ITO, New Delhi v. M/s. Worldwide Township Project Ltd, New Delhi

ITA 2168/DEL/2013 | 2007-2008
Pronouncement Date: 31-10-2013 | Result: Dismissed

Appeal Details

RSA Number 216820114 RSA 2013
Assessee PAN AAACW6552E
Bench Delhi
Appeal Number ITA 2168/DEL/2013
Duration Of Justice 6 month(s) 18 day(s)
Appellant ITO, New Delhi
Respondent M/s. Worldwide Township Project Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 31-10-2013
Date Of Final Hearing 17-10-2013
Next Hearing Date 17-10-2013
Assessment Year 2007-2008
Appeal Filed On 12-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H: NEW DELHI BEFORE SHRI I. C. SUDHIR JUDICIAL MEMBER AND SHRI J.S. REDDY ACCOUNTA NT MEMBER ITA NO. 2168/DEL/2013 ASSESSMENT YEAR 2007-08 ITO VS WORLDWIDE TO WNSHIP PROJECT LTD. WARD-18 (3) B-1/ 5 PASCHIM VIHAR C.R. BUILDING NEW DELHI. NEW DELHI. (PA N NO. AAACW6552E) (APPELLANT) (RESPONDENT) AND CO 156 /DEL/2013 ASSESSMENT YEAR 2 007-08 WORLDWIDE TOWNSHIP PROJECT LTD. VS. IT O B-1/5 PASCHIM VIHAR WARD-18 (3) ROOM NO.248 NEW DELHI. C.R. BUILDING NEW DELHI. (PAN NO. AAACW6552E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.S. MEENA CIT DR RESPONDENT BY : SHRI D.C. AGARWAL ADVOCATE ORDER PER I.C. SUDHIR JUDICIAL MEMBER THE REVENUE HAS IMPUGNED FIRST APPELLATE ORDER SOLELY ON THE GROUND THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CANCELLING THE PENALTY OF RS. 14 25 74 302/- IMPOSED BY THE ADDIT IONAL CIT U/S 271D OF THE I.T. ACT. ITA NO. 2168/DEL/13 & CO NO. 156/DEL/2013 2 2. THE ASSESSEE ON THE OTHER HAND HAS OBJEC TED THE FIRST APPELLATE ORDER ON THE BASIS THAT ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT PENALTY OF RS. 14 25 74 302/- LEVIED U/S 271D BY THE AO WAS NOT BARRED BY LIMITATION ON THE BASIS OF HIS DECISION THAT PROVISIONS OF SECTION 275(1)(A) WOULD APPLY AND NOT THE PROVIS IONS OF SECTION 275 (1)(C) OF THE ACT. 3. SINCE THE ISSUE RAISED IN THE CROSS O BJECTION IS LEGAL IN NATURE AND GOES TO THE ROOT OF THE MATTER WE PREFER TO ADJUDICATE UPON THIS ISSUE FIRST. 4. THE FACTS IN BRIEF ARE THAT ASSESSEE I S ENGAGED IN DEVELOPMENT OF REAL ESTATE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESEE HAS SHOWN PURCHASE OF LAND WORTH RS. 14.22 CRORES IN ITS PROFIT AND LOSS ACCOUNT WHICH WAS SHOWN AS CLOSING STOCK INTEREST. THE LAND WAS REFLECTED IN THE ASSET SIDE IN THE BALANCE SHEET UNDER THE HEAD INVE NTORIES. NOMINAL EXPENSES WERE DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE AO NOTED FURTHER THAT UNDER THE HEAD CURRENT LIABILITIES AN AMOUNT OF RS. 14 25 74 302/- WAS SHOWN AS SUNDRY CREDITORS. SINCE THERE WAS NO BUSINESS TRANSACTION DURING THE YEAR THE AO FOUND IT STRANGE THAT SUCH A LARGE SUM WAS REFLECTED AS S UNDRY CREDIT. AGAINST THE QUERIES RAISED THE ASSESSEE