M/s P.R. Associates, Pune V. Addl CIT Rg 3 Pune, Pune

MA 45/PUN/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8842 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 09-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Search and seizure; Period of limitation; Reasonable cause; Bad and doubtful debts
• Section: 273B; 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER M.A. NO. 45/PN/2012 (ARISING OUT OF ITA NO. 1378/PN/2009) (ASSTT. YEAR : 1999-2000) M/S. P.R. ASSOCIATES 594, SADASHIV PETH, PUNE PAN : AABFP 4863F .. APPLICANT V. ADDL CIT, RANGE 3, PUNE . RESPONDENT APPLICANT BY : SHRI SUNIL GANOO RESPONDENT BY : SHRI ALOK MISHRA HEARD ON : 08/ 6/2012 PRONOUNCED ON : /7/2012 ORDER PER R.S. PADVEKAR, JM THIS MISCELLANEOUS APPLICATION IS FILED BY THE ASS ESSEE U/S. 254(2) OF THE INCOME TAX ACT STATING THAT THERE ARE MIST AKES APPARENT FROM THE ORDER OF THE TRIBUNAL PASSED IN ITA NO. 1378/PN/200 9 DATED 14.11.2011 AND THE SAID MISTAKES NEED RECTIFICATION. 2. THE FIRST MISTAKE POINTED OUT BY THE ASSESSEE IS THAT IN THE TITLE OF THE ORDER, THE RESPONDENT IS SHOWN AS CIT(A) II, PU NE. IT IS STATED IN THE APPLICATION THAT THE RESPONDENT IN THIS CASE IS THE ADDL. CIT, RANGE 3, PUNE. WE FIND THAT THE RESPONDENT IS SHOWN AS CIT( A) II, PUNE IN PLACE OF THE ADDL. CIT, RANGE 3, PUNE. BEING IT A TYPOGRAPH ICAL MISTAKE, THE SAME IS RECTIFIED. IN PLACE OF CIT(A) II, PUNE, THE RE SPONDENT IS TO BE READ ADDL. CIT, RANGE 3,PUNE. 3. IT IS FURTHER STATED IN THE APPLICATION THE IN T HE TRIBUNAL ORDER, IT IS MENTIONED AS UNDER. M.A. NO 45/PN/2012 M/S. P.R. ASSOCIATES A.Y.1999-2000 PAGE OF 11 2 3. THE RELEVANT FACTS OF THE CASE ARE THAT THIS IS A CASE WHICH IS COVERED U/S. 132 OF THE INCOME TAX ACT [HEREINAFTER CALLED AS AN ACT] IT IS STATED IN THE APPLICATION THAT THIS IS THE M ISTAKEN STATEMENT OF FACT AS NO SEARCH AND SEIZURE ACTION WAS EVER CARRIED ON AGAINST THE ASSESSEE. 4. WE HAVE PERUSED THE ASSESSMENT ORDER AS WELL AS THE PENALTY ORDER PASSED U/S. 271D OF THE I.T. ACT. WE FIND THAT THE ASSESSEES ASSESSMENT IS COMPLETED U/S. 143(3) R.W.S. 147 VIDE ORDER DATE D 8.12.2006. NOWHERE, IT IS MENTIONED THAT ANY SEARCH AND SEIZUR E OPERATION WAS CARRIED OUT AGAINST THE ASSESSEE. WE, THEREFORE, A CCEPT THE CONTENTIONS OF THE ASSESSEE THAT THERE IS A MISTAKEN STATEMENT OF FACT AND WE ACCORDINGLY RECTIFY THE SAME AS UNDER. IN PARA 3, THE FOLLOWING SENTENCE/WORDS ARE DELETED : PARA NO. 3. THE RELEVANT FACTS OF THE CASE ARE TH AT THIS IS THE CASE WHICH IS COVERED U/S. 132 OF THE INCOME TAX ACT (HE REINAFTER CALLED AS AN ACT). THE DATE OF SEARCH 29.7.2003, DURING T HE SEARCH AND SEIZURE PROCEEDINGS .. AFTER DELETION OF ABOV E SENTENCE, PARAGRAPH NO. 3 OF THE ORDER STARTS AS UNDER : 3. IT IS MENTIONED THAT THE DEPARTMENT CAME TO KNO W OF THE VIOLATION OF PROVISION OF SEC. 269SS. 5. THE NEXT GRIEVANCE OF THE ASSESSEE IS THAT THE TRIBUNAL IS ERRED IN RESTORING THE MATTER TO THE LD CIT(A) WHEN THE ENTI RE EVIDENCE WAS AVAILABLE BEFORE THE BENCH. IT IS STATED IN THE AP PLICATION THAT THE ASSESSEE RAISED THE ADDITIONAL GROUND WHICH WAS ADM ITTED BY THE HONBLE BENCH. IN THE ORDER OF THE TRIBUNAL, THE