M/s. NEPC Agro Foods Ltd., CHENNAI v. ACIT, CHENNAI

ITA 1759/CHNY/2009 | 2003-2004
Pronouncement Date: 09-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 175921714 RSA 2009
Assessee PAN AAACN1569L
Bench Chennai
Appeal Number ITA 1759/CHNY/2009
Duration Of Justice 1 year(s) 9 month(s) 27 day(s)
Appellant M/s. NEPC Agro Foods Ltd., CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 09-09-2011
Date Of Final Hearing 05-09-2011
Next Hearing Date 05-09-2011
Assessment Year 2003-2004
Appeal Filed On 12-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH CHENNAI BEFORE SHRI N. S. SAINI ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER I.T.A. NO. 1759/MDS/2009 ASSESSMENT YEAR : 2003-04 M/S. NEPC AGRO FOODS LTD. 36 WALLAJAH ROAD CHENNAI-600 002 (PAN : AAACN1569L) V. THE ASSISTANT COMMISSIONER OF INCOME-TAX COMPANY CIRCLE-IV(4) CHENNAI. I.T.A. NO. 1522/MDS/2009 ASSESSMENT YEAR : 2003-04 THE ASSISTANT COMMISSIONER V. M/S. NEPC AGRO FOODS LTD. OF INCOME-TAX 36 WALLAJAH ROAD COMPANY CIRCLE-IV(4) CHENNAI-600 002. CHENNAI. (APPELLANTS) (RESPONDENTS) A N D C.O. NO. 184/MDS/2009 (IN ITA NO. 1522/MDS/2009) ASSESSMENT YEAR : 2003-04 M/S. NEPC AGRO FOODS LTD. V. THE ASSISTANT COMMISSIONER 36 WALLAJAH ROAD OF INCOME-TAX CIRCLE-IV (4) CHENNAI-600 002. CHENNAI. (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI R. SIVARAMAN ADVOCATE DEPARTMENT BY : SHRI AVINASH K. SAHAY DR-IV DATE OF HEARING : 05 -09-2011 DATE OF PRONOUNCEMENT : 09-09-2011 I.T.A. NOS. 1759 & 1522 AND CO NO. 184/MDS./2009 2 O R D E R PER BENCH : ITA NO. 1759/MDS/2009 IS AN APPEAL FILED BY THE AS SESSEE AND ITA NO.1522/MDS/2009 IS AN APPEAL FILED BY THE REVE NUE BOTH AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-V CHENNAI IN ITA NO. 747/06-07 DATED 12-08-2008 FOR THE ASSESSMENT YEAR 2003-04. CO NO. 184/MDS/20 09 IS CROSS OBJECTION FILED BY THE ASSESSEE IN THE REVENUES APPEAL IN ITA NO. 1522/MDS/2009. 2. SHRI R. SIVARAMAN ADVOCATE REPRESENTED ON BEHAL F OF THE ASSESSEE AND SHRI AVINASH K. SAHAY LEARNED CIT-DR REPRESENTED ON BEH ALF OF THE REVENUE. 3. THE CROSS OBJECTION FILED BY THE ASSESSEE IS TIM E BARRED BY 3 DAYS AND NO AFFIDAVIT EXPLAINING THE DELAY HAS BEEN FILED BY TH E ASSESSEE. CONSEQUENTLY THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED IN LIMINE. 