. Shri Yogesh D.Shridhar, Ahmedabad

MA 304/AHD/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4765 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 04-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N DIVATIA
• Assessee Lawyers: K M MAHESH
• Section: 143(3); 246; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI T K SHARMA, JM & SHRI A N PAHUJA,AM M A NO.304/AHD/2009 [ARISING OUT OF ITA NO.766/AHD/2005] (ASSESSMENT YEAR:-2001-02) INCOME-TAX OFFICER, WARD- 6(2), 1 ST FLOOR, C U SHAH COLLEGE BLDG., ASHRAM ROAD, AHMEDABAD V/S SHRI YOGESH D SHRIDHAR, 13, NEW RAJDEEP SOCIETY, MEMNAGAR, AHMEDABAD [PAN: NOT AVAILABLE] [APPLICANT] [ORIGINAL APPELLANT] [RESPONDENT] [ORIGINAL RESPONDENT] APPLICANT BY :- SHRI K M MAHESH, DR REVENUE BY:- SHRI S N DIVATIA, AR O R D E R A N PAHUJA: THIS IS A MISCELLANEOUS APPLICATION[MA] FILED BY T HE REVENUE, SEEKING RECONSIDERATION OF THE ISSUE OF LE VY OF PENALTY, ADJUDICATED BY THE ITAT IN AN ORDER DATED 03-04-2 009 IN ITA NO.766/AHD./2005, ON THE GROUND THAT THE CIT IN HIS ORDER DATED 12.10.2004 U/S 263 OF THE INCOME-TAX ACT,1961[HER EINAFTER REFERRED TO AS THE ACT] WHILE HOLDING THE ASSESSMENT ORDER DATED 27.2.2004 TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, DID NOT SET ASIDE THE ASSESSMENT ORDER FULLY BUT IT WAS SE T ASIDE ONLY FOR VERIFICATION OF CASH DEPOSITED IN THE BANK. 2. THE LD. DR APPEARING BEFORE US MERELY RE ITERATED WHAT IS MENTIONED IN THE MA WHILE THE LD. AR ON BEHALF OF T HE ASSESSEE CONTENDED THAT THERE IS NO MISTAKE APPARENT FROM RE CORD IN THE ORDER DATED 3.4.2009 OF THE ITAT, REQUIRING RECTIFI CATION. 3. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. IN ORDER TO APPRECIATE THE ISSUE, WE M AY,AT THE OUTSET, REFER TO THE FOLLOWING FINDINGS OF THE ITAT IN THE ORDER DATED 3.4.2009: M A NO.304/AHD/2009 [ARISING OUT OF ITA NO.766/AHD/2005] (ASSESSMENT YEAR:-2001-02) SHRI YOGESH D SHRIDHAR 2 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS, GONE THRO UGH THE FACTS OF THE CASE. THE FACTS ON RECORD REVEAL THAT IN THIS C ASE PENALTY U/S 271(1)(C) WAS LEVIED ON 6.9.2004 WHILE ID. CIT SET ASIDE THE ASSESSMENT VIDE HIS ORDER DATED 12.10.2004 U/S 263 OF THE !ACT. WE FIND THAT THE ID. CIT(A) DELETED THE PENALTY ONLY ON THE GROUND THAT U E ENT IRE ASSESSMENT HAS BEEN SET ASIDE BY THE CIT, HAVING RECOURSE TO PROVI SIONS OF SECTION 263 OF THE ACT . THE SAID ORDER U/S 263 IS STATED TO HAVE BEEN ACCEPTED BY THE ASSESSEE AND HAS NOT FILED ANY APPEAL. ACCORDINGLY, THE ID. CIT(A) CONCLUDED THAT THE ORDER U/S 263 HAVING BECOME FINA L, THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RA NCHHODBHAI HARIBHAI JADAV (SUPRA) IS APPLICABLE. IN THESE CIRCUMSTANCES , THE ID. CIT(A) DELETED THE PENALTY. THE LD. CIT(A) ALSO CLARIFIED THAT THE ASSESSING OFFICER WOULD BE FREE TO INITIATE THE PENALTY PROCEEDINGS WHILE C OMPLETING THE ASSESSMENT AFRESH IN THIS CASE AND THAT DELETION OF PENALTY HERE WOULD BE NO BAR FOR INITIATION OF SUCH