SAID ADDI TIONAL GROUND OF APPEAL HAS BEEN REPRODUCED ON PAGE NO. 1 IN PARA NO. 2. I T IS STATED THAT ALL THE MATERIAL FOR ADJUDICATION THE CONTROVERSY ARISING OUT OF ADDITIONAL GROUND OF APPEAL (WHICH WAS PURELY A LEGAL GROUND AND THE RE WERE NO DISPUTES M.A. NO 45/PN/2012 M/S. P.R. ASSOCIATES A.Y.1999-2000 PAGE OF 11 3 BETWEEN THE PARTIES IN THE FACTUAL ASPECTS) IN THE MATTER WERE AVAILABLE BEFORE THE HONBLE MEMBERS ON THE BASIS OF WHICH TH E ISSUE COULD HAVE BEEN FINALLY ADJUDICATED. IT IS STATED THAT INSTEA D OF REMANDING THE MATTER, THE TRIBUNAL SHOULD HAVE DECIDED ADDITIONAL GROUND. IT IS PLEADED IN THE APPLICATION THAT THE ORDER OF REMAND IN RES PECT OF ORIGINAL GROUND OF APPEAL CONSTITUTE MISTAKE APPARENT IN THE ORDER , WHICH DESERVES TO BE RECTIFIED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE LD. COUNSEL REITERATED IS ARGUMENT WH ICH HAS ALREADY BEEN STATED IN PARA NOS. 6 & 9 OF THE APPLICATION. THE LD COUNSEL RELIED ON THE FOLLOWING PRECEDENTS IN SUPPORT HIS CONTENTION THAT THE TRIBUNAL SHOULD NOT HAVE REMANDED THE MATTER BACK TO THE FILE OF TH E CIT(A) : 1) M.G. SHAHANI & CO. (DELHI) LTD. VS. COLLECTOR OF CENTRAL EXCISE, NEW DELHI, 1994 (073)-ELT-0003-SC-. 2) ZUARI LEASING & FINANCE LTD. VS. ITO, 112 ITD 20 5 (DELHI) 7. THE MAIN THRUST OF THE ARGUMENT OF THE LD COUNSE L IS THAT WHEN ALL THE MATERIAL FACTS WERE AVAILABLE ON RECORD, THERE WAS NO NECESSITY FOR THE TRIBUNAL TO RESTORE THE MATTER TO THE FILE OF T HE LD CIT(A). HE SUBMITS THAT SO FAR AS THE ADDITIONAL GROUND IS CON CERNED, IT WAS PURELY A LEGAL GROUND AND THE SAME COULD HAVE BEEN ADJUDICAT ED AS PER THE MATERIAL AVAILABLE ON RECORD. HE SUBMITS THAT THE INCIDENTAL POWER OF THE TRIBUNAL TO REMAND IS ONLY ON EXCEPTIONAL CIRCUMSTA NCES AND SAME SHOULD BE SPARINGLY USED WHEN IT IS NOT POSSIBLE TO DECIDE THE APPEAL FOR THE WANT OF RELEVANT EVIDENCE OR WHERE INVESTIGATION IS WARRANTED BY THE CIRCUMSTANCES. TO ADJUDICATE THE GRIEVANCE OF THE ASSESSEE, WE HAVE TO GIVE THE BACKGROUND OF THE ASSESSEES CASE. THIS A PPEAL IS ARISING OUT OF THE PENALTY LEVIED BY THE ADDL. CIT, RANGE 3, PUNE U/S. 271 D OF THE I.T. M.A. NO 45/PN/2012 M/S. P.R. ASSOCIATES A.Y.1999-2000 PAGE OF 11 4 ACT TO THE EXTENT OF RS. 79,18,000/-, FOR FAILURE T O COMPLY WITH THE PROVISIONS OF SEC. 269SS. THE ADDL. CIT ALSO REJEC TED THE EXPLANATION OF THE ASSESSEE AS A REASONABLE CAUSE. THE ASSESSEE C HALLENGED THE PENALTY ORDER BEFORE THE LD CIT(A) AND LD CIT(A) CONFIRMED THE PENALTY ORDER AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. THE AS SESSEE CHALLENGED THE ORDER OF THE LD CIT(A) II, PUNE BEFORE THE TRIBUNA L. DURING THE COURSE OF PROCEEDING BEFORE THE TRIBUNAL, THE ASSESSEE FI LED THE APPLICATION, SEEKING THE LEAVE TO RAISE THE ADDITIONAL GROUND AS UNDER : SINCE THE PENALTY PROCEEDINGS WERE INITIATED AFTER INORDINATE DELAY OF THREE YEARS AND SIX MONTHS FROM THE DATE OF KNOWLEDGE BY THE DEPARTMENT OF THE ALLEGED DEFA ULT COMMITTED BY THE APPELLANT ASSESSEE U/S 269 SS OF T HE I.T. ACT 1961, THE IMPUGNED PENALTY IS BARRED BY LIMITAT ION AND BAD IN LAW AND THEREFORE THE SAME MAY PLEASE BE ANN ULLED 8. THE ADDITIONAL GROUND