SH. R.K.RANA,PATNA vs. ACIT, CENTRAL CIECLE-2, PATNA

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA BEFORE SHRI N.K SAINI (AM) and SHRI AMIT SHUKLA (JM) ITA Nos 178,179 &180 Pat/2017 Assessment years: 1992-93,1999-2000 &.2002-03 Shri R KRana, Patna PAN GIR No.AEOPR6689E (Appellant) Vs . ACIT, Circle-2, Patna. Respondent) Department by Shri Abhay Kr., Sr DR Assessee by Smiriti Singh, Adv. Date of hearing: 09/03/2018 Date of Pronouncement: 09/03/2018 ORDER PER AMIT SHUKLA_J: The aforesaid appeal has been filed by the assessee against order dated 31.10.2017 for the assessment years-1992-93, 1999- 00; and order dated 24.11.2017 for the assessment year 2002-03, passed by ld. CIT (Appeals)-3 , Patna in relation to the penalty proceedings u/s271(1)(b) 2 Since issues involved in all the appeals are common arising out of similar set of facts, therefore, same were heard together and are being disposed of by way of this consolidated order. The 2 ITA Nos.-178,179 & 180/Pat/2017 assessee is mainly aggrieved by levy of penalty u/s 271(1) (b) for sum of Rs.20,000 /- for the assessment years 1992-93 and 1999- 2000; and Rs.30,000 / - for in the assessment year 2002-03. 3 In the A.Y.1992-93, the regular assessment was completed u/s 144/147 on 31.03.2000. In the impugned penalty order the Ld_ AO has noted following non-compliance of notices by the assesse: - Date of issue of Date of Date fixed for Remarks notice service of compliance notice Notices u/s 142(1) 08/03/2000 13.03.2000 No compliance dated 06.03.2000 Notices u/s 142(1) 18.03.2000 22.03.2000 No compliance along with questionnaire dated 16.03.2000 4 In response to the show-cause notice issued u/s 271(1) (b) / 274, the assessee submitted that penalty proceedings may be kept in abeyance till to which AO agreed. After the disposal of the first appeal in the quantum proceedings vide order dated 28.03.2006 by the Ld: CIT (A), AO once again gave opportunity to the assessee as why penalty should not be levied and fixed the date for compliance on 23.02.2006, but there was no compliance from the side of the 3 ITA Nos.-178,179 & 180/Pat/2017 assessee; and accordingly, he levied the penalty of Rs.20,000 / for both the defaults, vide order dated 20-03-2008. 5 Similarly, in the assessment year 1999-2000, the AO has noted that the assessment was completed u/s143 (3) on 06.03.2002 and the details of non-compliance was noted by him were as under: Date of issue of Date notice service notice of Date fixed for Remarks of compliance Notices u/s 23/02/2001 12.03.2001 143(2) dated (Sent 23.02.2001 through Speed Post) Notices u/s 26.02.2002 16.03.2002 142(1) along with letter dated 26.02.2002 No compliance No compliance 6_ In this year also, in response to the notice issued by the AO, u/s 271(1)(6) / 274, no compliance have been made by the assessee and finally, AO imposed the penalty of Rs.20,000 / - for non- compliance of the aforesaid notices, vide order dated 20-03-2008. 7 _ In the assessment year 2002-03, the non-compliance of the notices noted by the AO are reads as under: ITA Nos.-178,179 & 180/Pat/2017 Date of issue of Date of service of Date fixed for Remarks notice notice compliance Notices u/s 23/07/2003 25.07.2003 No 143(2) dated 17.07.2003 compliance Notices u/s 17.12.2004 24.12.2004 142(1) & 143(2) dated 14.12.2004 Notices u/s 16/02/2005(Sent 21/02/2005 142(1) & 143(2) through speed dated post 8/02/2005 No compliance No Compliance 7 _ But, in this year departing from the earlier years AO refused to accept the assessee s submission that the penalty proceeding should be kept in abeyance till the decision of quantum appeal by the Ld: CIT (A). The AO held that the penalty has to be levied for the non-compliance of notices and is independent of quantum proceedings and accordingly, levied the penalty of Rs.30,000 / 8. In all these years, the Ld. CIT (A) has confirmed the penalty after referring to the decision of Hon'ble Patna High Court in the case of Standard Mercantile Company reported in 160 ITR 613 and Nathulal Agrawala & Sons reported in 153 ITR 292; and held that penalty under this section is mandatory whenever there is non- 5 ITA Nos.-/78,179 & 180/Pat/2017 compliance. Thus, he confirmed the penalty in all the years under appeal. 8 After hearing both the parties and on perusal of the impugned orders, we find that in so far as the levy of penalty u/s 271(1)(b) in the assessment 1992-93 and 1999-2000 are concerned, the same has been levied by the AO vide order dated 20.03.2008, whereas the assessment orders were passed / completed vide order dated 31.03.2000 and 06.03.2002 respectively. 