4. THE FACTS THAT HAVE LED TO THE REVENUES AND THE ASSESSEES APPEALS ARE THAT THE ASSESSEE IS A COMPANY WHICH IS DOING THE BUSINE SS OF PRODUCTION AND TRADING OF TEA COFFEE PHARMACEUTICALS MINERAL WATER AND OTHER AGRICULTURAL PRODUCTS. THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 01-1 2-2003 DECLARING A LOSS OF ` 129.77 LAKHS . THE ASSESSMENT CAME TO BE COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT FOR SHORT) ON 23-03-2006 M AKING CERTAIN DISALLOWANCES. IN THE COURSE OF ASSESSMENT IT WAS NOTICED THAT THE ASSESSEE HAD ACCEPTED LOANS TO AN EXTENT OF ` 1 87 87 244/- IN CASH. CONSEQUENTLY NOTICE U/S 27 4 READ WITH SECTION 271 OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER ON 23.03.2006 ASKING TO SHOW CAUSE AS TO WHY PENALTY U/S. 271D OF THE AC T SHOULD NOT BE LEVIED ON THE I.T.A. NOS. 1759 & 1522 AND CO NO. 184/MDS./2009 3 ASSESSEE. SUBSEQUENTLY SHOW CAUSE NOTICE WAS AGAI N ISSUED U/S. 274 READ WITH SECTION 274D BY THE ADDL. COMMISSIONER OF INCOME-TA X. COMPANY RANGE-IV CHENNAI ON 29-05-2006 AND THE ASSESSEE HAD REPLIED TO THE SHOW CAUSE NOTICE. THE APPEAL BEFORE US IS IN REGARD TO THE PENALTY UN DER SECTION 271D FOR THE VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. THE ALLEGATION IN THE PENALTY ORDER IS THAT IN RESPECT OF THE FOLLOWING 7 PERSONS THE ASSESSEE HAD ACCEPTED CASH LOANS BEING I) SHRI SHIVAGURUNATHAN ` 4 00 000/- II) SHRI DURGA AND MUKESH COFFEE TRADERS ` 1 87 930/- III) M/S. NEPC INDIA LTD. ` 1 42 34 314/- IV) SHRI SAMPATH KUMAR ` 2 00 000/- V) M/S. EPS & SONS ` 25 000/- VI) M/S. TYRE SALE & SERVICE CORP. ` 2 50 000/- VII) M/S. NEPC TEXTILES ` 34 90 000/- THE ASSESSEE HAD CONTENDED THAT THE AMOUNTS RECEIVE D FROM SHRI SHIVAGURUNATHAN REPRESENTED TRADE ADVANCE. SO ALSO IN REGARD TO SRI DURGA AND MUKESH COFFEE TRADERS. IN REGARD TO NEPC INDIA LTD. WHICH IS THE SISTER CONCERN OF THE ASSESSEE IT WAS SUBMITTED THAT THE AMOUNTS R ECEIVED WERE THE SALE PROCEEDS OF THE ASSESSEE COMPANY. SIMILAR WAS TH E CONTENTION IN REGARD TO THE AMOUNT RECEIVED FROM NEPC TEXTILES. IT WAS THE SUBM ISSION THAT THE ASSESSEE COMPANYS BANK ACCOUNT WAS ATTACHED BY THE EPF ORGAN IZATION AND TO KEEP THE ASSESSEE COMPANY FUNCTIONING THE ASSESSEE COMPANYS SALE PROCEEDS HAD TO BE I.T.A. NOS. 1759 & 1522 AND CO NO. 184/MDS./2009 4 ROUTED THROUGH THE SISTER CONCERNS FOR THE CONVENIE NCE AND THE FUNCTIONING OF THE ASSESSEE COMPANY AND TO AVOID THE RIGOUR OF ATTACHM ENT. IN REGARD TO SAMPATH KUMAR EPS & SONS AND TYRE SALE & SERVICE CORPORATIO N IT WAS SUBMITTED THE AMOUNTS HAD BEEN BORROWED TO TIDE OVER IMMEDIATE PA YMENTS WHICH WERE REQUIRED TO BE PAID TO THE LABOURERS WHO HAD TO BE PAID IN CASH. THE SUBMISSIONS OF THE ASSESSEE HAD NOT FOUND FAVOUR WITH THE ADDIT IONAL COMMISSIONER OF INCOME TAX AND THE ADDITIONAL COMMISSIONER HAD VIDE AN ORD ER DATED 05-02-2007 LEVIED PENALTY UNDER SECTION 271D OF THE ACT IN RESPECT OF ALL THE 7 TRANSACTIONS. 