EXPLAINED THAT THE SUN DRY CREDITOR WAS PACL INDIAN LTD. WHICH HAD PURCHASED LAND ON ITS BEHALF FROM SE VERAL LAND OWNERS. FROM THE DETAILS FILED WITH THE LETTERS IT CAME TO LIGHT THA T PACL INDIA LTD. HAD ISSUED PAYMENTS BY DEMAND DRAFTS DRAWN FROM ITS BANK ACCOU NT AND HAD MADE ITA NO. 2168/DEL/13 & CO NO. 156/DEL/2013 3 PAYMENTS TO VARIOUS LAND OWNERS ON BEHALF OF THE AS SESSEE. COPIES OF SALE DEED EXECUTED BETWEEN THE ASSESSEE AND THE LAND OWNERS / SELLERS WERE FURNISHED IN WHICH IT WAS CITED THAT THE PAYMENTS HAVE BEEN RECE IVED IN THE FORM OF DEMAND DRAFTS. IT IS ON THIS ACCOUNT THAT THE ASSESSEE HAD SHOWN PACL INDIA LTD. AS ITS SUNDRY CREDITORS IN THE BALANCE SHEET. THE AO DID N OT AGREE WITH THE EXPLANATION OF THE ASSESSEE WITH THIS OBSERVATION THAT THERE IS NO DIRECT BUSINESS DEALING BETWEEN THE ASSESSEE AND PACL INDIA LTD. THEREFORE PACL INDIA LTD. CANNOT BE TREATED AS A SUNDRY CREDITORS OF THE ASSESSEE. AT T HE MOST PACL INDIA LTD. WAS CONSIDERED AS A GIVER OF THE LOAN TO THE ASSESSEE W HICH THE ASSESSEE HAS TO REFUND IN FUTURE. AO FURTHER OBSERVED THAT ALTHOUGH THE LOAN IS NOT DIRECTLY GIVEN TO THE ASSESEE IT HAS BEEN GIVEN ON BEHALF OF THE A SSESSEE TO SOME PARTIES AND THE ASSESEE HAS TO REFUND THE AMOUNT TO PACL INDIA LTD. THE AO ACCORDINGLY HELD THAT THE SAME PARTAKES THE NATURE OF LOAN AND IS NOT A CREDIT TRANSACTION. THE AO NOTED THAT THE SAID LOAN HAS NOT BEEN GIVEN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT BUT HAS BEEN TRANSFERRED T O THE LOAN ACCOUNT OF THE ASSESSEE BY ADJUSTMENT OF GENERAL ENTRIES ONLY ON T HE BASIS OF THE LOAN TRANSACTIONS AS PER BALANCE SHEET OF THE ASSESSEE T HERE ARE NO BANK TRANSACTIONS THE PROVISIONS OF SECTION 269SS/269T ARE APPLICABLE . HE ACCORDINGLY INITIATED THE PENALTY PROCEEDINGS U/S 271D OF THE ACT. IN THE ORD ER PASSED U/S 271D THE LD. ADDITIONAL COMMISSIONER HAS HELD THAT THE PROVISION S OF SECTION 269SS IS ATTRACTED FOR THE SUM OF RS. 14 25 74 302/- THE MO NEY TRANSFERRED TO THE LOAN ITA NO. 2168/DEL/13 & CO NO. 156/DEL/2013 4 ACCOUNT IN THE FORM OF BOOK ENTRIES INSTEAD IN THE SHAPE OF ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT. THE PENALTY OF RS. 1 4 25 74 302/- BEING AN AMOUNT RECEIVED / TAKEN / ACCEPTED IN THE FORM OF B OOK ENTRIES HAS BEEN LEVIED U/S 271D OF THE ACT. THE LD. CIT(A) HAS DELETED THE PENALTY ON OTHER GROUNDS. HE HOWEVER DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THE PENALTY ORDER DATED 10.3.2002 IS BARRED BY LIMITATION ON TH E BASIS THAT PROVISION OF SECTION 275(1)(C) OF THE ACT ARE NOT APPLICABLE. HE HELD THAT FOR THE PURPOSE OF COMPUTATION OF LIMITATION PROVISIONS U/S 275(1)(A) OF THE ACT ARE APPLICABLE AS PER WHICH THE PENALTY ORDER IS NOT BARRED BY LIMITA TION. THE ASSESSEE IN ITS CROSS OBJECTION HAS QUESTIONED THIS ACTION OF THE LD. CIT (A) IN NOT HOLDING THE PENALTY ORDER AS TIME BARRED. 