WAS ADMITTED BY THE TRIBUN AL. AFTER DEALING WITH THE ARGUMENTS OF THE PARTIES, ON THE ADDITION AL GROUND, THE TRIBUNAL HELD AS UNDER : 12. WE HEARD BOTH THE PARTIES, PERUSED THE ORDERS OF THE REVENUE AND THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEES COUNSEL BEFORE US. WE TAKE UP THE ISSUES RAISED IN THE ADDITIONAL GROUND FIRST. THE SAID ISSUE RELATES TO IF THE DELAY OF 3 YEARS IN MATTERS OF INITIATION OF THE PENALTY PROCEEDINGS U/S 271D OF THE ACT CONSTITUTES ORDINARY DELAY; AND THE RE EXISTS LEGALLY SUSTAINABLE EXPLANATION FROM THE DEPARTMENT FOR THE SAID DELAY. ANCILLARY TO THE SAME, WE NEED TO DECIDE IF THE IMPUGNED PENALTY ORDER IS INVALID AND THEREFORE, IT SHOULD BE QUASHED. TO ANSWER THE ABO VE, WE NEED TO EXAMINE THE LEGAL PROVISIONS AND THE SETTLED LEGAL PROPOSIT IONS ON THE MATTER. FIRST WE TAKE UP THE RELEVANT LAW ON THE ISSUE AND FOR THIS WE PERUSED THE PROVISIONS OF SECTIONS 269SS, 271D AND 273B OF THE ACT. THEY A RE AS FOLLOWS. 269SS: NO PERSON SHALL,, TAKE OR ACCEPT FROM ANY OTHER PERSON () ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE O R ACCOUNT PAYEE BANK DRAFT, IF,- (A) THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGRE GATE AMOUNT OF SUCH LOAN AND DEPOSIT (B) . (C) IS TWENTY THOUSAND RUPEES OR MORE:.. M.A. NO 45/PN/2012 M/S. P.R. ASSOCIATES A.Y.1999-2000 PAGE OF 11 5 271D (1) IF A PERSON TAKES OR ACCEPTS ANY LOAN OR DEPOSIT IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS, HE SHALL BE LIABLE TO PAY, BY WAY OF PENALTY, A SUM EQUAL TO THE AMOUNT OF THE LOAN OR DEPOSIT SO TAKEN OR ACCEPTED; (2) ANY PENALTY IMPOSABLE UNDER THE SUB SECTION (1) SHALL BE IMPOSED BY THE JOINT COMMISSIONER . 273B NOTWITHSTANDING ANYTHING CONTAINED IN THE PR OVISIONS OF CLAUSE SECTION271D, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, ., FOR AN Y FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE C AUSE FOR THE SAID FAILURE 13. THE ABOVE PROVISIONS ARE CLEAR ON SOME OF THE I SSUES DISCUSSED IN THE PRECEDING PARAGRAPHS I.E. WHO SHALL IMPOSE THE PENA LTY, WHO SHALL DETERMINE THE CONTRAVENTION, WHAT CONSTITUTES THE CONTRAVENTI ONS ETC. THE SAID PROVISIONS ARE CAPABLE OF THROWING LIGHT ON THE TIM ING OF INITIATION OF THE IMPUGNED PENALTY. BUT UNFORTUNATELY, THE IMPUGNED O RDER IS NOT SPEAKING IN NATURE. THUS, THE IMPUGNED ORDER LACKS NOT ONLY THE DETERMINATION OF THE ISSUE BUT ALSO THE ADJUDICATION BY WAY OF SPEAKING ORDER IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (6) OF THE SECTION 25 0 OF THE ACT . 14. FURTHER, WE HAVE EXAMINED THE VARIOUS CITATIONS BROUGHT TO OUR NOTICE DURING THE HEARING PROCEEDINGS. SOME OF THE ARE NAR RATED AS UNDER. 1. IN GOVT. OF INDIA V. CITEDAL FINE PHARMACEUTICALS, MADRAS AND OTHERS REPORTED IN (1989) 3 SCC 483 = (2002-TIOL-680-SC-CX ) RULED THAT IN THE ABSENCE OF ANY PERIOD OF LIMITATION IT IS SETTL ED THAT EVERY AUTHORITY IS TO EXERCISE THE POWER WITHIN A REASONABLE PERIOD. WHAT WOULD BE REASONABLE PERIOD, WOULD DEPEND UPON THE FACTS OF E ACH CASE ..