Income Tax Appellate Tribunal - Ahmedabad
Swetamber Steel Limited, Baroda vs Assessee on 31 March, 2006
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "C"
Before SHRI MAHAVIR SINGH,JM & SHRI A N P AHUJ A, AM
ITA No.1531/Ahd/2006
(Assessment Year:-1994-95)
Swetamber Steel Limited, V/s Assistant Commissioner of
B/h Vihar Cinema, Income-tax, Panchmahal
Pratapnagar Road, Baroda Circle, Godhra
[PAN: AACCS 5504 L]
[Appellant] [Respondent]
Assessee by :- Shri S N Soparkar, AR
Revenue by:- Shri K M Mahesh, DR
O R D E R
A N Pahuja: This appeal by the assessee against an order dated 31-3-2006 of the ld. CIT(Appeals)-VI, Baroda,raises the following grounds:-
[1] "The learned Commissioner of Income-Tax (Appeals) [Called, CIT(A)] has erred in confirming (partly) penalty order of Assessing Officer [Called, AO] levying penalty of Rs.27,17,780/- u/s 271(1)(c).
[2] The learned CIT(A) has erred in not accepting the additional evidences which have direct nexus with the case of the assessee. And further erred in not following the decision of Hon. Allahabad High Court in case of Jaidayal Pyarelal (Kanpur) vs. CIT - 1973 Tax L R 880.
[3] The penalty order passed by AO is time barred as provided u/s 275(1)(a).
[4] The learned AR has erred in levying penalty without recording satisfaction as provided u/s 271."
2 Facts, in brief, as per relevant orders are that assessment was in this case was completed u/s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as the "Act"] on an income of Rs.1,16,46,380/- vide order dated 26-03-1997 in pursuance to return declaring income of Rs.3,26,370/- filed on 26-10-1994 by the ITA No.1531/Ahd/2006 assessee, manufacturing steel plants, sheets and structures. Inter alia, following disallowances/additions were made:-
(In Rs.) [a] On a/c of low gross profit 25,54,884/-
[b] refund of share application money 9,73,010/-
[c] interest on unexplained deposits of
earlier years 1,04,640/-
[d] transactions in the name of M/s 73,56,189/-
Gayatri Steel Traders
[e] purchase from M/s Rahul Enterprise 43,557/-
[f] Sale of M/s Satyam Steel Corporation 1,11,270/-
[g] Other misc. disallowances, including for 15,353/-
Vehicles, Telephone & office expenses
Simultaneously penalty proceedings u/s 271(1)(c) of the Act were also initiated for concealment of particulars of income. On appeal, the learned CIT(A) vide his order dated 19-12-1997 upheld the additions of Rs.15,353/- on account of other misc. disallowances and deleted the additions of Rs.9,73,010/- and Rs.1,11,270/- on account of share application money and sale of M/s Satyam Steel Corporation respectively. The remaining additions were set-aside by the learned CIT(A) for fresh inquiry. Consequently, fresh assessment order was passed u/s 144 read with section 250 of the Act on 10-03- 2000, determining the total income of Rs.1,05,18,543/-. The earlier additions of Rs.1,04,640/-,Rs.73,56,189/- and Rs.25,54,884/- were reiterated in this order while the amount of Rs.43,557/- on account of purchase made from M/s Rahul Enterprise was allowed by the AO. On further appeals, the learned CIT(A) deleted the addition of Rs.25,54,884/- and sustained the remaining additions. On further appeal, the Tribunal vide their order dated 30-04-2003 in ITA no.1262/Ahd/2002 restricted the addition on account of interest on unexplained deposits of earlier years to Rs.67,200/- besides reducing the addition in respect of transactions in the name of M/s 2 ITA No.1531/Ahd/2006 Gayatri Steel Traders to Rs.51,25,647/-. As a result, the following additions were ultimately sustained :-
(i) Interest on unexplained deposits of Rs. 67,200/-
earlier years
(ii) Transactions in the name of M/s Gayatri Rs.51,25,647/-
Steel Traders
(iii) Out of Vehicle expenses Rs. 5,353/-
(iv) Out of Telephone expenses Rs. 5,000/-
(v) Out of office expenses Rs. 5,000/-
3. On receipt of the aforesaid order of the Tribunal, the Department filed an miscellaneous application on 11-11-2003 against the relief of Rs.22,30,542/- in respect of transactions with M/s Gayatri Steel Traders. However, the Tribunal vide their order dated 28-05-2004 in MA no.231/Ahd/2003 rejected the said miscellaneous application. Subsequently, in response to show cause notice dated 10.11.2004 & 25.11.2004 issued by the AO before levy of penalty, the assessee contended that since the order dated 30-04-2003 of the Tribunal was received by the assessee on 29-05-2003, penalty proceedings were barred by limitation in terms of provisions of section 275 of the Act. On the merit of the additions, the assessee furnished a detailed reply and contended that there being no material to conclude that the amounts disallowed / added represented the assessee's income nor there was culpable or willful omission nor even deliberate concealment, penalty could not be imposed. Inter alia, the assessee relied upon the a number of decisions in CIT vs. Ramaswamy Naidu (1994) 208 ITR 377 (Mad),CIT vs. University Printers (1991) 188 ITR 206 (Cal), Additional CIT vs. Sawan Motor Stores (1977) 109 ITR 660 (AP),CIT vs. Shri Bajrang Trading and Supply Company (1991) 187 ITR 299 (Cal) and P.S.S. Bommanna Chettiar vs. CIT (1969) 73 ITR 26 (Mad).The assessee also contended that filing