TMI Blog2016 (1) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... icial Member The above captioned appeals by the Revenue have been filed against the order of the ld. CIT(A)-XIV, New Delhi dated 7.4.2011 and 13.5.2011 passed in Appeal Nos. 267 268/2010-11 for A.Y 2007-08 by which penalty levied by the AO u/ss 271D 271E of the Income-tax Act, 1961 ['the Act' for short] have been cancelled allowing the appeals of the assessee. 2. The assessee has also filed cross objections challenging the validity of penalty orders alleging that the same are barred by limitation as prescribed u/s 275(1)(c) of the Act. 3. The ld. AR submitted that the cross objections of the assessee being on legal grounds, may kindly be taken up first and the application for condonation of delay and admission of additional ground sought to be taken by the assessee by way of cross objection may kindly be heard first. The ld. DR fairly submitted that she has no objection if the application for condonation of delay and for admission of additional ground being legal is taken up for hearing first. The ld. AR submitted that the cross objections of the assessee being ITA Nos. 17 18/Del/2015 are delayed by 1297 and 1244 number of days but as per the notice issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ival parties, we note that in the case of Perfect Scale Company [supra], the ITAT, Mumbai Bench ah held as under: After considering the submission and perusing the material on record, I found that the assessee was bonafide in not filing the appeals in time. Copy of the affidavit of the Director of the company is placed on record. It has been explained that the company received the order ITA Nos.3228 to 3234/2013 of CIT(A) dated 1-10-2011 and the appeal should have been filed before the Tribunal within 60 days. It is further explained that the appeal matters of the assessee were looking after by Mr. P.K.Tandon, Chartered Accountant and on his advice the appeals were not filed. However, when the assessee transferred the case to Mr. S.S. Gajja, Chartered Account, who advised that appeals are to be filed before the Tribunal as the order of the CIT(A) is not as per the provisions of law. I noted that due to wrong advice of the Chartered Accountant, appeals could not be filed in time, therefore, I am of the view that there is a reasonable cause in not filing the appeals in the time. The decision in the case of The Phoenix Mills Ltd (supra), on which reliance has been placed, is in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Therefore, respectfully following the dicta of ITAT, Mumbai in the above mentioned case, the application for condonation of delay in filing the appeals are hereby allowed. Application of the assessee for admission of additional ground in both the cross objections 7. We have heard the arguments of both the sides on the admission of additional ground sought to be raised by the assessee in both the cross objections and also perused the relevant material on record. The ld. AR submitted that the ground in the cross objection is that the impugned orders passed u/s 271D 271E of the Act are barred by limitation and since this issue is taken up for the first time before the ITAT in the nature of additional ground, therefore, the same may kindly be admitted for adjudication. The ld. AR placed reliance on the proposition laid down by the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd reported in 229 ITR 383 [Hon'ble Supreme Court] submitting that the issue which is purely legal and which goes to the root of the matter and no new facts are required to be invoked, then the same should be admitted for adjudication being legal objection of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss Objection. ITA Nos.1809, 1504, 1505 1506 /Del/ 2013 C.O. Nos.122, 109, 107 108 /Del/2013 6.3 Further, the learned D.R. has given a short written submission dated 06.08.2014 the content of the same is reproduced below:- Note on applicability of Delhi High Court judgment in Alpine Electronics Asia P Ltd. (341 ITR 247 Del) in CO No. 122/D/2013 in ITA 1809/D/2013 filed by Silverline for AY 2008-09 Before discussing as to how the facts of the Delhi High Court judgment in Alpine Electronics Asia Pvt. Ltd. ( 341 ITR 247 Del) are distinguishable it will be relevant to keep in mind the provisions of section 292BB of the Income Tax Act, 1961 which provide that after 31-04-2008 in a ease where assessee has appeared or cooperated in any inquiry relating to assessment or reassessment, he after the completion of the assessment/reassessment cannot question the notice service of any notice on the following grounds; (a) that notice has not been served; or (b) that notice has not been served in time; or (e) that notice has been served upon him in an improper manner. 