(PARA 6) 2 . ACIT (INV.) VS. KUM. A.B. SHANTHI 255 ITR 258 (SC): 13. IT IS IMPORTANT TO NOTE THAT ANOTHER PROVISION , NAMELY, S. 273B WAS ALSO INCORPORATED WHICH PROVIDES THAT NOTWITHSTANDING AN YTHING CONTAINED IN THE PROVISIONS OF S. 271D, NO PENALTY SHALL BE IMPOSABL E ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFER RED TO IN THE SAID PROVISION IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR SU CH FAILURE AND IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR FAILURE TO TAKE A LOAN OTHERWISE THAN BY ACCOUNT-PAYEE CHEQUE OR ACCOUNT-P AYEE DEMAND DRAFT, THEN THE PENALTY MAY NOT BE LEVIED. THEREFORE, UNDUE HARDSHIP IS VERY MUCH MITIGATED BY THE INCLUSION OF S. 273B IN THE A CT. IF THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND IF FOR ANY RE ASON THE TAXPAYER COULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT-PAYEE CHEQUE O R DEMAND DRAFT FOR SOME BONA FIDE REASONS, THE AUTHORITY VESTED WITH THE PO WER TO IMPOSE PENALTY HAS GOT DISCRETIONARY POWER. IN THAT VIEW OF THE MATTER, WE DO NOT THINK THAT S. 269SS OR 271D OR THE EARLIER S. 276 DD IS UNCONSTITUTIONAL ON THE GROUND THAT IT WAS DRACONIAN OR EXPROPRIETORY IN NATURE. 3 . CHIMANRAM MOTILAL (P) LTD. VS. CIT 140 ITR 809 (BOM ): HOWEVER, WHETHER DELAY IN A GIVEN CASE IS INORDINA TE OR NOT AND WHETHER THE DELAY HAS BEEN PROPERLY EXPLAINED OR NOT WILL BE QU ESTIONS OF FACT TO BE DETERMINED BY THE APPROPRIATE AUTHORITIES BEFORE WH OM THE CONTROVERSY FALLS M.A. NO 45/PN/2012 M/S. P.R. ASSOCIATES A.Y.1999-2000 PAGE OF 11 6 FOR CONSIDERATION. THE QUESTIONS WHICH, THEREFORE, WILL HAVE TO BE DECIDED WHEN THE PENALTY PROCEEDINGS ARE CHALLENGED ON THE GROUND OF INORDINATE DELAY ARE, FIRSTLY, WHETHER THE DELAY IS INORDINATE , AND SECONDLY, WHETHER THERE IS ANY EXPLANATION TENDERED BY THE REVENUE EX PLAINING THE INORDINATE DELAY. THEN IT APPEARS TO BE WELL ESTABLISHED THAT EVEN THOUGH THERE IS NO PRESCRIBED PERIOD OF LIMITATION, THE DE LAY CAN ONLY BE A VERY RELEVANT FACTOR TO BE TAKEN INTO CONSIDERATION WHEN THE PROPRIETY OF THE ORDER OF PENALTY IS CALLED INTO QUESTION. BISHESHWAR LAL S CASE (1970) 76 ITR 653 (ALL) EXPLAINED & FOLLOWED; KRISHNA BHATTA VS. AGRL. ITO & ORS. (1981) 23 CTR (KER) 142: (1981) 132 ITR 21 (KER): TC 50R 600 RELIED ON. 4. KAREEMUL HAJAZI VS. STATE OF NCT OF DELHI & ORS. CRL. MA NO.13541/2010 IN CRL. A.NO.940/2010 DECIDED ON JAN 7, 2011 THIS BRINGS US TO THE POINT WHERE WE HAVE TO DECIDE AS TO WHETHER THE DELAY OF 23 DAYS OUGHT TO BE CONDONED OR NOT. WE FEEL TH AT BECAUSE NO PERIOD OF LIMITATION HAD BEEN PRESCRIBED BY THE LEGISLATURE A ND THAT IT IS ONLY BY VIRTUE OF THIS DECISION THAT WE ARE INFERRING A REASONABLE PE RIOD OF LIMITATION OF 60 DAYS FROM THE DATE OF THE ORDER APPEALED FROM, IT WOULD NOT BE FAIR AND JUST IF THE VICTIMS APPEAL IS THROWN OUT ON THE POINT OF LIMIT ATION. THERE WAS SUFFICIENT REASON FOR THE APPELLANT TO BE CONFUSED WITHIN REGA RD TO THE PERIOD OF LIMITATION. APART FROM ANYTHING ELSE, THIS GROUND ITSELF IS SUFFICIENT FOR US TO CONDONE THE DELAY OF 23 DAYS IN THE FILING OF THIS APPEAL. AS A RESULT THIS APPLICATION IS ALLOWED. 