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TMI Blog2019 (12) TMI 1677X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has erred in law and in facts in confirming the determination of tax liability on book profits u/s. 115JB of the Act by including surcharge and cess while comparing with tax on normal income." 2. In addition to the original grounds of appeal, the assessee, vide application dated 26-06-2019 raised the following additional ground of appeal:- "1.The Ld. Commissioner of Income-tax (Appeals) erred in law and in facts in not appreciating that the order passed by the Assessing Officer was bad in law and invalid as the same was time barred." 3. The brief facts of the case are that intimation under section (u/s) 143(1)(a) of the Act, was given by assessing officer (AO) to the assessee in accepting the assessee's claim of computation of profit under section (u/s) 115JB on 26-11-2009. On receipt of intimation the assessee filed application for rectification of intimation in respect of the following:- "1.1 We have filed a revised ITR on 41h September 2008 bearing acknowledgement, no 5120000068 and e-filed on 2nd September 2008 bearing acknowledgement no. 34777990020908. Advance Tax and' Tax on Dividend is paid on time. (e-filing acknowledgement * attached ref Annexure A] 1.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord for adjudicating the additional ground of appeal. The additional ground of appeal is purely legal in nature and all facts necessary for adjudication of additional ground are on record. In support of his submission, the Ld. AR for the assessee relied upon the decision of Hon'ble Supreme Court in National Thermal Power Corporation Vs CIT 229 ITR 381 and in Jute Corporation of India vs CIT (187 ITR 688 SC). 7. On the other hand, the Ld. DR for the revenue objected to raising of additional ground of appeal. Though, no reply in writing objecting the additional grounds of appeal id filed by the revenue. 8. We have considered the submissions of both the parties. Perusal of additional ground of appeal reveals that the assessee has raised legal ground that rectification order passed by AO is bad in law, invalid and is time barred. In our view, the additional ground of appeal raised by assessee is purely legal in nature. No new facts for adjudication of this ground are required to be brought on record. Therefore, the additional ground of appeal raised by assessee is admitted for adjudication. 9. In support of additional ground of appeal, the Ld. AR of the assessee submits that the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, but the same is allowable as deduction for the purpose of calculating book profit. Admittedly, the issue of book profit / computation of book profit were not the subject matter of rectification order dated 26-08-2010. The AO raised the issue of book profit u/s 115JB in a fresh show cause notice. The Ld.AR of the assessee vehemently submitted that the time limit of section rectification is to be reckoned from the end of relevant financial year when order u/s 143(1)(a) was passed. 12. The co-ordinate bench of Tribunal, while considering the similar ground of appeal in Ashu Engineers & Plastics Pvt Ltd (supra) passed the following order:- "6. We have heard the rival contentions, perused the material on record and duly considered the factual matrix of the case as also the applicable legal position. 7. In the case of CIT vs. Sakseria Cotton Mills Ltd., 124 ITR 570(Bom), Hon'ble Bombay High Court was in seisin of a situation in which a somewhat identical issue came up for consideration before Their Lordships, The original assessment order passed by the Assessing Officer carried out in appeal before the AAC but grant of rebate was not the issue on which the assessment order w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no dispute that in terms of provisions of section 154(7), no amendment under section 154 can be carried out after the expiry of four years from the end of the financial year in which the said order was passed. Learned Departmental Representative, however, has an interesting argument. He points out that limitation under section 154(7) applies only in cases covered by section 154(l)(a) i.e. deal with rectification of any order passed under the provisions of this Act, whereas the impugned order is in fact covered by section 154(a)(b), which deal with "any intimation or deemed intimation under sub-section(l) of Section 143. It is stated that, as evident from the wordings of Section 154(1), an intimation is not an order and is covered in the scope of Section 154 by the virtue of specific inclusions of 'intimations' under clause 154 (l)(b). His argument is that while there is a time barring limit for orders to be passed under section 154(l)(a), there no such limit for orders under section 154(l)(b), as time limit set out in section 154 (7) refers only to an 'order' and there is no specific inclusion of 'intimations'. It is, therefore, contended that section 154 