5. IN SUPPORT OF THE OBJECTION THE LD. AR SUB MITTED THAT THE LD. CIT(A) WHILE REJECTING THE CONTENTION OF THE ASSESSEE THAT PENAL TY ORDER U/S 271D IS BARRED BY TIME LIMIT HAS FAILED TO APPRECIATE THAT THE CASE O F THE ASSESSEE IN THE COMPUTATION OF PRESCRIBED LIMITATION PERIOD WILL FA LL UNDER THE CATEGORY OF IN ANY OTHER CASE UNDER SUB SECTION (1)(C) TO SECTION 275 OF THE ACT. HE POINTED OUT THAT THE DATE OF ASSESSMENT ORDER DURING THE COURSE OF WHICH PENALTY PROCEEDINGS U/S 271D WERE INITIATED IS 30.12.2009 THE FINANCIAL YEAR IN WHICH PROCEEDINGS FOR IMPOSING PENALTY ARE INITIATED EXPI RES ON 30.3.2010 THE FIRST NOTICE FOR LEVYING PENALTY WAS ISSUED ON 12.5.2010 ( THERE IS NO REFERENCE OF THESE DATE IN THE ASSESSMENT ORDER) ; COUNTING FRO M THIS 6 MONTHS WILL EXPIRE ITA NO. 2168/DEL/13 & CO NO. 156/DEL/2013 5 ON 30.11.2010 ; THE FIRST REFERENCE TO SHOW CAUSE N OTICE GIVEN BY THE AO IN THE PENALTY ORDER IS 7.3.2011 ; 6 MONTHS FROM THIS DATE WILL EXPIRE ON 30.9.2011; AND THE DATE OF THE PENALTY ORDER IS 10.3.2012. REFERRI NG THE PROVISION LAID DOWN U/S 275 OF THE ACT THE LD. AR SUBMITTED THAT THE PENAL TY CAN BE IMPOSED BEFORE THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDIN GS IN THE COURSE OF WHICH ACTION FOR THE IMPOSING OF PENALTY HAS BEEN INITIAT ED ARE COMPLETED OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FO R IMPOSITION OF PENALTY IS INITIATED WHICHEVER PERIOD EXPIRES LATER AS PROVI DED IN SECTION 275 (1) OF THE ACT. LD. AR SUBMITTED THAT IN THE PRESENT CASE CLA USES (A) AND (B) OF SECTION 275 (1) HAVE NO APPLICATION AS LEVY OF PENALTY U/S 271D IS INDEPENDENT OF ASSESSMENT PROCEEDINGS OR APPELLATE PROCEEDINGS. THEREFORE SIN CE THE PENALTY U/S 271D WAS INITIATED ALONGWITH THE PASSING OF THE ASSESSMENT O RDER DATED 30.12.2009 OR IN ANY CASE ON 12.5.2010 AND PENALTY HAVING BEEN LEVIE D ON 10.3.2012 IS CLEARLY BARRED BY LIMITATION. IN SUPPORT HE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- 1. ITO VS. RAMKISHORE REWARAM TADA (2006) 287 ITR 239 (MP) 2. SHANBHAG RESTAURANT VS. DCIT (2004) 266 ITR 393 (KAR) 3. CIT VS. HISSARIA BROS. 291 ITR 244 (RAJ.) 4. ASHWANI KUMAR VS. ITO (2009) 309 ITR (AT) 6 9 (DEL) 5. CIT VS. CHHAJER PACKAGING AND PLASTICS P. L TD. 300 ITR 180 (BOM) 6. CIT VS. BOMBAY CONDUCTOR AND ELECTRICALS LTD. 301 ITR 328 (GUJ) 7. VATIKA HOTELS (P.) LTD. VS. ACIT (2011) 45 SO T 59 (DEL) ITA NO. 2168/DEL/13 & CO NO. 156/DEL/2013 6 6. THE LD. DR ON THE OTHER HAND TRIED TO JUST IFY ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT IN THE CASE OF PRESENT ASS ESSEE APPEAL IS PERMISSIBLE AGAINST THE PENALTY LEVIED U/S 271(D) OF THE ACT BY THE AO HENCE CASE OF THE ASSESSEE FALLS UNDER CLAUSES (A) AND (B) TO SECTION 275 (1) AND NOT UNDER THE CLAUSE (C) TO SECTION 275 (1) OF THE ACT FOR COMPUT ATION OF PRESCRIBED TIME LIMIT FOR PASSING THE PENALTY ORDER. 