5. ON APPEAL BEFORE THE LEARNED CIT(A) THE LEARNED CIT(A) HAD ACCEPTED THE CONTENTION OF THE ASSESSEE THAT IT WAS ONLY ON ACCO UNT OF THE ATTACHMENT OF THE ASSESSEES BANK ACCOUNT THAT THE SALE PROCEEDS HAD TO BE ROUTED THROUGH THE BANK ACCOUNTS OF THE SISTER CONCERNS. CONSEQUENTLY THE LEARNED CIT(A) HAD CONSIDERED THE COPY OF THE BANK ATTACHMENT ORDER BY THE REGIONAL PROVIDENT FUND COMMISSIONER THE COPY OF THE MINUTES OF THE BOARD MEETING AUTHRORISING THE SISTER CONCERNS TO COLLECT SALE PROCEEDS ON BEHALF OF THE ASSESSEE COMPANY AS ALSO THE LEDGER ACCOUNTS THEREOF. THE LEARNED CIT(A) CO NSEQUENTLY DELETED THE PENALTY LEVIED IN RESPECT OF THE TRANSACTIONS WITH THE SISTER CONCERNS NEPC INDIA LTD. THE LEARNED CIT(A) HAD ALSO DELETED THE PENAL TY LEVIED IN RESPECT OF THE TRANSACTIONS WITH SRI DURGA & MUKESH COFFEE TRADERS ON ACCOUNT OF THE FACT THAT THE TRANSACTION WAS ONE OF TRADING AND THE LEDGER A CCOUNT ALSO SHOWED THE NATURE OF THE PRODUCT PURCHASED BY SRI DURGA & MUKESH COFF EE TRADERS AND ALSO ON THE GROUND THAT TRANSACTION WITH SRI DURGA & MUKESH COF FEE TRADERS WAS NOT ONE OF A I.T.A. NOS. 1759 & 1522 AND CO NO. 184/MDS./2009 5 LOAN TRANSACTION. IN RESPECT OF THE BALANCE 5 TRAN SACTIONS THE LEARNED CIT(A) HAD CONFIRMED THE LEVY OF PENALTY. 6. AGAINST THE ACTION OF THE LEARNED CIT(A) IN CANC ELING THE PENALTY LEVIED IN RESPECT OF THE TRANSACTION WITH NEPC INDIA LTD. AND SRI DURGA & MYUKESH COFFEE TRADERS THE REVENUE HAS FILED ITS APPEAL IN ITA NO . 1522/MDS/2009 AND AGAINST THE CONFIRMATION OF THE LEVY OF PENALTY THE ASSESSE E HAS FILED ITS APPEAL IN ITA NO. 1759/MDS/2009. 7. AT THE TIME OF HEARING THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER. IT WAS THE SUBMISSION T HAT THE ROUTING OF THE TRANSACTION THROUGH NEPC INDIA LTD. VIOLATED THE MOR AL RESPONSIBILITY INSOFAR AS THE BANK ACCOUNT OF THE ASSESSEE WAS ATTACHED AND T HE ASSESSEE SHOULD NOT HAVE TRANSACTED THROUGH THE ACCOUNT OF NEPC INDIA LTD. 8. IN REPLY TO THE REVENUES APPEAL THE LEARNED AU THORISED REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A ). IT WAS THE SUBMISSION THAT IT WAS ONLY BECAUSE THE ASSESSEE COMPANYS FUN CTIONING ITSELF WOULD HAVE GONE INTO DOLDRUMS THE ASSESSEE WAS COMPELLED TO RO UTE THE TRANSACTIONS THROUGH ITS SISTER CONCERNS. IT