5. STATE OF JHARKHAND & ORS ETC VS. SHIVAM COKE IND USTRIES, DHANBAD, ETC. 2011-TIOL-79-SC-MISC JHARKHAND VAT LIMITATION JUST BECAUSE THE STATU TE DID NOT PROVIDE FOR LIMITATION, PROVISIONS OF THE LIMITATION ACT CANNOT BE MADE APPLICABLE HOWEVER NO INDEFINITE PERIOD FOR DEMAND: IT IS A S ETTLED POSITION OF LAW THAT WHILE INTERPRETING A STATUTE, NOTHING COULD BE ADDE D OR SUBTRACTED WHEN THE MEANING OF THE SECTION IS CLEAR AND UNAMBIGUOUS. I F THE LEGISLATURE INTENDED TO PROVIDE FOR ANY PERIOD OF LIMITATION OR INTENDED TO APPLY THE SAID PROVISION OF ARTICLE 137 INTO SECTION 46(4), THE LEGISLATURE WOU LD HAVE SPECIFICALLY SAID SO IN THE ACT ITSELF. WHEN THE LANGUAGE OF THE LEGISL ATURE IS CLEAR AND UNAMBIGUOUS, NOTHING COULD BE READ OR ADDED TO THE LANGUAGE, WHICH IS NOT STATED SPECIFICALLY. THEREFORE, SECTION 46(4) OF T HE BFT ACT. IT IS TRITE THAT IF NO PERIOD OF LIMITATION HAS BEEN PRESCRIBED, STATUT ORY AUTHORITY MUST EXERCISE ITS JURISDICTION WITHIN A REASONABLE PERIOD. WHAT, HOWEVER, SHALL BE THE REASONABLE PERIOD WOULD DEPEND UPON THE NATURE OF T HE STATUTE, RIGHTS AND LIABILITIES THERE UNDER AND OTHER RELEVANT FACTORS. THREE YEARS PERIOD CANNOT BE SAID TO BE A VERY LONG PERIOD AND THE POWER WAS EXERCISED WITHIN A REASONABLE PERIOD OF TIME. CIT VS. HARINAGAR SUGAR MILLS LTD. 176 ITR 289 (BOM ): ALTHOUGH THE INCOME-TAX PROCEEDINGS WERE EARLIER CO MPLETED, THEY WERE REOPENED AND THESE PROCEEDINGS (AFTER REOPENING) WE RE ALSO COMPLETED IN DECEMBER 1962. THEREAFTER, EXCESS PROFITS TAX ASSE SSMENT WAS SOUGHT TO BE REOPENED IN JULY 1976. THIS 13 TO 14 YEARS DELAY HAS NOT BEEN SATISFACTORILY EXPLAINED . THE EXPLANATIONS OFFERED HAVE NOT FOUND FAVOUR WITH THE TRIBUNAL AND DO NOT APPEAL TO US ALSO. IT IS TRUE THAT THERE IS NO PERIOD OF LIMITATION FIXED BY THE STATUTE BY THE AP PROACH OF THIS COURT, ALTHOUGH INDICATED IN A MATTER INVOLVING PENALTY, MAY ALSO A PPLY TO REOPENING OF EXCESS PROFITS TAX ASSESSMENTS. EXCESS PROFITS TAX IS A C HARGE DIFFERENT FROM THE ORDINARY RATE OF TAX. THE DIFFICULTIES WHICH MAY BE FACED BY AN ASSESSEE BY REASON OF SUCH DELAY CAN BE EASILY VISUALIZED. APART FROM THE TWO JUDGEMENTS OF THE BOMBAY AND KER ALA HIGH COURTS M.A. NO 45/PN/2012 M/S. P.R. ASSOCIATES A.Y.1999-2000 PAGE OF 11 7 REFERRED TO BY THE TRIBUNAL IN ITS ORDER, SHRI DAST UR HAS ALSO DRAWN OUR ATTENTION TO SOME OBSERVATIONS IN BHARAT STEEL TUBE S LTD. VS. STATE OF HARYANA (1988) 3 SCC 478. THESE OBSERVATIONS ALSO SEEM TO SUGGEST THAT EVEN WHERE NO LIMIT IS PRESCRIBED FOR TAKING R ECOURSE TO A STATUTORY PROVISION, DELAY OR RATHER INORDINATE DELAY MAY BE AN ASPECT WHICH THE COURT CAN CONSIDER FOR QUASHING THE PROCEEDINGS. T HUS, THE APPROACH AS WELL AS THE FINAL CONCLUSION OF THE TRIBUNAL ARE IN ORDER AND DO NOT CALL FOR A REFERENCE. 15. THUS, TO SUM UP THE ISSUE, THE ASSESSEE STARTED COUNTING THE DELAY IN INITIATION OF THE PROCEEDINGS FROM THE DATE OF SEAR CH I.E. 29.7.2003, THE DATE ON WHICH DEPARTMENT HAS COME TO THE KNOWLEDGE OF TH E VIOLATION OF THE PROVISIONS OF SECTION 269SS. THE A.O. REASONED OUT SAYING THAT PENALTY PROCEEDINGS CANNOT BE INITIATED MERELY FROM THE DAT E OF KNOWLEDGE OF THE SAID VIOLATION UNLESS THE SAID ALLEGATION OF VIOLAT ION IS PROPERLY SCRUTINIZED DURING THE RE-ASSESSMENT PROCEEDINGS, WHICH WAS COM PLETED ONLY ON 8.12.2006. THE INITIATION