of a miscellaneous 3 ITA No.1531/Ahd/2006 application before the ITAT did not extend limitation period stipulated u/s 275 of the Act. For this proposition, the assessee relied on decisions in Smt. Shardaben vs. CIT (2000) 75 ITD 274 (Ahd), ACIT vs. Delhi Industrial Syndicate (2002) 83 ITR 130 (Delhi) and B N Amarnath vs. CIT (2003) 126 Taxman 201 (Kar).However, the AO rejected the contentions of the assessee on the ground that the order passed by the Tribunal on their miscellaneous application formed part of the order of the Tribunal order u/s 253 of the Act and, therefore, penalty proceedings were not time barred. W hile referring to the findings of the ITAT on their order in quantum appeal, the AO imposed a penalty of Rs.27,17,780/-@100% of the tax sought to be evaded on the concealed income of Rs.52,51,757/-.
4 On appeal, the learned CIT(A) concluded on the plea of limitation, as under:-
"5.3. I have carefully considered all the submissions of the appellant as well as the argument of the Assessing Officer. The case law of Shardaben vs. ACIT 75 ITD 274 does not apply to the instant case as there is no involvement of section 260 and the lime limit from the order under section 254 is the relevant issue. In the-decision in the case of ACIT vs. Delhi Industrial Syndicate - 77 TTJ 606 (Delhi) facts were different as there was dispute about the date of receipt of the order of the ITAT and only the subsequent miscellaneous appellate order of ITAT passed at the request of the appellant was claimed to be received by the Assessing Officer. A finding was given that the Assessing Officer was aware of the earlier order of the Hon'ble ITAT and therefore the penalty order was time barred. In regard to B.N. Amarnath vs. CIT, 259 ITR 590 (Kar) the matter related to provisions of section 129 however that is not the issue in the present case.
5.3.1. The provisions of Income Tax Act envisage penalty in relation to whole of the assessment and in the eventuality of second appeal unless all the issues disputed achieve finality through the order of ITAT, penalty cannot be quantified and it is therefore permissible to keep the proceedings alive up to 6 months from the receipt of the order of the ITAT. The issue is what constitute the final order of the Hon'ble ITAT.
4 ITA No.1531/Ahd/20065.3.2 In the instant case miscellaneous applications were filed by the assessee and the Department. In the assessee's petition the main contention was that no inquiry was conducted in regard to existence of Gayatri Steel Traders in the case of appellant company. Whereas the contention of the Department was that the addition of bogus purchases of Rs.73,56,189/-comprised of bogus purchases of Rs.68,84,532/- and cash credit of Rs.47,137/-. The Hon'ble ITAT examined these pleas and found these issues would fall in the category of reviewing the order of Tribunal which was not permissible under law and thus it was concluded that there was no mistake in the order of tribunal and the assessee's attempt was only to get the order of Tribunal reviewed which was not permissible. Similarly in regard to the Department's plea the tribunal did not find any mistake in the earlier order. Thus the miscellaneous applications were filed in regard to the material fact of the alleged bogus transaction with Gayatri Steel Traders and the Hon'ble ITAT after considering the facts rejected the applications of the assessee arid the Department. The miscellaneous applications were in regard to the transactions which form part of the order passed under section 253 by the Hon'ble ITAT. These were filed by assessee as well as the Department. It is seen that the miscellaneous application was filed by the Department within six weeks of the receipt of the order of the Hon'ble ITAT. During the course of appellate proceedings the concerned Addl. CIT also, mentioned that the Assessing Officer had serious difficulty in giving effect to the order of the Hon'ble ITAT. Thus both the parties were aggrieved with Hon'ble ITAT's original order and did not deem it final in relation to major component of addition. Further had the Hon'ble ITAT decided to amend its earlier order passed, the quantum of addition upheld by it would have undergone change. Thereby the quantum of penalty leviable u/s. 271(l)(c) would have also changed. Therefore order passed u/s. 271(1)(c) prior to the disposal of miscellaneous application by the Hon'ble ITAT would not have been proper. Since material segment of the order under section 253 was challenged by the assessee and the Department, the order of the Hon'ble ITAT could not be said to have achieved finality. In my view when appellant was also the initiator of miscellaneous application he cannot turnaround now and claim that Hon'ble ITAT's original order was final and period of limitation should be counted from receipt of that order in CCIT's office. The miscellaneous applications of the assessee and the Department were disposed off by the ITAT and the order in this regard was received by the Department in July, 2004. Thus the limitation should be reckoned from the month of July, 2004 and thus the order passed by the Assessing Officer was not barred by limitation."
