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2019 (11) TMI 404

..... finally, for the completion of penalty proceedings. Otherwise, in the case of maintainability of an appeal filed by either the revenue or the assessee, if there comes about a withdrawal of that appeal, without an order, the period of limitation would be deemed to subsist. The fact as to whether an order becomes final at the instance of one party, i.e., that of filing and prosecution or, on the withdrawal of an appeal cannot, in our considered opinion, be determinative of the period of limitation. Limitation, it goes without saying, has to be fixed and certain. Section 275(1A) speaks of giving effect to the orders passed by the appellate forums. It does not impose any condition whether to levy or not to levy the penalty. The section empowers the authorities to follow the appellate orders of higher forums within a period of six months from the date when the orders are passed. Section 275(1A) speaks of modification of the penalty passed within limitation. If no penalty order has been passed within limitation, the provisions of section 275(1A) are not operative. Thus, all considered, in view of the above discussion, it cannot at all be said that the limitation in the present case is go .....

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..... 1th July, 2018, F.No.279 of Misc.142/2007-ITJ (Pt.), in consonance with the power entrusted under section 268A of the Income Tax Act, 1961 that no appeal should be filed before the Tribunal in case the tax effect does not exceed ₹ 50 lakhs. In the backdrop of the CBDT Circular No.17/2019, the Ahmedabad Bench of the Tribunal, in its recent order passed on 14th August, 2019 in the case of Income Tax Officer Ward 3(2), Ahmedabad vs. Dinesh Madhavlal Patel, Ahmedabad and others in ITA No. 1398/Ahd/2004, etc., disposing off 628 appeals and Cross Objections, observed and held as below: These 628 appeals and COs pertain to the appeals are filed by various Assessing Officers, all these appeals call into question correctness of the relief granted to the taxpayers by the Commissioners of Income Tax (Appeals) and, most importantly, the tax effect involved in all these appeals does not exceed ₹ 50,00,000 in each of these appeals. The cross objections taken up for hearing are only such cross objections as emanate from these appeals and are broadly in support of the orders passed by the Commissioner (Appeals). In these cases, in the light of the discussions with the Principal Chief C .....

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..... in one stroke, the Government has not only prevented, but has, in effect, set the stage for withdrawal of thousands of appeals before this Tribunal and before Hon ble Courts above. In an environment in which retrospectivity was attached only to the taxation and not to tax reliefs or concessions, such an approach is a pleasant departure from legacy practices. 3. In view of the above factual background and the generous concession by this benevolent CBDT circular, all these appeals must be dismissed as withdrawn and the related cross objections must be dismissed as infructuous. There is, however, a small issue that we must deal with. 4. Smt Aparna Agarwal, learned Departmental Representative, however, has a point to make. She points out that the circular dated 8th August 2019 is not clearly retrospective inasmuch as it specifically states in para 4 that (t)he said modifications shall come into effect from the date of issue of this Circular . It is thus pointed out that this sentence gives an impression that is only after the date of the said circular that the departmental appeals will not be filed in the cases within the specified tax effect limits. We are urged to bear in mind the im .....

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..... d counsel for the assessee, invites our attention to the letter dated 16th July 2018 issued by Member CBDT to the all the Principal Chief Commissioners of Income Tax, in the context of circular dated 11th July 2018 that the present circular seeks to modify, seeking report on withdrawal of the appeals covered by the circular. He then points out that it is the old circular is still alive today and the only change is with respect to the monetary limits. In all fairness, therefore, the same approach regarding withdrawal of pending appeals must be followed for this circular as well. On the same lines, arguments are advanced by the learned representatives which, for the sake of brevity and to avoid repetition, we are not referring to in more specific details. In brief rejoinder, learned Departmental Representative graciously leaves the matter to us. 5. Having considered the rival submissions and having perused the material on record, we do not have slightest of hesitation in holding that the concession extended by the CBDT not only applies to the appeals to be filed in future but it is also equally applicable to the appeals pending for disposal as on now. Our line of reasoning is this. T .....

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..... d circular which is as follows: 13. This Circular will apply to SLPs/ appeals/ cross objections/ references to be filed henceforth in SC/HCs/Tribunal and it shall also apply retrospectively to pending SLPs/ appeals/ cross objections/references. Pending appeals below the specified tax limits in pare 3 above may be withdrawn/ not pressed. 7. In view of the above discussions, we hereby hold that the relaxation in monetary limits for departmental appeals, vide CBDT circular dated 8th August 2019 (supra) shall be applicable to the pending appeals in addition to the appeals to be filed henceforth. 8. Learned Commissioner (DR) then submits liberty may kindly be given to point out, upon necessary further verifications, and to seek recall the dismissal of appeals and restoration of the appeals in the cases (i) in which it can be demonstrated that the appeals are covered by the exceptions, and (ii) which are inadvertently included in this bunch of appeals, wherein the tax effect, in terms of the CBDT circular (supra), exceeds ₹ 50,00,000. None opposes this prayer; we accept the same. We make it clear that the appellants shall be at liberty to point out the cases which are wrongly inclu .....

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..... al, i.e., by April or May 2014, whereas the penalty has been imposed on 27/01/2017, which is beyond six months. The ld. counsel for the assessee submitted that the appeal effect has also been given in the month of September 2014 itself, which establishes that the order was received by the Revenue in the month of September, 2014 and the penalty should have been imposed latest by 31/03/2015. The ld. counsel for the assessee submitted that as such, the penalty imposed is barred by the limitation prescribed by section 271(1)(a), as rightly held by the ld. CIT(A). 9. Heard. The question is as to whether the Department is correct in contending that the limitation to pass penalty order in the present case is governed by the provisions of section 271(1A) of the Act, or if the ld. CIT(A) has rightly held the penalty order to be barred by the limitation prescribed by section 271(1)(a) of the Act. 10. Section 275 deals with bar of limitation for imposing penalty. Sub-section (1) of section 275 reads as under: (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 (App .....

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..... on is applicable only if the Commissioner (Appeals) passed the order before 1st June, 2003, disposing of the appeal made before him; (ii) in a case where relevant assessment or other order is the subject matter of an appeal to the Commissioner (Appeals) under section 246 or section 246AQ, and the Commissioner (Appeals) passes the order on or after 1st 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; (iii) 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; and (iv) 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 .....

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..... by the Commissioner. The object of insertion of section 275(1A) in the Act has been explained by the CBDT vide its Circular No.1 of 2007, dated 27.4.2007 [290 ITR (St.) 73]. It has been provided in this sub-section 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, 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 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 264 is passed, an order imposing or enhancing or reducing penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of the assessment as revised by giving effect to such order of the Commissioner (Appeals), or the Appellate Tribunal, o .....

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..... lable for continuing the penalty proceedings on reversal of the order favourable to the assessee. A plain reading of the section evinces that the expiry of the period of six months as prescribed is to be reckoned from the date of completion of proceedings, or from the end of the month in which the order of the CIT(A) or, as the case may be, the Appellate Tribunal, is received. Now, keeping the logic of the provision in consideration, it is an order that determines, inter alia, the rights of the parties finally, for the completion of penalty proceedings. Otherwise, in the case of maintainability of an appeal filed by either the revenue or the assessee, if there comes about a withdrawal of that appeal, without an order, the period of limitation would be deemed to subsist. The fact as to whether an order becomes final at the instance of one party, i.e., that of filing and prosecution or, on the withdrawal of an appeal cannot, in our considered opinion, be determinative of the period of limitation. Limitation, it goes without saying, has to be fixed and certain. Section 275(1A) speaks of giving effect to the orders passed by the appellate forums. It does not impose any condition whethe .....

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