WAS THE SUBMISSION THAT AP PEAL HAD BEEN FILED AGAINST THE DEMAND RAISED BY THE P.F. ORGANIZATION AND IT WAS B EFORE THE DISPOSAL OF THE APPEAL ITSELF ATTACHMENT HAD BEEN DONE THEREBY HAMP ERING THE FUNCTIONING OF THE ASSESSEE COMPANY AND IF THE RE-ROUTING OF THE TRANS ACTIONS THROUGH THE SISTER CONCERNS WERE NOT DONE IT WOULD HAVE END UP WITH M UCH MORE MULTIPLE LITIGATION INSOFAR AS THE CHEQUES ISSUED BY THE ASSESSEE COMPA NY WOULD GET BOUNCED I.T.A. NOS. 1759 & 1522 AND CO NO. 184/MDS./2009 6 PAYMENTS WOULD NOT BE POSSIBLE TO ITS BUSINESS TRAN SACTIONS NEGOTIABLE INSTRUMENTS ACT VIOLATION WOULD TAKE PLACE AND THE COMPANY WOULD END UP IN WINDING UP PROCEEDINGS. 9. IN REGARD TO THE ASSESSEES APPEAL IT WAS SUBMIT TED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT IN RESPECT OF THE TR ANSACTION WITH SHRI SHIVAGURUNATHAN IT WAS CLEARLY BROUGHT OUT BEFORE T HE ASSESSING OFFICER WHO HAD RECORDED THE TRANSACTION IN HIS ORDER THAT THE AMOU NTS WERE RECEIVED TOWARDS THE ADVANCE FOR SALE OF COFFEE AND THE TRANSACTION WAS IN NO WAY A LOAN TRANSACTION. HE DREW OUR ATTENTION TO PAGE 4 OF THE PENALTY ORDE R AS ALSO PARA 7 OF THE ORDER OF THE LEARNED CIT(A) TO SHOW THAT IT WAS SPECIFICA LLY BROUGHT OUT THAT THE AMOUNTS RECEIVED BY THE ASSESSEE COMPANY FROM SHRI SHIVAGURUNATHAN WAS TOWARDS THE SALE PROCEEDS OF COFFEE. 10. IN REGARD TO SHRI SAMPATH KUMAR EPS & SONS AND TYRE SALE & SERVICE CORPORATION IT WAS THE SUBMISSION THAT THE AMOUNTS WERE IMMEDIATELY REQUIRED FOR PAYMENT TO THE LABOURERS AND AS THE ASSESSEE CO MPANYS BANK ACCOUNTS WERE FROZEN THE ASSESSEE HAD TO ROUTE THE TRANSACTION IN CASH. IT WAS THE SUBMISSION THAT THE GENUINENESS OF THE TRANSACTIONS IS NOT DIS PUTED. 11. IN REGARD TO THE TRANSACTION WITH NEPC TEXTILES IT WAS THE SUBMISSION THAT IT WAS SIMILAR TO THE TRANSACTION WITH NEPC INDIA LTD. HOWEVER THE LEARNED CIT(A) HAD NOT ACCEPTED THE CLAIM OF THE ASSESSEE ONLY ON ACCOUNT OF THE FACT THAT THERE WAS NO BOARD RESOLUTION AUTHORIZING NEPC TEXTILES TO RECEIVE ANY MONEY FROM THE SALES MADE BY THE ASSESSEE-COMPANY. IT WAS THE S UBMISSION THAT IT WAS ONLY I.T.A. NOS. 1759 & 1522 AND CO NO. 184/MDS./2009 7 BECAUSE OF THE ATTACHMENT OF THE ASSESSEES BANK AC COUNT THAT THE ASSESSEE HAD TO GO THROUGH THIS PROCESS AND THE REASONABLE CAUSE MAY BE ACCEPTED AND THE PENALTY DELETED. 12. IN REPLY THE LEARNED DR VEHEMENTLY SUPPORTED T HE ORDER OF THE ASSESSING OFFICER AND RE-ITERATED THE STAND THAT THE TRANSACT ION WAS IMMORAL. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE PROVISIONS OF SECTION 271D OF THE ACT SHOWS THAT THE PENALTY IS L EVIABLE IF A PERSON TAKES OR ACCEPTS ANY LOAN OR DEPOSIT IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS. SECTION 269SS BARS AN ASSESSEE TO ACCEPT ANY LOAN O R DEPOSIT OTHERWISE THAN BY AN ACCOUNT-PAYEE CHEQUE OR ACCOUNT-PAYEE BANK DRAFT . A PERUSAL OF THE PROVISIONS OF SECTION 273 SPECIFICALLY PROVIDES THA T PENALTY IS NOT TO BE IMPOSED IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. A PERUSAL OF THE ORDER OF THE LEARNED CIT(A) MORE SP ECIFICALLY IN PAGE 3 PARA 5 CLEARLY SHOWS THAT THE LEARNED CIT(A) HAS ACCEPTED THE FACT THAT THE ATTACHMENT OF THE BANK ACCOUNT OF THE ASSESSEE HAS LED TO THE ASSESSEE ROUTING THE TRANSACTIONS THROUGH ITS SISTER CONCERNS BANK ACCO UNTS AND THAT THE SAME WAS A REASONABLE CAUSE. THE ACCEPTANCE OF THE REASONABLE CAUSE BY THE LEARNED CIT(A) IS NOT CHALLENGED BY THE REVENUE. OBVIOUSLY WHEN AN ASSESSEE IS IN TROUBLE IT WOULD CLUTCH TO THE LAST STRAW TO STAY SOLVENT AND TO AVOID FURTHER COMPLICATIONS. THIS IS ALL THAT THE ASSESSEE DID. THE ASSESSEE HA S ROUTED THE TRANSACTION THROUGH THE BANK ACCOUNTS OF ITS SISTER CONCERNS AND IN THE COURSE OF THE ASSESSMENT ALSO NO ADDITION ON THIS COUNT NOR ANY FAULT ON THE PART OF THE ASSESSEE ON THIS I.T.A. NOS. 1759 & 1522 AND CO NO. 184/MDS./2009 8 COUNT HAS BEEN POINTED OUT. IN FACT THE ADDITION I N THE ASSESSMENT ORDER IS ONLY ON ACCOUNT OF THE TREATING OF THE LEASE RENT PAID I N RESPECT OF THE WINDMILL AS A BOGUS TRANSACTION. THERE IS NO DISALLOWANCE OR ADV ERSE REMARK AGAINST THE ASSESSEE IN RESPECT OF THE TRADING TRANSACTION OF T HE ASSESSEE THROUGH THE BANK ACCOUNTS OF THE SISTER CONCERNS. IT IS ALSO UNDISP UTED THAT THE TRANSACTIONS THROUGH THE BANK ACCOUNT OF THE SISTER CONCERNS ARE THAT OF THE ASSESSEE AND THAT THEY RELATE TO THE TRADING ACTIVITIES OF THE ASSESS EE. THE ASSESSEE HAS SUBSTANTIALLY PROVED IT ALSO. IN SUCH A SITUATION WE ARE OF THE VIEW THAT THE ASSESSEE HAS PROVED THE REASONABLE CAUSE IN REGARD TO THE TRANSACTION WITH ITS SISTER CONCERN NEPC INDIA LTD. AS ALSO NEPC TEXTILES. THOUGH THE LEARNED CIT(A) HAS MENTIONED THAT THE ASSESSEE HAS NOT SHOWN ANY B OARD RESOLUTION FOR ROUTING THE TRANSACTIONS THROUGH THE ACCOUNTS OF THE SISTER CONCERN NEPC TEXTILES WE ARE STILL INCLINED TO CANCEL THIS PENALTY IN RESPECT OF NEPC TEXTILES ALSO BY ACCEPTING THE REASONABLE CAUSE EXPLAINED BY THE ASSESSEE. 