Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘A‘ BENCH
Before: SHRI M.BALAGANESH & SHRI KULDIP SINGH
आदेश / O R D E R PER M. BALAGANESH (A.M):
This appeal in A.Y.2003-04 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-33, Mumbai in appeal No.CIT(A)-33/Rg.21/68/2012-13 dated 19/08/2019 (ld. CIT(A) in short) in the matter of imposition of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as Act).
The only effective issue to be decided in this appeal is as to whether the ld. CITA was justified in upholding the levy of penalty u/s 271(1)(c ) of the Act in the facts and circumstances of the case. The inter connected issue involved therein is whether the penalty order u/s 271(1)(c ) of the Act had been passed within time and is not barred by limitation in the facts and circumstances of the case.
We have heard the rival submissions and perused the materials available on record. At the outset, we find that the ld. AR before us had raised a preliminary objection that the penalty order passed by the ld. AO in the instant case is barred by limitation. Since this goes to the root of the matter, we deem it fit to address this preliminary issue. We find that the assessee firm is engaged in the business of export of fabrics and garments and had filed its return of income for the Asst Year 2003-04 on 12.11.2003 declaring total income of Rs 67,840/-, together with the computation of income, profit and loss account and audit report. In the scrutiny assessment proceedings, the ld. AO made various additions and disallowances and determined the income of the assessee at Rs 47,97,470/- vide order u/s 143(3) of the Act dated 27.03.2006. Penalty proceedings u/s 271(1)(c ) of the Act were duly initiated by the ld. AO. This assessment was subjected to challenge by the assessee before the ld. CIT(A) , who vide his order dated 19.01.2010 partly allowed the appeal of the assessee after giving some partial relief. The order of ld. CIT(A) was challenged by the assessee before this tribunal and the said appeal was remanded back by this tribunal to the file of ld. CIT(A) for fresh adjudication in dated 23.09.2016.
3.1. The ld. AO issued a letter dated 6.8.2012 requiring the assessee’s attendance on 08.08.2012 in connection with penalty proceedings u/s 271(1)( c ) of the Act. The assessee had stated in its statement of facts filed before this tribunal that on 08.08.2012, the hearing did not take place and thereafter penalty order was passed by the ld. AO on 30.08.2012 levying penalty of Rs 19,36,450/- u/s 271(1)( c) of the Act. Aggrieved by this penalty order, the assessee preferred an appeal before the ld. CIT(A). As stated in the statement of facts filed before us, the assessee had requested the ld. CIT(A) to keep the penalty appeal in abeyance till the disposal of the quantum appeal by this tribunal, which was pending at that stage. Finally the ld. CIT(A) dismissed the appeal of the assessee vide his order dated 19.08.2019.
3.2. Before us, the assessee had raised a preliminary ground that the penalty order dated 30.08.2012 passed by the ld. AO is barred by limitation as per the proviso to section 275(1)(a) of the Act. The ld. AR argued that the order of ld. CIT(A) was passed on 19.01.2010 in the original quantum proceedings and that the said order could have definitely reached the ld. AO before 31.03.2010 and hence the time limit for passing the penalty order would expire by 31.03.2011. Even if it is assumed that the order of the ld. CIT(A) on quantum appeal was received by the ld. AO from the office of the ld. CIT(A) during the financial year 2010-11, still the time limit for passing the penalty order would expire by 31.03.2012.Accordingly , he argued that the penalty order passed by the ld. AO on 30.08.2012 is barred by limitation as per the time limit prescribed in proviso to section 275(1)(a) of the Act. Per Contra, the ld. DR vehemently argued that the assessee’s case would fall within the ambit of section 275(1)(a) of the Act and since the quantum appeal of the assessee was pending before this tribunal, the ld. AO on receipt of the tribunal order had resorted to pass the penalty order within the time limit prescribed thereon. The ld. DR also placed reliance on the following decisions in support of his contentions by way of written submissions :- a) Decision of Hon’ble Delhi High Court in the case of CIT vs Mohair Investment & Trading Co. P Ltd reported in 18 taxmann.com 239 (Del HC) b) Decision of Mumbai Tribunal in the case of Mahindra Intertrade Ltd vs DCIT reported in 16 taxmann.co, 77 (Mum ITAT)
3.3. For the sake of convenience, the provisions of section 275(1)(a) of the Act together with its proviso is reproduced hereunder:-
“Bar of limitation for imposing penalties. 275. (1) No order imposing a penalty under this Chapter shall be passed—
(a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whichever period expires later :
Provided that in a case where the relevant assessment or other order is the subject- matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whichever is later;”
3.4. The aforesaid proviso in section 275(1)(a) of the Act was inserted in the statute by the Finance Act 2003 w.e.f. 01.06.2003, meaning thereby, the same would be applicable for all penalties levied on or after 01.06.2003. In the instant case, the order of ld. CIT(A) in quantum proceedings was passed on 19.01.2010 and hence the maximum time limit for passing the penalty order would expire by 31.3.2011 in normal course and by 31.03.2012 in abnormal course of delay in receipt of order of ld. CIT(A) by the ld. AO. Hence either way, the penalty order passed on 30.08.2012 would be squarely barred by limitation. We find that the decisions relied supra by the ld. DR are factually distinguishable as they were rendered for the Asst Years 2001-02 and 2000-01. Admittedly the law prevailing for the Asst Years 2000-01 and 2001-02 for levy of penalty would be governed by section 275(1)(a) of the Act, where the ld. AO could keep the penalty proceedings in abeyance till the order of tribunal was received. But due to insertion of proviso with effect from 01.06.2003, the ld. AO would be entitled to keep the penalty proceedings in abeyance only till the disposal of the first appeal by the ld. CIT(A). Hence the reliance placed on the decisions by the ld DR would not advance the case of the revenue. Accordingly, as rightly pointed out by the ld. AR before us, the time limit for passing the penalty order would expire by 31.03.2011 i.e one year from the end of the financial year in which the order of ld. CIT(A) is passed is received by the ld. Administrative Commissioner having jurisdiction over the assessee. In view of the above, we hold that the penalty order passed by the ld. AO on 30.08.2012 is squarely barred by limitation in view of proviso to section 275(1)(a) of the Act. Hence levy of penalty is hereby cancelled.
3.5. Since penalty order passed by the ld. AO is cancelled as barred by limitation, the other grounds raised by the assessee both on law and on merits need not be gone into as they would become academic. Hence no opinion is given on the same.
In the result, the appeal of the assessee is allowed.
Order pronounced on 24/01/2022 by way of proper mentioning in the notice board.