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation as per the unamended provisions, is not expired. In fact, in the case cited by the learned Departmental Representative i.e., Bhikari Charan Panda vs. CIT (supra) their Lordships have held that two year period mentioned in s. 275 of the unamended Act had not expired at the stage when the new provisions have been introduced. Per contra, it implies that in case where the limitation has expired before the amended provisions have come into force, the new provisions cannot be applied to such assessee as the vested right which has already been acquired by the assessee before the amendment cannot be taken away. The Hon'ble Delhi High Court in the case of CIT vs. Pratap Singh of Nabha (1982) 138 ITR 27 (Del) has dealt with a similar case wherein their Lordships have held that as per the law as it then stood, penalty order has to be passed within two years and since there is no change of law within this period, the period of limitation cannot be extended by applying the amended provisions. In the present case, as on 31st Jan., 1989, penalty proceedings have not been initiated. As we have already held that under the unamended provisions of s. 275 the AO is required to initiate penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and about 50 months from the date of obtaining the audit report. The subsequent incumbent AO has initiated the penalty proceedings. To our mind, taking the limitation period prescribed in s. 275 for initiation of penalty proceedings under the other sections of this Chapter and also by respectfully following the judgment of the jurisdictional High Court in the case reported in 1990 CrLJ 1110. maximum of two years from the end of the assessment year in which the assessments are completed, can be said to be a reasonable time within which the AO could have initiated the penalty proceedings. As in the present case, the penalty proceedings have been initiated about 43 months after the completion of the assessment, we are of the opinion that the penalty proceedings are barred by limitation and consequently penalties levied under s. 271B cannot be sustained. 11. In this context we may also draw support from the judgment of the Hon'ble Andhra Pradesh High Court in the case of K.P. Narayanappa Settv & Co. vs. CIT f!975} 100 ITR 17 (AP) wherein their Lordships have held that though no specific period was prescribed within which penalty may be levied, there should not be inordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, however, subject matter of two rectification proceedings is altogether" different and7~therefore7~the ratio of Hon'ble Supreme Court's judgment in the case of Hind Wire Industries Ltd v. CIT(supra) does not come into play. When this proposition was put to Learned D.R., he did not have much to say except placed his bland reliance of Hon'ble Supreme Court's judgment in the case of Hind Wire Industries Ltd v. CIT(supra) and also the stand taken by the authorities below. We are unable to see any merits in learned Departmental Representative's reliance on Hind Wire Industries (supra) either. We are of the considered view that the ratio laid down in the case of Hind Wire Industries Ltd v. CIT (supra) remains confined to a case where subject matter of second rectification is the same as the first rectification and it was only in such a situation that the time limit of second rectification proceedings gets extended by the fact of first rectification proceedings. In a situation in which the subject matter of second rectification proceedings is wholly unrelated to the subject matter of first rectification proceedings as is the situation in the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A)'s order and since we have already dismissed revenue's appeal, cross objection has become academic." 14. Now adverting to the facts of the present case, the first rectification order was passed by the AO on 13.03.2012 at the instance of assessee. Admittedly no issue of book profit under section 115JB was the subject matter of the rectification order passed on 13.03.2012. The AO issued show cause notice for rectifying the order on the issue of book profit only for the second proposed rectification. From the above discussions, it is clear that the legal position is that the time limit for rectification of mistake under section 154(7) is to be considered from the date of the original order or in subsequent rectification order only if the said rectification order dealing with the same which is sought to be rectified. In this view of the matter and having noted that the first rectification order dealt with entirely different, it is clear that the time limit for passing the impugned order indeed expired on expiry of four years from the end of the financial year, in which, the original order sought to be rectified was passed i.e. on 31.3.2009. Considering the aforesaid dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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