OF THE SAID PROCEEDINGS AFTER THE GAP OF 45 DAYS I.E. ON 23.1.2007, WILL NOT CONSTITUTE INORDINATE DELAY. ON THE OTHER HAND, THE CIT(A) DID NOT GO INTO THIS ASPECT THAT FROM WHICH DATE THE INORDINATE DELAY SHOULD BE COMPUTED. HE MERELY EXPANDED THE PROVISI ONS OF SECTION 275(1) AND HELD THAT THE PENALTY PROCEEDINGS BE COMPLETED WITHIN THE PERIOD OF 6 MONTHS AS PER THE STATUTE IS IN ORDER. FOR THIS HE RELIED ON THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CHIMANRAM MOTILA L PVT. LTD. VS. CIT 149 ITR 809 (BOM) FOR THE PROPOSITION THAT THE DELAY OF 6 YEARS FROM THE INITIATION TILL THE CONCLUSION OF THE SAID PROCEEDINGS IS FOUN D VALID. IN THE PROCESS, HE IMPOSED THE ISSUE FOR DETERMINATION AND DID NOT ADJ UDICATE THE LEGAL GROUND RAISED BY THE ASSESSEE IN ACCORDANCE WITH THE PROVI SIONS OF SUB-SECTION 6 OF THE SECTION 250 OF THE ACT. 16. FROM THE ABOVE EXTRACTS FROM VARIOUS CITATIONS, IT IS CLEAR THAT, IN THE CIRCUMSTANCES OF NO EXPRESS PROVISION FOR PROCEEDIN GS TO COMMENCE, MORE SO WHEN THE TAXPAYERS IS HIT ADVERSELY, THERE IS A REQUIREMENT OF FIXING OF REASONABLE PERIOD AND THE LENGTH OF THE PERIOD IS O UGHT TO BE CASE SPECIFIC AND IT DIFFERS FROM ONE CASE TO AS HELD BY THE APEX COURT. THERE IS NO DISPUTE ON THE FACT THAT THERE ARE NO EXPRESS PROVISIONS FOR INITIATION OF THE PROCEEDINGS U/S 271D OF THE ACT IN THE INSTANT CASE . FURTHER, IT IS ALSO CLEAR FROM THE ABOVE, THERE IS NEED FOR EXPLANATION FOR T HE SAID DELAY IF IT CONSTITUTES DELAY OR INORDINATE DELAY AND SUCH EXPLANATION HAS TO BE GIVEN BY THE PERSON OR AUTHORITY RESPONSIBLE FOR THE DELAY/INORDINATE D ELAY. WHEN THIS IS THE SETTLED LAW AT THE LEVEL OF THE APEX COURT, WE HAVE PERUSED THE ORDERS OF THE REVENUE FOR DETAILS OF DELAY OR INORDINATE DELAY OR EXPLANA TION OF THE REVENUE ETC. THE REVENUE AUTHORITIES IN GENERAL, THE CIT(A) IN PARTI CULAR HAS NOT DETERMINED THE M.A. NO 45/PN/2012 M/S. P.R. ASSOCIATES A.Y.1999-2000 PAGE OF 11 8 ISSUES PROPERLY AS CAN BE MADE OUT FROM THE IMPUGNE D ORDER. CIT(A) CONSIDERED THE DELAY FROM THE DATE OF INITIATION OF THE PENALTY PROCEEDINGS AND THE CONCLUSION OF THE SAID PROCEEDINGS LEAVING THE CONTENTIOUS ISSUE OF WHY INITIATION IS NOT DONE FROM THE DATE OF SEARCH. THU S, THE CIT(A) SUSTAINED THE PENALTY ERRONEOUSLY DETERMINED THE ISSUE AND ADJUDI CATED THE SAME RELYING ON THE JUDGMENTS OF THE JURISDICTIONAL HIGH COURT R EPORTED IN THE CASE OF CHIMANRAM MOTILAL (P) LTD. VS. CIT (SUPRA) AND LALT A PRASAD GOENKA 20 ITR 399 (BOM). THESE DECISIONS RELATE TO THE DELAY BET WEEN THE INITIATION OF THE PENALTY PROCEEDINGS AND LEVY OF PENALTY FINALLY. TH ESE DECISIONS DOES NOT RELATE TO THE ISSUE OF WHY NOT INITIATED AT THE TIM E SEARCH ITSELF. TO THAT EXTENT, ORDER OF THE CIT(A) IS DEFICIENT AND NOT IN ACCORDA NCE WITH THE PROVISIONS OF SECTION 256 OF THE ACT WHICH SAYS AS UNDER: THE ORDER OF THE COMMISSIONER (A) DISPOSING OF AN APPEAL SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION , THE DECISION THERE ON AND THE REASONS FOR THE DECISION. 