14. IN REGARD TO THE TRANSACTION WITH SRI DURGA & MUKESH COFFEE TRADERS IT IS NOTICED THAT THE TRANSACTION WITH SRI DURGA & MUKES H COFFEE TRADERS IS PURELY TRADING IN AGRICULTURAL PRODUCTS AND THIS HAS NOT B EEN DISPROVED. 15. IN REGARD TO THE TRANSACTION WITH SHRI SHIVAGUR UNATHAN IT IS NOTICED THAT THIS IS ALSO A TRANSACTION FOR THE SALE OF COFFEE AND IT IS NOT A LOAN OR DEPOSIT. CONSEQUENTLY THE TRANSACTION IS NOT HIT BY THE PRO VISIONS OF SECTION 269SS AND CONSEQUENTIAL TO SECTION 271D OF THE ACT. I.T.A. NOS. 1759 & 1522 AND CO NO. 184/MDS./2009 9 16. IN REGARD TO THE TRANSACTION WITH SHRI SAMPATH KUMAR EPS & SONS AND TYRE SALE AND SERVICE CORPORATION WE ARE OF THE VIEW TH AT THE PENALTY HAS BEEN RIGHTLY LEVIED. INSOFAR AS IT IS ACCEPTED THAT THE ASSESSEE HAD ROUTED ITS TRANSACTIONS THROUGH THE SISTER CONCERNS NEPC AND NEPC TEXTILES T HEN WHAT STOPPED THE ASSESSEE FROM ROUTING THESE TRANSACTIONS WITH THE S AID THREE PERSONS THROUGH THE SAME SISTER CONCERNS? WHAT IS THE SO-CALLED EMERGE NCY NATURE THAT REQUIRED SUCH CASH WITHDRAWALS FROM THE THREE OUTSIDE PERSONS? EV EN ACCEPTING THAT IT IS LABOUR PAYMENT OBVIOUSLY THE ASSESSEE WOULD KNOW WELL IN ADVANCE AS TO WHAT IS THE PAYMENT REQUIRED AND IT COULD VERY WELL HAVE TAKEN THE MONEY THROUGH CHEQUES OF DEMAND DRAFTS THROUGH THE ACCOUNTS OF THE SISTER CONCERNS. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT SHOWN ANY REASONABLE CAUSE IN REGARD TO THE VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT IN RESPECT OF THE TRANSACTIONS WITH SHRI SA MPATH KUMAR EPS & SONS AND TYRE SALE AND SERVICE CORPORATION. IN THE CIRCUMST ANCES ON MERITS THE PENALTY DELETED BY THE LEARNED CIT(A) IN REGARD TO THE TRA NSACTIONS WITH DURGA & MUKESH COFFEE TRADERS AND NEPC INDIA LTD. STANDS CONFIRMED AND THE APPEAL OF THE REVENUE STANDS DISMISSED. THE PENALTY LEVIED IN RE SPECT OF THE TRANSACTIONS WITH SHRI SHIVAGURUNATHAN AND NEPC TEXTILES STANDS CANCEL LED AND THE PENALTY LEVIED IN RESPECT OF THE TRANSACTIONS WITH SHRI SAMPATH KU MAR EPS & SONS AND TYRE SALE & SERVICE CORPORATION STANDS CONFIRMED. CONSE QUENTLY THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. I.T.A. NOS. 1759 & 1522 AND CO NO. 184/MDS./2009 10 17. HERE WE MAY ALSO NOTE THAT THE ASSESSEE HAS RAI SED ANOTHER PLEA THAT THE PENALTY LEVIED U/S 271D OF THE ACT WAS BARRED BY LI MITATION INSOFAR AS THE SHOW CAUSE NOTICE WAS ISSUED BY THE ASSESSING OFFICER ON 23-03-2006 AND THE PENALTY ORDER WAS PASSED ON 05-02-2007. CONSEQUENTLY IN V IEW OF THE PROVISIONS OF SECTION 275(1)(C) OF THE