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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI Before Sh. N. K. Saini, AM And Sh. Kuldip Singh, JM & 6257/Del/2013 : Asstt. Year : 2009-10 Asstt. Commissioner of Income Vs M/s Mahesh Wood Products (P) Tax, Central Circle-03, Ltd., 2042, Katra Tabacoo, Khari New Delhi Baoli, Delhi (APPELLANT) (RESPONDENT) PAN No. AAACM0118Q Assessee by : Sh. Suresh Kumar Gupta, CA Revenue by : Sh. P. Dam Kanunjna, Sr. DR Date of Hearing : 18.05.2016 Date of Pronouncement : 24.05.2016 ORDER Per N. K. Saini, AM:
These two appeals by the department are directed against the separate orders each dated 10.09.2013 of ld. CIT(A)-I, New Delhi.
The grievance of the assessee in these appeals relates to the deletion of penalties of Rs.1,71,94,800/- each levied by the AO under Sections 271D and 271E of the Income Tax Act, 1961 (hereinafter referred to as the Act).
During the Course of hearing the ld. Counsel for the assessee raised the issue of limitation under “Rule 27” of 2 & 6257/Del/2013 Mahesh Wood Products (P) Ltd. Income Tax (AT) Rules, 1963. As the Ld. CIT(A) had considered this ground of the assessee and decided the issue against the assessee, we hold that the assessee is entitled to raise this ground on the issue of limitation under Rule 27 of Income Tax (AT)000 Rules.
4. In the present case, it is noticed that the ld. CIT(A) in paras 4.3 to 4.5 of the impugned orders held as under:
"4.3 Section 275 imposes certain limitation on passing of penalty orders. The relevant dates in the case are as under:- Date of search 30.06.2009 Date of order u/s I53A 30.12.2011 Date of reference by AO to Addl.CIT 30.05.2012 Date of notice u/s 271D/271E to appellant 22.08.2012 Date of order by the Addl.CIT 30.11.2012 4.4 The case of the appellant is that the limitation contained in section 275(1)(c) is applicable to its case, as interpreted by the courts / tribunals cited in its submissions, and the order passed u/s 271D / 271E is barred by limitation prescribed therein. Section 275(l)(c) provides that no order imposing a penalty under the chapter shall be passed (i) after the expiry of the Financial Year (FY) in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or (ii) six months from the end of the month in which action for imposition of penalty is initiated, which ever period expires later. In the 3 & 6257/Del/2013 Mahesh Wood Products (P) Ltd. present case, the first period of limitation expired at the end of FY 2011-12, i.e. on 31.03.2012, as the assessment order was passed on 30.12.2011 and there appears to be no further appeal against the said order. The subsequent period in the case, however, expired at the end of six months on 28.02.2013, as the action for imposition of penalty, i.e. issue of notice u/s 271D / 271E by the Addl.CIT, was taken on 22.08.2012. As the order was passed on 30.11.2012, it was within the period of limitation prescribed u/s 275(1 )(c). 4.5 In view of the above, this ground of appeal raised by the appellant is contrary to the law in the matter and is, accordingly, dismissed."
5. During the course of hearing the ld. Counsel for the assessee at the very outset stated that this issue is covered by the order dated 08.03.2016 of the ITAT Delhi Bench ‘F’, New Delhi in the case of DCIT, Central Circle-03, New Delhi Vs M/s Raj Katha Products P. Ltd. in ITA Nos.5853, 5854, 5855, 5857, 5858, 5859/Del/2013 for the assessment years 2006-07, 2007-08, 2009-10 (copy of the said order was furnished which is placed on record). It was stated that the assessee also belonges to the same group to which the said assessee M/s Raj Katha Products P. Ltd. belongs.
In his rival submissions the ld. DR supported the orders of the authorities below and further submitted that
After considering the submissions of both the parties and the material on record, it is noticed that an identical issue having similar facts has been adjudicated by the ITAT Delhi bench ‘F’, New Delhi in the aforesaid referred to case of DCIT, Central Circle-03, New Delhi Vs M/s Raj Katha Products P. Ltd. wherein the relevant findings have been given in paras 3.1 to 3.4 of the order dated 08.03.2016 which read as under:
“3.1. The Hon'ble Delhi High Court in the case of Principal CIT-5 vs. Jkd Capital & Finelase Ltd. judgment dated 13th October, 2015 at paras 8 and 9 it was held as follows. "8. We are unable to agree with the above submission of learned Standing counsel for the Revenue. Section 275(1)(c) reads as under: 275. (1) No order imposing a penalty under this Chapter shall be passed. (a).... (b)..... (c) in any other case, 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 5 & 6257/Del/2013 Mahesh Wood Products (P) Ltd. from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.
9. In terms of the above provision, there are two distinct periods of limitation for passing a penalty order, and one that expires later will apply. One is the end of the financial year in which the quantum proceedings are completed in the first instance. In the present case, at the level of the AO, the quantum proceeding was completed on 28th December 2007. Going by this date, the penalty order could not have been passed later than 31st March 2008. The second possible date is expiry of six months from the month in which the penalty proceedings were initiated. With the AO having initiated the penalty proceedings in December 2007, the last date by which the penalty order could have been passed is 30th June 2008. The later of the two dates is 30th June 2008." 3.2. Further at para 11 it was held as follows. "11. In fact, when the AO recommended the initiation of penalty proceedings the AO appeared to be conscious of the fact that he did not have the power to issue notice as far as the penalty proceedings under Section 271-E was concerned. He, therefore, referred the matter concerning penalty proceedings under Section 271-E to the Additional CIT. For some reason, the Additional CIT did not issue a show cause notice to the Assessee under Section 271-E(1) till 20th March 2012. There is no explanation whatsoever for the delay of nearly five years after the assessment 6 & 6257/Del/2013 Mahesh Wood Products (P) Ltd. order in the Additional CIT issuing notice under Section 271-Eof the Act. The Additional CIT ought to have been conscious of the limitation under Section 275(1) (c), i.e., that no order of penalty could have been passed under Section 271-E after the expiry of the financial year in which the quantum proceedings were completed or beyond six months after the month in which they were initiated, whichever was later. In a case where the proceedings stood initiated with the order passed by the AO, by delaying the issuance of the notice under Section 271- E beyond 30th June 2008, the Additional CIT defeated the very object of Section 275(1)(c)."
Applying the propositions laid down in this case law by the Jurisdictional High Court to the facts of the present case, we hold that all the impugned orders levying penalty are barred by Limitation. The penalty order should have been passed not later than 30th June, 2012. As the impugned order is passed beyond this date, all the appeals are barred by Limitation. Hence all the Revenue appeals are dismissed.”
So, respectfully following the aforesaid referred to order dated 08.03.2016 in the case of DCIT, Central Circle- 03, New Delhi Vs M/s Raj Katha Products P. Ltd. (supra), we decide the issue in favour of the assessee and hold that the impugned orders levying the penalties under Sections 271D and 271E of the Act are barred by limitation because the penalty order should have been passed not later than
7 & 6257/Del/2013 Mahesh Wood Products (P) Ltd. 30.06.2012, however, in the present case, the penalty orders were passed by the ld. Addl. Commissioner of Income Tax, Central Range-2, New Delhi on 15.06.2013. Since we have decided the legal issue in favour of the assessee, therefore, no separate findings are being given on the grounds raised by the department.
In the result, appeals of the department are dismissed. (Order Pronounced in the Court on 24/05/2016)