PROCEEDINGS. UNDISPUT EDLY, THE LD. CIT(A) HAD ISSUED A SHOW CAUSE NOTICE U/S 263 OF THE ACT IN OR DER TO ASCERTAIN THE GENUINENESS OF DEPOSITS ON WHICH INTEREST OF RS.40, 45,257/- HAD BEEN RECEIVED AND ALSO TO ASCERTAIN THE GENUINENESS OF T HE ADVANCES AND SOURCES OF CASH DEPOSITED IN BANK ACCOUNT NO. 544 W ITH MADHAVPURA MERCANTILE CO-OP. BANK, NAVRANGPURA BRANCH. AFTER C ONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT FOUND THAT THE ASSESSMENT ORDER DATED 27-2-2004 ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE AND ACCORDINGLY, SET ASIDE THE ASSESSMENT ORDER DATED 2 7-2-2004. THE LD. CIT FURTHER DIRECTED TO MODIFY THE ASSESSMENT TO THE AB OVE EXTENT IN ACCORDANCE WITH LAW AFTER BRINGING ON RECORD ALL NE CESSARY EVIDENCE AND EXAMINATION OF DETAILS MENTIONED IN THE SAID ORDER U/S 263 OF THE ACT. FINALLY, THE LD. CIT CONCLUDED THAT - THE ASSESSMENT MADE U/S 143(3) ON 27-2-2004 IS SET ASIDE FOR MAKING FRESH ASSESSMENT DE NOVO. 6.1 IN A SOMEWHAT SIMILAR SITUATION, HON'BLE JURISD ICTIONAL HIGH COURT IN THE CASE OF RANCHHODBHAI HARIBHAI JADAV (SUPRA) QUA SHED THE RELEVANT ORDERS LEVYING PENALTY HOLDING THAT 'THE PRESENT IS A CASE OF THAT NATURE WHERE FROM TH E UNDISPUTED FACTS IT IS APPARENT THAT AS ON THE DATE THE PENALT Y ORDERS WERE MADE THERE WERE NO SUBSISTING ASSESSMENT ORDERS EIT HER AGAINST ANY PETITIONER IN HIS INDIVIDUAL CAPACITY OR AGAINS T THE FIRM FOR WHICH AS PARTNERS, IF SO PERMISSIBLE UNDER LAW, THEY COUL D BE SUBJECTED TO ANY PENALTY. THE ONLY GROUND WHICH HAS WEIGHED WITH THE AO TO LEVY PENALTY IS THAT OTHERWISE HE WOULD LOSE HIS LI MITATION TO IMPOSE PENALTY WHICH ACCORDING TO HIM MAY BECOME IMPOSABLE IN CASE THE APEX COURT ON AN APPEAL UPSETS THE DECISION OF THIS COURT RENDERED IN THE CASE OF THE FIRM. M A NO.304/AHD/2009 [ARISING OUT OF ITA NO.766/AHD/2005] (ASSESSMENT YEAR:-2001-02) SHRI YOGESH D SHRIDHAR 3 THIS REASONING IS APPARENTLY UNSUSTAINABLE. THE BAR OF LIMITATION FOR IMPOSING PENALTY UNDER SECTION 275 ENVISAGES THAT W HERE THE RELEVANT ASSESSMENT ORDER IS THE SUBJECT-MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTION 246 OR AN APPE AL TO THE APPELLATE TRIBUNAL UNDER SECTION 253 THE PENALTY CA N BE IMPOSED WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHIC H THE ORDER OF THE COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, OF THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISS IONER OR THE COMMISSIONER. THE OTHER CONTINGENCY HAVING ALREADY EXPIRED WE ARE NOT MALTING REFERENCE TO IT. OBVIOUSLY THE OBJE CT OF THIS PROVISION IS TO SEE THAT PENALTY IMPOSABLE ACCORDS WITH FINAL ASSESSMENT. UNTIL ASSESSMENT, DURING THE COURSE OF WHICH PENALTY PROC EEDINGS HAVE BEEN INITIATED, BECOMES FINAL, THE PENALTIES IMPOSA BLE TOO CANNOT BE DETERMINED WITH CERTAINTY WHICH IS REFERABLE TO TAX LIABILITY OF THE ASSESSEE.' 