ACT AS THE PENALTY ORDER HAS NOT BEEN PASSED BEFORE THE EXPIRY OF THE RELEVANT FINANCIAL YEAR IN WHICH THE PROCEEDINGS IN THE COURSE OF WHICH THE ACTION FOR IMPOSITION OF PENALTY WAS INIT IATED WERE COMPLETED NOR WAS IT PASSED WITHIN SIX MONTHS FROM THE END OF THE MON TH IN WHICH ACTION FOR IMPOSITION OF PENALTY WAS INITIATED THE PENALTY LE VIED U/S. 271D WAS BARRED BY LIMITATION. 18. IN REPLY IT WAS SUBMITTED BY THE LEARNED DR TH AT THE SHOW CAUSE NOTICE FOR THE LEVY OF PENALTY WAS ORIGINALLY ISSUED ON 23-03- 2006 BY THE ASSISTANT COMMISSIONER OF INCOME-TAX COMPANY CIRCLE-IV(4) C HENNAI WHO WAS THE ASSESSING AUTHORITY AND AS PER THE PROVISIONS OF SEC. 271D OF THE ACT A PENALTY IS IMPOSABLE ONLY BY THE JOINT COMMISSIONER OF INCO ME TAX ANOTHER SHOW CAUSE NOTICE HAD BEEN ISSUED BY THE ADDITIONAL COMMISSION ER OF INCOME-TAX ON 25-09- 2006 AND THE PROCEEDINGS WERE HEARD ON VARIOUS DATE S AND THE PENALTY ORDER WAS PASSED ON 05-02-2007. IT WAS THE SUBMISSION THAT T HE PENALTY ORDER WAS NOT BARRED BY LIMITATION. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT T HE OUTSET IT IS TO BE NOTICED THAT IT IS ONLY THE PERSON WHO ISSUES THE SHOW CAUS E NOTICE WHO CAN HEAR THE ISSUE AND PASS AN ORDER THEREON. THE ASSISTANT COM MISSIONER OF INCOME-TAX I.T.A. NOS. 1759 & 1522 AND CO NO. 184/MDS./2009 11 COMPANY CIRCLE-IV(4) CHENNAI IS NOT COMPETENT TO I SSUE THE SHOW CAUSE NOTICE NOR CAN HE LEVY A PENALTY U/S 271D OF THE ACT. HE CAN ONLY REFER THE MATTER TO THE JOINT COMMISSIONER OF INCOME TAX AND ABOVE FOR THE LEVY OF THE PENALTY U/S 271D OF THE ACT. THE NOTICE ISSUED BY THE ASSISTAN T COMMISSIONER OF INCOME-TAX WHO IS THE ASSESSING OFFICER ON 23-03-2006 IS JUST AN INTIMATION TO THE ASSESSEE THAT HE IS REFERRING THE ISSUE TO THE ADDL. COMMISS IONER OF INCOME TAX FOR THE LEVY OF PENALTY U/S 271D. THE COMPETENT AUTHORITY BEING THE ADDL. COMMISSIONER OF INCOME TAX HAS ISSUED THE NOTICE ON 25-09-2006 A ND HAS PASSED HIS ORDER LEVYING A PENALTY ON 05-02-2007 WELL WITHIN THE SI X MONTHS LIMITATION PRESCRIBED UNDER SECTION 275(1)(C) OF THE ACT. IN THE CIRCUMS TANCES WE ARE OF THE VIEW THAT THE PENALTY ORDER PASSED BY THE ADDL. COMMISSIONER OF INCOME TAX IS NOT BARRED BY LIMITATION AND THIS PLEA OF THE ASSESSEE STANDS DISMISSED. 20. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 21. THE ORDER WAS PRONOUNCED IN THE COURT ON 09/09/ 2011. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 09 TH SEPTEMBER 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE