Income Tax Appellate Tribunal - Chandigarh
Dy. Cit vs Swagat Motors & General Finance Co. (P) ... on 24 August, 2004
Equivalent citations: (2004)91TTJ(CHD)1116
ORDER
Jugal KISHORE, A.M.:
The revenue is in appeal in respect of order dated 14-2-2000, passed by the learned Commissioner (Appeals) deleting penalty of Rs. 5.11 lakhs levied by the assessing officer under section 271D of the Income Tax Act, 1961.
2. Briefly stated, the facts of the case are that during the course of assessment, it was noticed that the assessee- company had accepted loans/deposits in cash in violation of the provisions of section 269SS. The assessing officer thereafter initiated penalty proceedings under section 271D/269SS and ultimately imposed a penalty of Rs. 5.11 lakhs.
3. In the first appeal, it was submitted that the action of the assessing officer was bad in law as he issued show-cause notice on 20-12-1996, which was served on the assessee on 20-12-1996, and the penalty was imposed on 22-9-1998. It was, therefore, submitted that since the penalty order was passed on 22-9-1998, which was more than six months from the date of initiation of penalty proceedings under section 271D, it was barred by limitation. The assessee further submitted that in case an appeal had been filed under the assessment order, then the limitation period would be extended. However, so far as penalty under section 271D for default under section 269SS was concerned, the same could not be the subject-matter of appeal as no addition could be made in respect of deposit in quantum. The assessee pointed out that the above submissions were duly supported by the order of the assessing officer in para 7, wherein she observed that since no addition had been made there was no ground of any relief and hence the limitation period in this case could not be extended. The assessee further relied on the decision in the case, of Manohar Lal v. Dy. CIT (1995) 53 TTJ (Jp) 105, wherein it was held that clause (a) of section 275(l) does not apply to such a case as the penalty proceedings were. not the subject-matter of the appeal. While deciding the issue, Jaipur, Bench followed the decision of the Pune, Bench in the case of Bhushan Chemicals v. Dy. CIT (1995) 54 ITD 5 (Pune).
3.1 The Commissioner (Appeals) after considering the submissions of the assessee observed that the penalty proceedings under section 271D were initiated on 20-12-1996, and the assessing officer finally imposed the penalty on 22-9-1998, i.e., after a period of more than 1-1/2 years from the date of initiation of penalty proceedings. The Commissioner (Appeals) held that the provisions of clause (a) to section 275(l) were not applicable to the assessee's case, as the penalty was to be levied under section 271D for which no addition could be made in quantum and consequently there were no items which were the subject-matter of appeal. It was, therefore, held by the Commissioner (Appeals) that the penalty order passed by the assessing officer was barred by limitation as the case was covered by the decisions of the Jaipur and Pune Benches, and cancelled the penalty imposed by the assessing officer.
4. Before us, learned Departmental Representative strongly rebutted the order of the Commissioner (Appeals) and submitted that since the assessee had preferred, an appeal before the first appellate authority against quantum which was decided on 17-3-1998, penalty order under section 271D was passed on 22-9-1998, and hence within limitation, as laid down under clause (a) of section 275(l). On the other hand, learned Authorised Representative supported the impugned order and reiterated the submissions made before the Commissioner (Appeals).
5. We have heard both the parties, perused the orders of the tax authorities and gone through the material available on record as well as the paper book filed by the assessee. In this case, the revenue has relied upon clause (a) of section 275(l), wherein it is stated that no order imposing a penalty under this chapter shall be passed where relevant assessment order was the subject-matter of an appeal before the Commissioner (Appeals) under section 246 or was before the Tribunal under section 253 and the period of six months could be counted from the end of the month in which the order of the Commissioner (Appeals) or the Tribunal, as the case may be, is received by the Chief CIT or CIT, or before the end of the financial year in which the proceedings had been initiated, whichever period expires later; whereas the assessee has relied upon the decisions of the Jaipur and Pune Benches, wherein it has been held that penalty proceedings under section 271D are different as nothing is being add ed in quantum and as such no item of such subject-matter is there before the Commissioner (Appeals) to be adjudicated and, therefore, period of six months could be reckoned from the date of initiation of penalty proceedings under section 271D by the assessing officer. We find that such submissions made by the assessee before the Commissioner (Appeals) could not be controverted by the Departmental Representative and the revenue is not able to cite any other case law in support of its contention. We, therefore, find that the case of the assessee is covered by the decisions of the Jaipur and Pune Benches, wherein it has been held that penalty proceedings should be completed within six months or before the end of the financial year, whichever period is later. Since in the present case, the penalty proceedings were completed after a period of 1-1/2 years, we find that the Commissioner (Appeals) rightly deleted the impugned penalty imposed by the assessing officer,' relying upon the decisions of the Jaipur and Pune Benches. We, therefore, based on above facts and circumstances of the case, do not find any infirmity in the order passed by the Commissioner (Appeals) in deleting the penalty imposed under section 271D. We uphold the impugned order and reject the ground raised by the revenue.
6. In the result, the appeal is dismissed.