9 At the outset; we find that the penalty imposed by the Assessing Officer is barred by limitation in terms of Section 275(1). Since, levy of penalty u/s.271(1)(b) is not dependent upon the outcome of the quantum proceedings for which time limit for levy of penalty has been given in clause (a) of sub section (1) of Section 275, wherein penalty is dependent upon the outcome and findings of the appellate orders. The penalty in this section is independent of quantum and is levied for no-compliance of notices issued u/ s 142(1), etc. The time limit for initiation of levy of penalty under 271(1)(6), ostensibly would fall in clause (c) which prescribes the following time limit:- "275 (1) (a) (b) ITA Nos.-178,179 & 180/Pat/2017 (c) In any other case, after the expiry of the financial year in which the proceedings, in the course f which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later: 10. Thus, two time limits have been prescribed under clause (c) firstly, expiry of the financial year in which the proceedings in the course of which action for the imposition of the penalty is initiated or completed; or secondly, six months from the end of the month in which action for imposition of penalty is initiated: Both the time limits prescribed for imposing the penalty had expired long time back in the present case, because penalty has been levied on 20.03.2008, whereas the time limit if reckoned from the time of initiation which was in the year 2001 or 2002, had expired way back. Here in these case the assessment order which is the proceedings in the course of which action for imposition of penalty was initiated was passed in 31.03.2000 and 06.03.2002; or at the most when notices u/s 271(1)(b) / 274 were issued for the first time had expired by 31-03-2002 and 31-03-2003 (which can be reckoned as outer limit); Here the penalty order has been passed on 20.03.2008, which is much beyond the time limit prescribed for imposing the penalty and accordingly, we hold that for the ITA Nos.-178,179 & 180/Pat/2017 assessment year 1992-93 and 1999-2000 the penalty levied u/s 271(1) (b) is barred by limitation. 11_ In so far as the levy of penalty for the assessment year 2002- 03 is concerned, the assessee's contention before the Ld. CIT (A) as incorporated in the impugned order were as under: "the only issue in this appeal is imposition of penalty u/ s 271(1) (b) of the IT Act amounting to Rs.30,000/ The quantum appeal for this year was dismissed by the Ld. CIT (A) vide order dated 31.08.2016 in appeal no.41/4-1/2005-06. On appeal, the Hon'ble Tribunal vide its consolidated order has been pleased to remand the assessments back to CIT(A) with a direction that these issue may be decided afresh in accordance with law after allowing the assesse and opportunity of being heard, though of course, after the decision of Hon'ble CBI Court: Thus, the assessment orders passed had not attained finality and its veracity, legality etc is to be tested by the first appellate court. That the allegation of non-compliance to notices is contrary to the records of the appellant's case It is respectfully submitted that identical penalty was imposed in A.Y. 1994-95, 1993-94, 1997-98 and 2001-02. On appeal, the Ld. CIT (A) was pleased to cancel the penalty vide order dated 16.04.2014. In the year under consideration, the penalty has been imposed on 27.09.2005 whereas the assessment orders have been passed on 17.03.2005. Thus, the facts of the year under consideration 8 ITA Nos.-178,179 & 180/Pat/2017 are identical to the facts of the year i.e , 1994-95, 1993-94 1997-98 and 2001-02 wherein identical penalty has been canceled. 12_ However, the Ld_ CIT (A) has confirmed the penalty on the ground that the penalty is mandatory where there is non- compliance by the assesse. 13_ After hearing both the parties and going through the explanation given by the Ld. Counsel, we find here in this case entire quantum proceedings, has been set aside to the file of Ld_ CIT (A) with the direction to be decided afresh after the decision of CBI Court. Whatever default was there for non-compliance in the course of assessment proceedings, stands relegated back; because the matter has to be decided afresh in the remand proceedings. It is also not in dispute that identical penalty imposed in the assessment years 1993-94, 1997-98 & 2001-02 have been deleted by the Ld. CIT(A) vide order dated 16.04.2014_ Thus, when on similar set of facts the penalty has been deleted, then in this year also, we do not find any reason to confirm the penalties and accordingly, we direct the AO to delete the penalty of Rs.30,000 / - ITA Nos.-178,179 & 180/Pat/2017 14_ In the result all the appeals filed by the assesse are allowed: Order is pronounced in the open court on 9th, March, 2018. / - / - (N.K: Saini) Accountant Member (Amit Shukla) Judicial Member Date of order: 09, March, 2018 S.Sinha Copy of the Order forwarded to: 1 The Appellant: 2 The Respondent: 3 The CIT(A)-Patna 4_ CIT Patna 5_ Income Tax Appellate Tribunal,Patna 6_ Guard file BY ORDER PRIVATE SECRETARY