TRIUMPH SECURITIES LTD,MUMBAI vs. ADDITIONAL CIT CEN CIR 6, MUMBAI

These are two appeals in

Grounds in ITA No. 1217/Mum/2018 challenging penalty confirmed by the ld. CIT [A] u/s 271 E of The Act are as under: -

Grounds in ITA No.1218/Mum/2021 confirming penalty u/s 271 D of the Act are as under: -

The fact of the case shows that the assessee is a company engaged in share and stock broking, investment and trading in shares, member of the Bombay Stock Exchange, who filed its return of income on 9thOctober 2000 disclosing the income of Rs.6,88,48,954/-. The Return was picked up for scrutiny. Looking at the complexity in the accounts of the assessee, audit under section 142(2A) of the income-tax Act, 1961 (hereinafter referred to as ‘Act’) was ordered and got conducted. The assessee was then assessed under section 143(3) of the Act on 5thNovember 2003, wherein the income of the assessee was determined at Rs.8,48,33,150/-.

As the accounts of the assessee were audited under section 142(2A) of the Act, the audit report indicated that assessee has accepted Rs. 15,25,000/- from M/s BB Roongta & Company and Rs. 12,23,50,000/- from M/s AB

In response to the notice, assessee submitted that assessee is a non-banking financial company engaged in the business of share trading and belongs to Ketan Parekh Group. The assessee referred to the observation of the joint parliamentary committee on enquiry of stock market scam. The learned Assessing Officer after considering the explanation of the assessee held that there is no such reasonable cause. There is no explanation for transaction between sister concern and accordingly, the learned Addl. Commissioner of Income Tax, Central Range-6, Mumbai passed an order under section 271D of the Income-tax Act, 1961 on 30thJuly 2004 levying a penalty of Rs.12,38,75,000/-.

Similarly, as the above loans have been are repaid by the assessee to M/s BB Roongta & Company of Rs.25,000/- to M/s AB Corporation of Rs.12,23,50,000/- the show cause notice under section 271E of the Act were issued on 15/12/2003 as there is a violation under the provisions of Section 269T of the Act was noticed. Later on, similar notice was issued by same adjudicating authority stating

Both these orders were challenged before the learned CIT(A) and subsequently before the co-ordinate Benches. The co-ordinate Bench set aside the matter back to the file of the learned CIT(A). The learned CIT(A) passed an order on 18thDecember 2017 confirmed the levy of penalty under section 271E of the Act and further enhanced by the learned CIT(A) of Rs.22,99,17,749/-. Therefore, now, this is the appeal before the co-ordinate bench in the second round of proceedings. 09. Similarly, against the order passed by the learned Addl. Commission of Income Tax under section 271D of the Act, the assessee preferred the appeal before the learned CIT(A) who also enhanced the penalty of Rs.43,44,28,859/- and the total penalty levied was of Rs.55,83,03,859/-.

The appeal was filed before the ITAT, wherein ITAT restore the matter back to the file of the learned CIT(A) who passed an order confirming the penalty levied by the Assessing Officer and enhanced by the learned CIT(A) by

The main reason stated by the assessee is that the director of the assessee company Shri Dhiren Bhatia who was busy in attending certain statutory matters of SEBI and due to this pre-occupation, he forgot to send the orders to the chartered accountant and due to this the appeal was filed late. Immediately, on noticing of the above on 28thFebruary 2018, the orders were sent to the chartered accountant and appeals were filed on 1stMarch 2018. It was stated that this is a fresh reason for condonation of delay. The learned Authorized Representative reiterated the same facts. 013. The learned Departmental Representative vehemently objected the same. 014. As we find that the delay is minimal and further there is sufficient cause in not filing the appeal in time. In the interest of justice, we condone the delay.

The learned Departmental Representative vehemently opposed the additional ground and submitted that now in the second round of appeal before ITAT, the above ground cannot be raised.

We have carefully considered the rival contentions and find that the ground raised by the assessee is jurisdictional ground which can be raised in time during pendency of appeal. Further, this ground goes to the root of the matter and does not require any further verification of facts. Therefore, we admit the same.

The learned Authorized Representative specifically argued that in the present case, assessment passed under section 143(3) of the Act on 5thNovember 2003 and notice under section 271E of the Act was issued on 15thDecember 2003 and penalty is imposed on 30thJuly 2004. He referred to the provisions of section 275(1)(c) of the Act and submitted that imposition of penalty was taken on 5th

Similarly, first show cause notice u/s 271D was issued on 15/12/2003 and penalty was levied by order dated 30/7/2004.

On the merits of the penalty levied under section 271D and 271E of the Act, he submitted that learned Addl. Commissioner of Income tax has misread the headings of the tax audit reports clause. He submitted that the Addl. CIT has considered all the loans accepted and repaid whether in violation of provision of section 269SS or 269T of the Act, he has levied penalty. He specifically referred to the copies of the account of M/s BB Roongta & Company and M/s AB corporation to show that the loans are received and repaid through banking channels and therefore there is no violation of provisions of section 269SS or 269T of the Act.

With respect to the enhancement of penalty of Rs.43,44,28,859/- in violation of the provision of section 269SS of the Act, he submitted that these are the journal

The learned Departmental Representative Dr. P Daniel referred to the background of the case stating that the assessee belongs to Ketan Parekh group which was involved in stock market scam. He stated that because of the complexities in accounts the assessment was completed after getting accounts audited under section 142(2)(a) of the Act. During assessment proceedings, the fault under section 269SS and 269T of the Act was noted. He submitted that the learned CIT(A) confirmed the penalties in the first round as well as in the second round of appeal. He supported both the orders of the learned Assessing Officer and Commissioner of Income Tax (Appeals). He even otherwise submitted that the assessee

The learned Departmental Representative with respect to the argument of the learned Authorized Representative that orders passed are not within the time limit, he submitted that orders are passed within six months of the time period allowed under section 275 of the Act. He submitted that notice under section 271D and 271E of the Act read with section 274 of the Act were issued on 16thJanuary 2004 and the respective penalties were levied on or before 30th July 2004 there is no infirmity, and the penalties orders are within time.

The learned Authorized Representative submitted that identical issue is decided in case of assessee by co- ordinate Bench for Assessment Year 2000-01, where the penalty levied under section 271E and 271D of the Act were deleted, therefore, the issue is squarely covered in favour of the assessee.

We have carefully considered the rival contentions and perused the orders of the lower authorities. In the present case, the assessment order under section 143(3) of the

In this case, ld. Adjudicating authority once again issued the same notice for the same offence being show cause notice for levy of penalty u/s 271D and 271E of the act on 16/1/2004. Claim of revenue is that the last notice [ second notice] issued by the ld. Adjudicating authority should be considered for computing outer time limit for passing penalty orders. If the subsequent notices issued by the ld. Adjudicating authorities on 16/01/2004 are taken for computing time limit, the ld. Adjudicating authority would always be in a positing extend the above time limit for issuing a fresh notice for the same offence and it would not be in consonance of letter and spirit of the law. Therefore, same is rejected.

Accordingly, both the appeals filed by the assessee are allowed.

As the appeal of the assessee are allowed on additional ground, the issue of reasonable cause and levy of penalty on merits are not at all adjudicated.

In the result both the appeals filed by the assessee are allowed.