17. THUS, IN OUR OPINION, THE CIT(A) HAS NOT DETERM INED OR ADJUDICATED THE SSUE RAISED BEFORE HIM IN ACCORDANCE WITH THE ABOVE SAID PROVISIONS. IN SUCH CIRCUMSTANCES, THE IMPUGNED ORDER CANNOT BE DESCRIB ED AS A SPEAKING ONE. REGARDING THE NEED FOR A SPEAKING ORDER, IT IS A SE TTLED LAW THAT EACH AND EVERY APPEALABLE ORDER HAS TO BE A SPEAKING AND REA SONED ORDER; SO THAT THE REASONS FOR TAKING A PARTICULAR DECISION OR DERIVIN G A PARTICULAR CONCLUSION ARE KNOWN. THE REASON IS THE SOUL OF THE LAW, IT BRINGS CLARITY IN THE ORDER AND GIVING REASONS IS A PART OF THE PRINCIPLES OF NATUR AL JUSTICE. IT IS IMPERATIVE TO INTRODUCE THE REASONS IN THE ORDER AS HELD BY THE A PEX COURT IN THE CASE OF SUGA RAM (8 SCC 641)(SC)(2008) AND ADOPTED BY THE J URISDICTIONAL HIGH COURT IN THE CASE OF M/S SHIVSAGAR VEG. RESTAURANT (ITA NO 144 OF 2006)(BOM). IT IS ALSO EVIDENT FROM THE CONTENTS OF PARA 3.4 & 3.5 OF THE IMPUGNED ORDER AND ALSO ORDERS OF THE ASSESSING OFF ICER THAT THEY ARE DEFICIENT ON THE EXPLANATION FOR THE DELAY OF 3 Y EARS, IF DATE OF SEARCH IS CONSIDERED AS A STARTING POINT FOR COUNTING SUCH DE LAY, OR 45 DAYS, IF DATE OF COMPLETION OF RE-ASSESSMENT IS CONSIDERED AS A STAR TING POINT. IN EITHER CASE, THE ORDERS OF THE REVENUE DO NOT CONTAIN EXPLANATIO N FOR INITIATION. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT LEGAL ISS UES MUST BE SET ASIDE TO THE FILES OF THE CIT(A) WITH THE DIRECTION TO HIM T O DECIDE THE ISSUE AFRESH AFTER CONSIDERING THE ABOVE REFERRED CITED DECISIONS. TH E CIT(A) SHALL ENDEAVOR TO BRING IN ANY EXPLANATIONS FOR THE SAID DELAY OF BOT H THE KINDS BEFORE PASSING A SPEAKING ORDER. ACCORDINGLY, THE LEGAL ISSUE IS SE T ASIDE TO THE FILES OF THE CIT(A). M.A. NO 45/PN/2012 M/S. P.R. ASSOCIATES A.Y.1999-2000 PAGE OF 11 9 9. WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD COUNSEL THAT THE APPROACH OF THE TRIBUNAL IS CASUAL IN RESTORING TH E ADDITIONAL GROUND TO THE FILE OF THE LD CIT(A). ON THE PERUSAL OF PARA NO. 16 OF THE TRIBUNAL ORDER, THE SPECIFIC REASONS ARE GIVEN RELYING ON T HE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF LALTA PRAS AD GOENKA, 20 ITR 399 (BOM) AND CHIMANRAM MOTILAL (P) LTD VS. CIT, 140 IT R 809. THE TRIBUNAL HAS EXPRESSED THE OPINION THAT THE LD CIT(A) HAS NO T DEALT WITH THE ISSUE OF THE DELAY IN INITIATION OF THE PROCEEDINGS FOR LEVY OF THE PENALTY AS CONTEMPLATED IN THE ACT AND MORE SO, THE TRIBUNAL H AS GIVEN DETAILED REASONS IN PARA NO. 17 WHY THERE IS A NECESSITY TO RESTORE THE ISSUE ARISING FROM ADDITIONAL GROUND TO THE FILE OF THE L D CIT(A). 10. IN THE CASE OF ZUARI LEASING & FINANCE LTD., ( SUPRA), THE ASSESSEE HAD CLAIMED THE BAD DEBT OF RS. 85,69,350. IN THE SAID CASE, THE A.O. OBSERVED THAT THE AMOUNTS WERE WRITTEN OFF AS A BAD DEBT DURING THE PENDENCY OF THE SUIT U/S. 138 OF THE NEGOTIABLE INS TRUMENT ACT. THE ASSESSEE MAINTAINED THAT THE CLAIM OF THE BAD DEBT WAS ADMISSIBLE. WHEN THE MATTER REACHED BEFORE THE TRIBUNAL, IN THE OPINION OF THE LD. ACCOUNTANT MEMBER, THE SAID ISSUE HAS NOT BEEN EXAM INED PROPERLY BY THE LOWER AUTHORITIES, AND THEREFORE, THE LD. ACCOU NTANT MEMBER SET ASIDE THE ISSUE OF THE BAD DEBT TO THE FILE OF THE A.O. ANOTHER GROUND OF APPEAL WAS IN RESPECT OF DISALLOWANCE OF CLAIM OF D EPRECIATION OF RS. 