1.2 In the case before the High Court (as seen from para 26 of the Order), assessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d strong reliance on the judgment of the Hon'ble Gauhati High Court reported in 234 ITR 663 (Gau). The issue raised in the additional ground being a legal which goes to the rootof the matter, the learned AR contended that there was no difference between a cross objection and an appeal and, therefore, the additional ground raised by the assessee deserves to be admitted as it is within the parameter of law. It was, further, submitted that it was an undisputed fact that in the absence of a notice u/s 143(2) of the Act, whether the assessment prevails or not, is purely a legal issue. In this connection, the learned AR drew strength from the findings of the earlier Bench of this Tribunal in ITA No. 6020/Del/2012 dated 29.5.2014 in the case of B.R.Arora v. ACIT. 6.5 Further, it was submitted by the learned counsel that Section 292BB is applicable only from A.Y. 2008-09 onward in light of dictum laid down by the Hon'ble Special Bench of the Tribunal in case of Kuber Tabacco Products (Pvt.) Ltd. reported in 117 ITD 273 (Delhi) (S.B), which was affirmed by the Hon'ble Delhi H.C. by judgment dated 06.10.2010 in Writ Petition No. 1159 1161/2010. It was submitted further th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is, to make the provisions of the Income Tax Act, 1961 really workable emphasis is on the service of the notice and not beyond. Reading the word issuance' u/s 292BBwhich law does not talk so would only tantamount to keeping oneself busy in writing the law which is the exclusive domain of the legislature and not of the Courts. 2.3 What fun would it make when the notice so issued is not even served. Kindly appreciate without service the assessee cannot be legally expected to appear in the proceedings for which service of the relevant notice is a must. How an assessee can participate in the proceedings without there being any ITA Nos.1809, 1504, 1505 1506 /Del/ 2013 C.O. Nos.122, 109, 107 108 /Del/2013 notice (written or oral). Upon participation in the proceedings one can conclude that there was notice about which assessee had the knowledge. 2.4 Since, the Income Tax Act is silent for obvious reasons which even lay person (as shown above) can appreciate about the crucial aspect of the 'issuance of notice or the form (whether written or oral) in which it is to be served we have to form understanding with the help of other sources like Dictionaries which define the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s148 and subsequent participation in the proceedings has to be taken conclusive of service notice which, implicitly include issuance too. In other words, undisputed service of notice u/s 148 and thereafter participation of the assessee in assessment proceedings goes to show that it had the notice of the proceedings. 3. About the date as to from which particular date or assessment year section 292BB (inserted w.e.f. 01.04.2008) would be applicable, it may kindly be ITA Nos.1809, 1504, 1505 1506 /Del/ 2013 C.O. Nos.122, 109, 107 108 /Del/2013 appreciated that Finance Act is always for the financial year for which budget is being laid before the Parliament. It is why, Finance Act is generally in the context of the income which has been earned on which likely revenue realization can be worked out as such except where it is specifically provided as to form which particular date that will apply. But this has no relation with the procedural provisions which would apply with effect from the date from which it is inserted on the statute book dealing with the procedures taking place on that date or thereafter. 4. Thus, the interpretation that law requires issuance of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assumption that law mandates issuance of the notice whereas (as demonstrated above) law does not lay emphasis on ITA Nos.1809, 1504, 1505 1506 /Del/ 2013 C.O. Nos.122, 109, 107 108 /Del/2013 issuance and instead lays stress on 'service' of the notice. Thus, this too is not applicable. 5. Submitted for kind consideration. 7. We have carefully considered the rival submissions with regard to the admissibility or otherwise of the additional ground sought to be raised by the assessee. At the out-set, we would like to point out that since the additional ground sought to be raised is legal in nature and goes to the root of the matter and also in view of the judgments of (i) the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd 229 ITR 383 (SC) and (ii) the Hon'ble Delhi High Court in Gedore Tools Pvt. Ltd reported in 238 ITR 268 (Del), we are inclined to admit the same and taken up for consideration. 7.1. Now, the moot question for consideration is: Whether the non-issuance of a notice u/s 143(2) of the Act as alleged by the assessee-firm had vitiated the conclusion of the assessments u/s 147 read with s. 143(3) of the Act? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a lapse of 12 months from the first notice dated 31.12.2009. The ld. AR further submitted that section 275(1)(c) of the Act is applicable for calculating limitation period for passing penalty orders u/s 271D 271E of the Act. Therefore, the penalty orders are barred by limitation. The ld. AR vehemently contended that limitation of six months should be calculated with regard to the first notice issued by the AO and penalty order was to be passed on or before 30.6.2010 which were actually passed on 4.1.2011. Therefore, under the facts and circumstances of the case, the impugned penalty orders levying penalty u/s 271D 271E of the Act is barred by limitation and the same may kindly be quashed, allowing the objection of the assessee. 