5. As regards merits of the penalty, the learned CIT(A) concluded that penalty proceedings were validly initiated u/s 271(1)(c) and after rejecting the request for admission of additional evidence, upheld the levy of penalty on the amount of Rs.67,200/- in 5 ITA No.1531/Ahd/2006 respect of interest on cash credit and on Rs.51,25,647/- on account of bogus purchases, relying, inter alia, on the decision of Hon'ble Madhya Pradesh High Court in the case of Vimal Ginning and Pressing Factory vs. CIT 279 ITR 100 (MP).
6. The assessee is now in appeal before us against the aforesaid findings of the learned CIT(A). At the outset, the learned AR on behalf of the assessee while inviting our attention to ground no.3 of the appeal as also letter dated 29-03-2010 of the CIT-II,Baroda, mentioning that ITAT's order in quantum appeal was received in the office of CIT on 28-05-2003, contended that the penalty order passed by the AO having been barred by limitation in terms of provisions of section 275 of the Act, the said order should be quashed. On the other hand, the learned DR did not counter these submissions of the learned AR.
7. W e have heard both the parties and gone through the facts of the case. Indisputably, a combined order dated 30.4.2003 of the ITAT in quantum appeal in ITA nos.707/Ahd./2002, 1075/Ahd./97, 1262 & 1263/Ahd./2002 for the AYs 92-93, 93-94, 94-95 & 96-97 was received by the CIT admittedly on 28-05-2003 .At the outset, we may have a look at the relevant provisions of sec. 275(1)(a) of the Act, stipulating limitation for imposing penalty u/s 271(1)(c) of the Act ,which read as under:-
"Sec. 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 Chief Commissioner or Commissioner, whichever period expires later;6 ITA No.1531/Ahd/2006
.................................................................................................
[Explanation : In computing the period of limitation for the purposes of this section,--
(i) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129;
(ii) any period during which the immunity granted under section 245H remained in force; and
(iii) any period during which a proceeding under this Chapter for the levy of penalty is stayed by an order or injunction of any court, shall be excluded.]"
7.1 A close scrutiny of the aforesaid relevant provisions of sec. 275 shows that cl. (1)(a) covers those cases where the penalty proceedings are in respect of a default related to the assessment for a particular assessment year and the penalty proceedings are required to be initiated in the course of that proceedings only. In such a case where the relevant assessment order or other orders are the subject-mater of an appeal to the CIT(A) under s. 246 or an appeal to the Tribunal under s. 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 6 months from the end of the month in which the order of CIT(A) or, as the case may be, of the Tribunal is received by the Chief CIT or CIT, whichever period expires later. Apparently, cl. (a) governs the categories, which are integrally related to the assessment proceedings and are not independent of it. The explanation to sec. 275 of the Act provides for exclusion of certain period while computing limitation. There is no stipulation for exclusion of period elapsed in disposal of miscellaneous application filed before the Tribunal in an order in quantum appeal. W e are of the opinion that the assessment order cannot be considered as subject-matter of appeal during the pendency of miscellaneous application before the ITAT. As already stated, a combined order dated 30-04-2003 of the Tribunal in quantum appeal in ITA nos.707/Ahd./2002, 1075/Ahd./97, 1262 & 1263/Ahd./2002 for the AYs 92-93, 93-94, 94-95 & 96-97 was received by the CIT admittedly on 28-05-2003. Therefore, in terms of the aforesaid provisions of section 275(1)(a) of the Act, limitation 7 ITA No.1531/Ahd/2006 for imposition of penalty expired on 30-11-2003.Since penalty in this case has been imposed only on 28-01-2005, apparently the said order is barred by limitation . Therefore, accepting ground no.3 in the appeal of the assessee, we set aside the order of the CIT(A) and quash the order dated 28.1.2005 of the AO, imposing penalty, being time-barred. This ground of appeal is, therefore, allowed. As a corollary, especially when no submissions have been made before us on the remaining ground nos.1, 2 and 4 in the appeal, these do not survive for our adjudication.
8. In the result, appeal is allowed.
Order pronounced in the court today on 7 -10-2010 Sd/- Sd/-
(MAHAVIR SINGH) (A N P AHUJA) JUDICI AL MEMBER ACCOUNTANT MEMBER Date : 7 -10-2010 Copy of the order forwarded to:
1. Swetamber Steel Limited, B/h Vihar Cinema, Pratapnagar Road, Baroda
2. The ACIT, Panchmahal Circle, Godhra
3. CIT concerned
4. CIT(A)-VI, Baroda
5. The DR, Bench-C, ITAT, Ahmedabad
6. Guard File BY ORDER Deputy Registrar Assistant Registrar ITAT, AHMEDABAD 8