Income Tax Appellate Tribunal - Chandigarh
Jasbir Singh S/O S. Gurdev Singh, ... vs Assessee on 29 March, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'B' CHANDIGARH
BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER
AND MS SUSHMA CHOWLA, JUDICIAL MEMBER
ITA No. 694/Chd/2010
Assessment Year: 2004-05
Jasbir Singh S/o S.Gurdev Singh Vs. The ITO,
Village Channa Gulab Singh Barnala.
Teh. Barhala, Barnala.
PAN No.BJMPS6348P
ITA No. 695/Chd/2010
Assessment Year: 2004-05
Kartar Singh S/o S.Gurdev Singh Vs. The ITO,
Village Channa Gulab Singh Barnala.
Teh. Barhala, Barnala.
PAN No.BGMPS4444M
&
ITA No. 696/Chd/2010
Assessment Year: 2004-05
Avtar Singh S/o S.Gurdev Singh Vs. The ITO,
Village Channa Gulab Singh Barnala.
The Barhala, Barnala.
PAN No.BGXPS5632L
(Appellant) (Respondent)
Appellant By : Shri Subhash K.Garg
Respondent By: Shri S.S.Khemwal
ORDER
PER SUSHMA CHOWLA, JM
These three appeals relate to three different assessees against separate orders of CIT(A), all dated 29.3.2010 relating to assessment year 2004-05 against penalt y levied u/s 271(1)(c) of the Income-tax Act. 2
2. All these three appeals relating to different assessees but on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience.
3. Identical issue raised in all the appeals is against the penalt y imposed u/s 271(1)(c) of the Act being time barred in view of the proviso to section 275(1)(a) of the Act. The assessee in all the appeals has challenged the jurisdiction of Assessing Officer to levy of penalt y u/s 271(1)(c) of the Act, which is being taken up in the first instance as the same goes to the root of the issue involved.
4. The factual aspects in all the appeals are identical, however, a reference is being made to the facts in ITA 694/Chd/2010 for deciding the issue in hand. The brief facts of the case are that in view of non- compliance to notice u/s 142(1) of the Act within the time allowed by the assessee, the assessment was completed exparte u/s 144 of the I.T. Act on 11.12.2006 at an income of Rs.16,38,348 plus agricultural income 1,20,000/- Penalt y proceedings were initiated u/s 271(1)(c) of the Act. The C IT(A) vide order dated 19.12.2007 dismissed the appeal of the assessee. The assessee filed an appeal before the Tribunal. Meanwhile, the Assessing Officer issued a show cause notice to the assessee to explain why the penalt y u/s 271(1)(c) of the Act should not be levied. In repl y vide letter dated 19.8.2008, the assessee requested that the penalt y proceedings be kept pending till the disposal of the appeal by the Tribunal. The Tribunal vide order in ITA No.108/Chd/2008 dated 31.12.2008 dismissed the appeal of the assessee. The said order of the Tribunal was received as per the Assessing Officer in his office on 31.3.2009. The additions made by the Assessing Officer were confirmed by the Tribunal, pursuant to which penalty order u/s 271(1)(c) of the Act 3 was passed on 25.9.2009 leving penalty of Rs.5,24,156/-. Before the CIT(A) the assessee raised the plea vide Ground Nos.2 to 9 that penalt y proceedings initiated u/s 271(1)(c) of the Act were time barred in view of the proviso to section 275 (1)(a) of the Act. The contention of the assessee before the CIT(A) that as the order of the C IT(A) was passed after 1.6.2003, the penalt y order is time barred. The Assessing Officer in the Remand Report reported that the provisions of sec 275(1)(a) of the Act were not ignored and as per section 275 of the Act penalt y could be imposed within six months from the end of the month in which the order of the Tribunal was received by the Chief Commissioner or the Commissioner. It was further clarified that the order from the Tribunal was received on 31.3.2009 and the penalt y in the case could be imposed on or before 30.9.2009. The CIT(A) observed that section 275 itself was the substantive part of the Act and that the assessee had filed an appeal before the Tribunal. As per the C IT(A) the Assessing Officer had within his right passed the order within six months from receipt of the order of the Tribunal. The CIT(A) also noted that the assessee himself had pleaded before the Assessing Officer that the penalt y proceedings be kept in abeyance till the order of the Tribunal. Further reliance was placed b y CIT(A) on the judgment of the Hon'ble Madras High Court in Rayala Corporation Pvt. Ltd. Vs. UOI (161 Taxman 127). Accordingl y, it was held by the CIT(A) that the Assessing Officer had started the penalt y proceedings within the prescribed time and the Ground of appeal raised b y the assessee was dismissed. The assessee is in appeal against the order of the C IT(A) in this regard.
5. The Ld. A.R. for the assessee pointed out that the order of the CIT(A), Patiala dated 19.12.2007 was received in the office of the CIT, Patiala on 20.12.2007 as per the information received in response to the 4 application moved under R.T.I. Act. The copy of the said communication regarding service of order is placed at page-1 of the paper book. The Ld. AR for the assessee further stated that after the amendment in Finance Act, 2003 w.e.f. 1.6.2003, the limitation for imposing penalt y u/s 271(1)(c) of the Act shall be before the expiry of the financial year in which action of imposition of penalt y had been initiated or within one year from the end of the financial year in which order of CIT(A) was received by the Chief Commissioner or Commissioner, whichever is latter. In the case of the assessee the order of CIT(A) was served on 20.12.2007 in the office of the CIT, Patiala and as such the penalt y proceedings were time barred on 31.3.2009. The Ld. AR for the assessee relied on Tarlochan Singh & Sons (HUF) Vs. ITO (Asr). [(2008) 114 TTJ (Asr) 82 ] The Ld. DR for the Revenue for the Revenue placed reliance on the order of the C IT(A).
6. We have heard the rival contentions and perused the records. The issue in the present appeal is whether the penalt y levied u/s 271 (1)(c) of the Act is barred by limitation. The period prescribed for levy of penalt y is provided u/s 275 of the Act. It prescribes the time limit within which the order imposing penalties under various sections are to be passed. Section 275 reads as under:-
"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 5 (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief 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 Chief Commissioner or Commissioner, whichever is later;
(b) in a case where the relevant assessment or other order is the subject-matter of revision under section 263 [or section 264] , after the expiry of six months from the end of the month in which such order of revision is passed;
(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 from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. (1A) 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 or an appeal to the High Court under section 260A or an appeal to the Supreme Court under section 261 or revision under section 263 or section 264 and an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty is passed before the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the Chief Commissioner or the Commissioner or the order of revision under section 263 or section 264 is passed, an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of assessment as revised by giving effect to such order of the Commissioner (Appeals) or, the Appellate Tribunal or the High Court, or the Supreme Court or order of revision under section 263 or section 264:
Provided that no order of imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty shall be passed--
(a) unless the assessee has been heard, or has been given a reasonable opportunity of being heard;6
(b) after the expiry of six months from the end of the month in which the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the Chief Commissioner or the Commissioner or the order of revision under section 263 or section 264 is passed:
Provided further that the provisions of sub-section (2) of section 274 shall apply in respect of the order imposing or enhancing or reducing penalty under this sub-section. (2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any action initiated for the imposition of penalty on or before the 31st day of March, 1989.
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. The section prescribes the time period within which an order imposing penalt y under Chapter XXI is to be passed. Sub section 1(a) to section 275 of the Act provides that where the order of assessment or any other order is subject matter of appeal before the C IT(A) or the Tribunal, an order imposing penalt y cannot be passed after the expiry of financial year in the course of which the proceedings for imposition of penalt y were initiated, or six months from the end of the month in which the order of C IT(A) or Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later. The proviso to section 275(1)(a) of the Act further provides that where the CIT(A) passes an order on and after Ist day of June 2003 disposing of an appeal, an order imposing penalt y shall be passed before the expiry of the financial year in the course of which the proceedings for imposition of penalt y were 7 initiated, or within one year from the end of the financial year in which the order of C IT(A) was received by the Chief Commissioner or Commissioner whichever is later. The Amritsar Bench of the Tribunal in Tarlochan Singh & Sons (HUF) Vs. ITO (supra) where the order of CIT(A) in quantum appeal was passed after Ist June, 2003, proviso to Section 275(1)(a) would be applicable for levy of penalt y and not the main provision of s.275(1)(a); otherwise the proviso would be redundant.
8. In the facts of the present case before us, the order of the CIT(A) was passed on 19.12.2007 i.e after the Ist day of June, 2003 and the provisions of proviso to Section 275(1)(a) are applicable. The prescribed time limit for imposing penalt y is governed by the provisions of proviso to section 275(1)(a) of the Act, where it is prescribed that the penalt y order is to be passed within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the Chief Commissioner or the Commissioner. The order of the CIT (A) is dated 19.12.2007 and as per the information received by the learned AR for the assessee through RTI, the same was received in the office of CIT, Patiala on 20.12.2007. The evidence in this respect has been filed on record. The penalt y proceedings u/s 271 (1)(c) of the Act under proviso to section 275(1)(a)are time barred on 31.3.2009. The penalt y u/s 271 (1)(c) of the Act has been levied vide order of the Assessing Officer dated 25.9.2009, which is beyond the limitation prescribed under the statute for levy of penalt y. Hence, the order passed by Assessing Officer levying penalt y u/s 271 (1)(c) of the Act is time barred. The passing of the order by the Tribunal on 31.12.2008 does not determine the time limit for the passing of such order, in all such cases where order of C IT(A) is passed after 1.6.2003. Accordingl y, we set aside the order of CIT(A) and direct 8 the Assessing Officer to delete the penalt y levied u/s 271 (1)(c) of the Act. The ground of appeal raised by the assessee are thus allowed.
9. The facts in ITA Nos. 695 & 696/Chd/2010 are identical to the facts in ITA No. 694/Chd/2010 and in line with our decision in the said appeal, we direct the Assessing Officer to delete the penalt y levied u/s 271 (1)(c) of the Act.
10. The assessee has also raised several issue against the merits of the levy of penalt y which are not being addressed by us in view of our Order in deleting the penalty levied u/s 271 (1)(c) of the Act being time barred.
11. In the result, the three appeals in ITA Nos. 694 to 696/Chd/2010 are allowed.
Order Pronounced in the Open Court on this 18 t h day of October, 2010.
Sd/- Sd/-
(G.S.PANNU) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 18 t h October, 2010
Rkk
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR
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