DEWAN ENGINEERING WORKS vs. CIT, PATIALA AND ANR.

ITA/938/2008HC Punjab & HaryanaPHHC01080980200814 October 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE GURDEV SINGH5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the ITAT's order. The Court found the assessee's reliance on the Computwel Systems Limited judgment to be misplaced, as that case dealt with a different scheme (Kar Vivad Samadhan) and the analogy could not be applied to the limitation period under Section 275 of the Income Tax Act. The Court noted that the assessee had filed an appeal before the Tribunal and also requested deferment of penalty proceedings until the appeal was decided. The proceedings were deferred at the assessee's request. Even if the appeal was time-barred and the delay was not condoned, the assessee could not be heard to say that the filing of the appeal should be ignored, as no one can take advantage of their own wrong. The Court upheld the ITAT's conclusion that the penalty was not barred by limitation. The appeal was dismissed.

What were the facts?

The assessee, M/s Dewan Engineering Works, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT) concerning assessment year 1986-87. The ITAT had upheld the Commissioner of Income Tax (Appeals) [CIT(A)]'s decision regarding the penalty imposed under Section 271(1)(c). Reassessment proceedings were initiated following a search, leading to penalty proceedings. The assessee contended that the penalty was time-barred under Section 275 of the Act, arguing that the limitation period commenced from the receipt of the CIT(A)'s order. The ITAT, however, held that the penalty was not barred by limitation, citing the assessee's own request to defer penalty proceedings until the disposal of their appeal before the Tribunal.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal has erred in holding that the penalty imposed by the Assessing Officer (AO) has not become barred by time limitation, despite the bar under Section 275(1)(a) of the Income Tax Act, 1961, which states no penalty can be imposed after six months from the end of the month in which the CIT(A)'s order is received by the CIT? 2. Whether, on the facts and in the circumstances of the case, the Tribunal has erred in holding that since the quantum appeal was pending before the Tribunal, the limitation period for imposing penalty had not expired, despite the fact that the appeal could be regarded as pending only if the delay had been condoned, as per the judgment in Computwel Systems Limited v. W. Husan and another? Assessee's Contentions: The assessee argued that the limitation for imposing penalty commenced from the receipt of the CIT(A)'s order dated 22.1.1998. They contended that the Tribunal wrongly held that the limitation commenced from the date of receipt of the Tribunal's order, as the appeal filed before the Tribunal was beyond limitation and the delay was not condoned. Therefore, the filing and pendency of the appeal should be ignored, relying on the Supreme Court judgment in Computwel Systems Limited. Revenue's Contentions: The revenue opposed the submission, arguing that the Computwel judgment was distinguishable as it related to proceedings under the Kar Vivad Samadhan Scheme and not Section 275 of the Act. They relied on the Supreme Court judgment in Mela Ram & Sons v. CIT, which held that for limitation purposes, the date of the order dismissing an appeal as time-barred was the commencement date. The revenue further argued that the assessee sought deferment of penalty proceedings, and thus could not take advantage of their own wrong.

Which sections of the Income-tax Act were involved?

Section 260A,Section 275,Section 271(1)(c),Section 264

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No.938 of 2008(O&M) Date of decision: 14.10.2009 M/s Dewan Engineering Works Sirhind -----Appellant Vs. The Commissioner of Income Tax, Patiala and another. ----Respondents CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE GURDEV SINGH Present:- Mr. Rajiv Sharma, Advocate for the appellant. Mr. Rajesh Katoch, Advocate for the respondents. Adarsh Kumar Goel,J.

1.

The assessee has preferred this appeal under section 260A of the Income Tax Act, 1961 (in short, ‘the Act’) against the order dated 18.8.2008 passed by the Income Tax Appellate Tribunal, Chandigarh ‘A’ Bench in M.A No.158/Chd/2007 arising out of its own order dated 9.4.2007 in ITA No.766/Chd/2007, for the assessment year 1986-87, proposing to raise following substantial questions of law:- “i) Whether, on the facts and in the circumstances of the case, the Tribunal has fallen in error in holding that the penalty imposed by the AO has not become barred by time limitation despite there being bar under section 275(1)(a) of Income Tax Act, 1961 that no penalty can be imposed after the expiry of six months from the end of the month in which the order

The order continues below.

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