13. Per contra, the ld. DR supported the orders of the AO and submitted that the ld. CIT(A) was not justified in deleting the penalty without appreciating that the transactions between the assessee company and Shri R.C. Arora, Director recorded in the RCA Imprest A/c were of the nature of loan or deposits, as per Explanation (iii) to section 269SS of the Act. The ld. DR further submitted that the assessee company did not incur any expenses through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the penalty proceedings under Section 271D of the Act for the alleged contravention of provisions of Section 269SS was issued to the assessee, of course by the AO, on 25.03.2003. Even if the matter had otherwise been in appeal before the CIT(A) against the original assessment order and the appeal was decided on 13.02.2004, the same was hardly of relevance so far the penalty proceedings under Section 271D were concerned. As held by this Court in Hissaria Bros. (supra), completion of appellate proceedings arising out of assessment proceedings has no relevance over sustaining such penalty proceedings. As held clearly by this Court, in such a matter, clause (c) of Section 275 (1) would be applicable. Section 275(1)(c) could be noticed as under:- 275. Bar of limitation for imposing penalties. (1) No order imposing a penalty under this Chapter shall be 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 perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposition of penalty has been initiated. Thus, it will be relevant to find out the date on which the action for imposition of penalty has been initiated. In the assessment order dt. 27th Jan., 2003, the ITO has clearly recorded a finding that since the assessee has violated the provisions of s. 269SS of the Act for which a separate show-cause notice has been issued vide notice dt. 10th Jan, 2003, penalty proceedings are being initiated for committing the default for accepting loan in cash i.e. through bearer cheque . This conclusively proves that the action for imposition of penalty has been initiated on 10th Jan., 2003 as recorded in assessment order dt. 27th Jan, 2003. It is a different fact that the ITO, who has so initiated the penalty is not competent to levy penalty under s. 271D. However, it cannot be said that the action has not been initiated. Once the penalty proceedings have been initiated, whosoever is the competent authority has to pass an order imposing penalty if he is of the opinion that penalty under s. 271D is attracted. The authority competent to levy penalty is thereafter not initiating the proceedings for imposition of penalty but is only exercising his power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present matter were initiated by notice dt. 6th April, 1999 and the period of limitation of six months is to be computed from the last date of the month in which the penalty proceedings were initiated. Thus, 30th April, 1999 would be starting point of limitation of six months and consequently, 29th Oct., 1999 would be the last date of period of limitation, computed in accordance with second half of cl. (c ) of s. 275(1) of the Act. Thus, in the case on hand, by computing limitation in both permissible ways, the period of limitation is either 31st March, 1999 or 29th Oct., 1999. 29th Oct., 1999 being later in time, that was the available outer limit for the Department to impose penalty. The order imposing penalty is passed on 13th March, 2000. Coming to the opening part of sub-s.(1), it says, no order imposing penalty............. shall be passed . Thus, once the period of limitation prescribed by either of cls. (a) to (c) has expired, the Departmental authorities have no powers to impose penalty. The opening part rules out any possibility of taking initiation of proceedings as sufficient compliance or as keeping the proceedings within limitation. Language is so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the records of the case to Delhi. Their Lordships also observed that if the case itself had been transferred, the same would have to be directed u/s 127 of the Act but no such order of transfer of the case has been made. In the light of the above noted circumstances, their Lordships held that the notice issued by the AO of Bangalore cannot be regarded as a valid notice and the notice issued by the AO of Delhi having jurisdiction over the assessee was, on 24.12.2014 was held as time barred i.e. beyond 30.9.2013 [as per date of 14.9.2012 on which relevant return was filed. 19. In view of the above noted facts of the case of Sunworld [supra], the ld. AR submitted that the analogy advanced by the ld. DR cannot applied to the present case as the present case is not related to section 143(2) of the Act and there is no dispute of territorial jurisdiction and issuing and withdrawing the notice u/s 143(2) of the Act by the AO not having territorial jurisdiction. The ld. AR replied that the limitation prescribed in the second proviso to section 143(2) cannot be equated with sub-section (c) of section 275(1) of the Act as provisions of section 143(2) mandates limitation for service of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
