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TMI Blog2016 (5) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... educed to Rs. 18,49,640/- . The Department went in appeal before the Income Tax Appellate Tribunal and the Tribunal has retained certain additions made by the Assessing Officer and the total income was fixed at Rs. 42,65,340/-. The assessee moved before the Hon'ble High Court of Kerala against the order of the ITAT dated 22.12.2001. During pendency of appeal before the Hon'ble High Court, the Assessing Officer passed the order dated 08.07.2002, imposing a penalty of Rs. 25,00,000/- u/s. 158BFA(2). The assessee preferred appeal against the penalty order before the CIT(A) and on giving effect to the order of the CIT(A), the penalty has been reduced to Rs. 24,18,452/-. The assessee appealed further before the ITAT and the ITAT in their order dated 27.04.2007 restored the matter to the file of the Assessing Officer with a direction to decide the issue of penalty afresh after the High Court decides on the quantum. The Hon'ble High Court of Kerala in their order in I.T.A. No.187&199/2002 dated 03.11.2009 sustained the additions as retained by the Tribunal, whereby the total income stood fixed at Rs. 42,65,340/-. The Assessing Officer after receipt of the order of the High Court of Kerala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later; (f) in respect of search initiated u/s. 132 or books of account, other documents or any assets, requisitioned u/s. 132A after the 30th day of June, 1995 but before the 1st day of January, 1997." In view of the above, there is force in the contention of the counsel that since the quantum assessment of the assessee was the subject matter of appeal before the Hon'ble High Court of Kerala u/s. 260A, his case falls u/s. 158BFA(3)(e). The proceedings in the course of which action for imposition of penalty was initiated became complete only with the pronouncement of the order of the High Court of Kerala on 03.11.2009 or on 24.02.2010 when the standing counsel of the Department received the certified copy of the order. Further, in the case of orders u/s. 260A, order-III, rule-3 of the Code of Civil Procedure applies and not the rule No.35 of the Appellate Tribunal Rules which requires that the order shall be communicated after it is signed to the assessee and to the Commissioner is not applicable. As per section 158BFA(3)(e) the penalty order gets time ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as it has been passed after the limitation period. 6.2 Secondly, as submitted by the counsel in earlier paragraph, the penalty order dated 27.09.2010 acquires the character of a primary order and for all practical purposes this order has to be treated as the initial lawful order. In view of this, the Assessing Officer should have obtained the prior approval of the Joint Commissioner as per provisions of 158BFA(3)(b). The decision of ITAT, Pune Bench in the case of Akil Gulamali Somji vs. ITO, Ward-4(5), Pune in I.T.A. Nos. 458/PN/2010 dated 30-03-2012, for the assessment years 2001-02 to 2004-05 is also relevant here. In that judgment, the tribunal has held that where the provision is mandatory and if the approval of the senior officer is not obtained before passing the order, such an order is null and void. As the penalty order dated 27.09.2010 has been passed without the approval of the Joint Commissioner, the order has to be treated as null and void. In view of this, penalty is not sustainable on this count also." 4. The Ld. DR relied upon the order of the Assessing Officer and also the decision of the Hon'ble Madhya Pradesh High Court in the case of CIT vs. Vijay Dal Mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8. It is pertinent to reproduce hereinbelow the decision of the Hon'ble Madhya Pradesh High Court in the case of Sultanpur Kshetriya Gramin Bank v. Joint CIT (2011) 336 ITR 156 (M.P.) at page 161:- "Under Order 3, rule 3 of the Code of Civil Procedure processes served on a recognized agent of a party, or on an advocate of the party shall be effectual as if the same had been served on the party himself as held in Jangi Bhagat Ramawtar vs. CIT, AIR 1930 Patna 127. The Allahabad High Court in Mithoo Lal Tek Chand v. CIT (1967) 64 ITR 377 (All) has held that a munim is an authorized agent to receive notices on behalf of the firm of his employers. Service on the secretary of the managing director of a notice addressed to the company was held to be valid service in General Commercial Corporation Ltd. v. CIT (1966) 62 ITR 459(Mad). The crucial fact is whether the person on whom service has been effected, was empowered to accept the service or not. In the case on hand, on undisputed facts, the advocate was empowered to accept the copy of the order of the Tribunal and therefore, the service on him is valid service for the purposes of calculation of limitation for filing an appeal. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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