2,93,687/- ON LEASE OF 5 CARS. THE SAID ISSUE WAS ALSO RESTORED TO THE FILE OF THE A.O. BY THE LD. ACCOUNTANT MEMBER FOR FRESH EXAMINATION. THE LD JUDICIAL MEMBER WAS OF THE OPINION THAT ONC E THE BAD DEBTS ARE WRITTEN OFF AND THE CONDITIONS OF SEC. 32(2) ARE FU LFILLED, THE ADDITION SUSTAINED BY THE CIT(A) IS REQUIRED TO BE DELETED. HENCE, IN HIS OPINION, THERE WAS NO JUSTIFICATION IN RESTORING THE SAID I SSUE (I.E. ISSUE OF BAD DEBTS ) TO THE FILE OF THE A.O IN VIEW OF THE REMAN D REPORT OF THE A.O M.A. NO 45/PN/2012 M/S. P.R. ASSOCIATES A.Y.1999-2000 PAGE OF 11 10 WHICH WAS ALREADY ON RECORD. ON THE ISSUE OF RESTO RING THE MATTER TO THE A.O. FOR FRESH CONSIDERATION, THERE WAS A DIFFERENC E OF OPINION BETWEEN THE TWO LD. MEMBERS, AND MATTER WAS REFERRED TO THE THIRD MEMBER FOR ADJUDICATION. MOREOVER, AS PER THE FACTS OF THE S AID CASE ON RECORD, THERE WAS NO NECESSITY TO RESTORE SAID ISSUE TO FI LE OF THE A.O AS IN THE REMAND REPORT ALSO, THE A.O HAS ACCEPTED FACTUAL SI TUATION. IN SUM AND SUBSTANCE, ALL THE FACTUAL ASPECTS OF THE ISSUE OF THE BAD DEBT WERE BEFORE THE TRIBUNAL IN THE SAID CASE, AND HENCE IN THAT BACKGROUND, THE LD THIRD MEMBER (THE THEN HONBLE PRESIDENT) MADE CERT AIN OBSERVATIONS IN RESPECT OF THE APPROACH OF THE LD ACCOUNTANT MEMBER FOR RESTORING THE MATTER OF THE BAD DEBTS TO THE FILE OF THE A.O. WE HAVE ALSO CONSIDERED THE DECISION IN THE CASE OF M.G. SHAHANI & CO. (DEL HI) LTD. (SUPRA). IN OUR OPINION, AS PER THE FACTS OF THAT CASE, THEIR L ORDSHIPS WERE OF THE OPINION THAT THE TRIBUNAL SHOULD HAVE ANALYSED THE EVIDENCE AND GIVEN THE FACTUAL CONCLUSION. 11. IN THE PRESENT CASE, WE FIND THAT WHILE RESTORI NG THE ADDITIONAL GROUND, SPECIFIC REASONS ARE GIVEN BY THE TRIBUNAL AND IT CANNOT BE SAID THAT IT IS A MISTAKE WHICH CAN BE RECTIFIED U/S. 254(2) OF THE ACT. SO FAR AS THE ANOTHER GRIEVANCE OF THE ASSESSEE IS CONCER NED, THAT IS RESTORATION OF THE ORIGINAL GROUND TO THE FILE OF THE A.O. WE ARE UNABLE TO ACCEPT THE SAME AS A MISTAKE. ADMITTEDLY, THE ISSUE OF DELAY IN INITIATION OF THE PENALTY PROCEEDINGS AND LEVY OF THE PENALTY GOES TO THE ROOT OF THE ENTIRE MATTER, AND IF THE ASSESSEE SUCCEEDS ON THE SAID IS SUE, THEN THE QUESTION OF EXAMINING WHETHER THERE WAS A REASONABLE CAUSE F OR THE ASSESSEE OR NOT WILL ARISE. WHETHER A PARTICULAR ISSUE WAS REQ UIRED TO BE RESTORED ON THE FACTS OF THE CASE CANNOT BE SAID TO BE A PURELY MISTAKE WHICH CAN BE RECTIFIED U/S. 254(2) OF THE ACT, AS IN OUR HUMBLE OPINION, THE SAID AMOUNTS TO REVIEW OF THE ORDER OF THE TRIBUNAL WHIC H IS NOT PERMISSIBLE M.A. NO 45/PN/2012 M/S. P.R. ASSOCIATES A.Y.1999-2000 PAGE OF 11 11 WITHIN JURISDICTION CONFERRED U/S. 254(2). WE FIND NO MERIT ON THE THIRD GRIEVANCE OF THE ASSESSEE AND ACCORDINGLY, THE RELE VANT GROUNDS ARE DISMISSED. 12. IN THE RESULT, MISCELLANEOUS APPLICATION IS PAR TLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 18TH JULY 2012. SD/- SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 18TH JULY, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A)- II, PUNE 5. THE D.R. ITAT B BENCH, PUNE 6. GUARD FILE /-TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE