Income Tax Appellate Tribunal - Ahmedabad
Smt. Shardaben vs Assistant Commissioner Of Income Tax on 1 December, 1999
Equivalent citations: (2000)68TTJ(AHD)859
ORDER
R.K. Bali, A.M. This is an appeal by the assessee against the order dated 24-12-1997, passed by the Commissioner (Appeals) wherein the learned first appellate authority has upheld the penalty of Rs. 6,75,695 levied by the assessing officer under section 271(1)(c) of the Act. The assessee has raised the following grounds :
(1) On the facts and in the circumstances of the case as well as law on the subject, learned Commissioner (Appeals) erred in confirming the action of assessing officer in levying penalty of Rs. 6,73,695 under section 271(1)(c) of Income Tax Act.
(2) On the facts and in the circumstances of the case as well as law on the subject, learned Commissioner (Appeals) erred in upholding the validity of penalty order by rejecting the plea of the assessee that the penalty order has been passed after limitation period prescribed under section 275 of the Income Tax Act.
(3) It is therefore, prayed that the penalty of Rs. 6,73,695 may please be deleted and the penalty order may please be annulled being barred by limitation.
2. The learned authorised representative of the assessee submitted that the order passed by the assessing officer was barred by limitation as prescribed under section 275 and the assessee has taken ground of appeal Nos. 2 and 3 specifically in this regard.
3. Briefly the facts are that Dr. RasikIal T. Acharya-the deceased assessee was an orthopaedic surgeon. His wife Srnt. Shardaben R. Acharya is also doctor with B.A.M.S. degree. Both husband and wife purchased a piece of land with equal share and built hospital known as 'Acharya Hospital' over the land. A part of the hospital was converted into hotel known as 'Hotel Surat'. There was a search and seizure operation in the case of the assessee when the assessee disclosed a sum of Rs. 10 lacs in the statement recorded under section 132(4) on 20-12-1990, for assessment year 1991-92. Thereafter the assessee filed the return of income on 30-8-1991, declaring loss of Rs. 1,36,398 including the undisclosed income of Rs. 10 lacs. In the return of income, against the regular income and disclosed income of Rs. 10 lacs, the assessee claimed set off of the business loss of Rs. 2,20,402 and depreciation loss of Rs. 10,10,870 relating to the business of "Hotel Surat", These claims were disallowed by the assessing officer who framed the assessment at a total income of Rs. 12,31,427 vide order, dated 25-3-1994. The assessing officer treated the business of "Hotel Surat" as belonging to the partnership firm consisting of the assessee and his wife and not belonging to the assessee alone and, therefore, disallowed the loss relating to "Hotel Surat" for set off against the income of the assessee. On appeal, the Commissioner (Appeals) confirmed the above finding of the assessing officer vide order, dated 15-2-1995. On further appeal by the assessee, the Tribunal upheld the action of the Commissioner (Appeals) in this regard vide order dated 30-5-1996. On an application for reference under section 256(1) by the assessee the Tribunal allowed the reference application by its order dated 18-2-1997, in R.A. No. 455/Ahd/1996 (arising out of ITA No. 1982/Ahd/1995).
4. It was submitted by the learned authorised representative of the assessee that the order of the Tribunal in the quantum appeal dated 30-5-1996, was received by the Commissioner on 16-8-1996, and accordingly as per the provisions of section 275 the order of penalty has to be passed by the assessing officer on or before 28-2-1997. It was submitted that in the case of the assessee the penalty order under section 271(1)(c) was passed by the assessing officer only on 14-5-1997, and as such the same is clearly barred by limitation. It was submitted that the assessing officer was aware of the receipt of the Tribunal's order as is apparent from his letter dated 6-12-1996, which was duly replied by the assessee on 18-12-1996, and the assessee's explanation was thus filed well in time. It was submitted that the Commissioner (Appeals) has rejected the plea of this assessee with regard to the action of the assessing officer in passing the penalty order having become time-barred on the plea that the Tribunal's order has not become final because reference has been granted by the Tribunal and the final order will have to be passed by the Tribunal under section 260 only, on the basis of certain decisions which have been referred by the Commissioner (Appeals) in paras 7 and 8 of the impugned order. It was submitted that the Commissioner (Appeals) has not properly appreciated the provisions of section 275. It was pleaded that section 275 does not say that the order of the Tribunal which is to be considered for the purpose of limitation, is the order passed under section 260. It was pleaded that in section 275 reference is made to section 253 only which prescribes the filing of appeal before the Tribunal and the Tribunal passes the order under section 254 in relation to appeals filed under section 253. Therefore, for the purpose of limitation under section 275 an order of the Tribunal is the order under section 254 and not the order under section 260. It was submitted that the decisions relied upon by the Commissioner (Appeals) were in a totally different context. It was accordingly submitted that the penalty levied by the assessing officer as upheld by the Commissioner (Appeals) is clearly barred by limitation and the order should he quashed.
5. The learned departmental Representative strongly relied on the order of the Commissioner (Appeals) and submitted that the order passed by the assessing officer is within the period of limitation.
6. We have considered the rival submissions and have also gone through the orders passed by the assessing officer as well as Commissioner (Appeals). Section 275 which deals with bar of limitation for imposition of penalty reads as under section 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 an appeal to the 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 Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later.
The relevant dates as pleaded by the assessee with regard to the passing of the order by the Tribunal under section 254 and its communication to the Commissioner, has not been disputed by the departmental authorities according to which the order of the Tribunal dated 30-5-1996, was received by the Commissioner on 16-8-1996, and in accordance with the provisions of section 275 the order of penalty has to be passed by the assessing officer within six months from the end of the month in which the order of the Tribunal was received by the Commissioner i.e., before 28-2-1997. Admittedly, the order was passed on 14-5-1997, and as such is clearly barred by limitation. Reliance of the departmental Representative as well as the Commissioner (Appeals) that by granting a reference under section 256(1) the order passed, by the Tribunal under section 254 is no longer final and the period of limitation should start from passing of the order under section 260 is without any merit because for the purpose of limitation it is the order of the Tribunal passed under section 254 which is in relation to an appeal filed under section 253, which is to be taken into consideration and not the order under section 260. In this view of the matter we are of the opinion that the order passed by the assessing officer was clearly barred by limitation and as such it is quashed. Before us elaborate submissions were with regard to the merit of levy of penalty by the learned authorised representative of assessee which were vehemently opposed by the learned departmental Representative and detailed written submissions were also filed in support of their respective arguments. However, since we have quashed the penalty order on ground of limitation, we do not think it necessary to deal with merit of the case for the purpose of levy of penalty under section 271(1)(c).
7. In the result, the appeal is allowed.