6.2 HON'BLE SUREME COURT IN THE CASE OF K.C. BUIL DERS VS. ACIT 265 ITR 562 (SC) HELD THAT ORDINARILY, PENALTY CANNOT S TAND IF THE ASSESSMENT ITSELF IS SET ASIDE. WHERE AN ORDER OF ASSESSMENT O R REASSESSMENT ON THE BASIS OF WHICH PENALTY HAS BEEN LEVIED ON THE ASSES SEE HAS ITSELF BEEN FINALLY SET ASIDE OR CANCELLED BY THE TRIBUNAL OR O THERWISE, THE PENALTY CANNOT STAND BY ITSELF AND THE SAME IS LIABLE TO BE CANCELLED. 6.3 HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DALMIA (1992) 107 TAXATION 107, HELD THAT NO PENALTY SURVIVES AFTER D ELETION OF ADDITIONS, FORMING THE BASIS FOR THE LEVY OF PENALTY. SINCE TH E VERY BASIS UPON WHICH THE PENALTY HAS BEEN IMPOSED DOES NOT EXIST IN VIEW OF ORDER U/S 263 OF THE ACT DIRECTING THE AO TO MAKE THE ASSESSMENT AFR ESH DENOVO, WE ARE OF THE OPINION THAT PENALTY LEVIED IN RELATION TO THE AMOUNT OF INTEREST, DOES NOT SURVIVE AND TO THAT EXTENT ORDER OF THE LD. CIT (A) HAS TO BE UPHELD. 3 IN THE LIGHT OF OUR AFORESAID DECISION , ESPECIA LLY WHEN THE CIT IN HIS ORDER DATED 12.10.2004 U/S 263 OF THE ACT S ET ASIDE THE ASSESSMENT MADE U/S 143(3) ON 27-2-2004, FOR MAKING FRESH ASSE SSMENT DE NOVO, WE DO NOT FIND ANY MISTAKE APPARENT ON RECORD, REQUIRING RECT IFICATION. WE ARE OF THE OPINION THAT THROUGH THIS MA, THE REVENUE MERELY SEEKS T O HAVE REVIEW OF THE ORDER DATED 3-4-2009, WHICH AS PER THE LAW IS NOT PERMISS IBLE. IN THE CASE OF V. P. MINOCHA, ITO V. ITAT [1977] 106 ITR 691 , HONBLE GUJARAT HIGH COURT RELYING UPON BALARAM'S CASE [1971] 82 ITR 50 (SC) ( SUPRA ), HELD THAT A DECISION GIVEN BY M A NO.304/AHD/2009 [ARISING OUT OF ITA NO.766/AHD/2005] (ASSESSMENT YEAR:-2001-02) SHRI YOGESH D SHRIDHAR 4 THE TRIBUNAL ON A DEBATABLE POINT OF LAW CANNOT BE SUBSEQUENTLY CONSIDERED AS SHOWING ANY MISTAKE APPARENT FROM THE RECORD WHICH THE TRIBUNAL COULD CONSEQUENTLY RECTIFY. SIMILARLY, HONBLE MADRAS HIG H COURT IN THE CASE OF CIT V. R. CHELLADURAI [1979] 118 ITR 108 , HELD THAT THE TRIBUNAL'S POWER UNDER SECTION 254(2) IS NOT TO REVIEW ITS EARLIER ORDER BUT ONLY TO AMEND IT WITH A VIEW TO RECTIFYING ANY ERROR APPARENT FROM THE RECORD. THE POWER OF RECTIFICATION UNDER SECTION 254(2) OF THE INCOME-TAX ACT CAN BE EXERCIS ED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND P ATENT MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES T O BE ESTABLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. IN OUR VIEW, THE TRIBUNAL HAS NO JURISDICTION UNDER SECTION 254(2) TO PASS THE SECOND ORDER. 7. IN THE LIGHT OF AFORESAID DISCUSSION , THERE BE ING NO MISTAKE APPARENT FROM RECORD, REQUIRING RECTIFICATION, THIS MA IS REJECT ED. ORDER PRONOUNCED IN THE COURT TODAY ON 9 -9-2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 9-9-2010 COPY OF THE ORDER FORWARDED TO: 1. SHRI YOGESH D SHRIDHAR, 13, NEW RAJDEEP SOCIETY, MEMNAGAR, AHMEDABAD 2. INCOME-TAX OFFICER, WARD-6(2), 1 ST FLOOR, C U SHAH COLLEGE BLDG., ASHRAM ROAD, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XII, AHMEDABAD 5. DR, BENCH-C, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUT Y REGISTRAR/ASSISTANT REGISTRAR ITAT, AHMEDABAD