7. HAVING GONE THROUGH THE ORDERS OF THE AUT HORITIES BELOW MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON WE FIND THAT THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HISSARI A BROS (SUPRA) ON AN IDENTICAL ISSUE HAS BEEN PLEASED TO HOLD THAT SINCE PENALTY P ROCEEDINGS FOR THE DEFAULT OF NOT HAVING A TRANSACTION THROUGH THE BANK AS REQUIR ED UNDER SECTIONS 269SS AND 269T ARE NOT RELATED TO THE ASSESSMENT PROCEEDINGS BUT ARE INDEPENDENT THEREOF THE COMPLETION OF APPELLATE PROCEEDINGS AR ISING OUT OF THE ASSESSMENT PROCEEDINGS OR OTHER PROCEEDINGS DURING WHICH THE P ENALTY PROCEEDINGS U/S 271D AND 271E MAY HAVE BEEN INITIATED HAS NO RELEVANCE FOR SUSTAINING OR NOT SUSTAINING THE PENALTY PROCEEDINGS AND THEREFORE C LAUSE (A) OF SUB SECTION (1) OF SECTION 275 CANNOT BE ATTRACTED TO SUCH PROCEEDINGS . THE HONBLE COURT HAS BEEN PLEASED TO OBSERVE THAT THE EXPRESSION THE RE LEVANT ASSESSMENT OR OTHER ORDER USED IN SECTION 275(1)(A) AND (B) IS SIGNIFI CANTLY MISSING FROM CLAUSE (C) OF SECTION 275 (1) TO MAKE OUT THIS DISTINCTION VER Y CLEAR. THERE IS NO PROVISION UNDER CLAUSE (C) FOR AN EXTENDED PERIOD OF LIMITATI ON COMMENSURATE WITH ITA NO. 2168/DEL/13 & CO NO. 156/DEL/2013 7 COMPLETION OF THE APPELLATE PROCEEDINGS IF ANY ARIS ING FROM THE PROCEEDINGS DURING THE COURSE OF WHICH SUCH PENALTY PROCEEDINGS ARE INITIATED AS IN THE CASE WHERE THE PENALTY PROCEEDINGS ARE LINKED WITH THE A SSESSMENT PROCEEDINGS OR OTHER RELEVANT PROCEEDINGS. FURTHER OBSERVATION OF THE HONBLE HIGH COURT REMAINED THAT CLAUSE (A) COVERS THOSE CASES WHERE T HE PENALTY PROCEEDINGS ARE IN RESPECT OF A DEFAULT RELATED TO PRINCIPAL ASSESS MENT FOR A PARTICULAR ASSESSMENT YEAR AND THE PENALTY PROCEEDINGS ARE REQUIRED TO BE INITIATED IN THE COURSE OF THOSE PROCEEDINGS ONLY. IN CASES FALLING UNDER CLAU SE (C) PENALTY PROCEEDINGS ARE TO BE COMPLETED WITHIN SIX MONTHS FROM THE END OF T HE MONTH IN WHICH THE PROCEEDINGS DURING WHICH THE ACTION FOR IMPOSITION OF PENALTY IS INITIATED ARE COMPLETED OR SIX MONTHS FROM THE END OF THE MONTH I N WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED WHICHEVER PERIO D EXPIRES LATER. THE HONBLE HIGH COURT HAS ACCORDINGLY APPROVED THE FINDING OF THE TRIBUNAL ON THE QUESTION OF LIMITATION THAT THE ORDER OF PENALTY SHOULD HAVE BEEN PASSED WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ASSESSMENT W AS COMPLETED. RESPECTFULLY FOLLOWING THIS DECISION OF HONBLE RAJASTHAN HIGH C OURT THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ASHWANI KUMAR VS. ITO (SUPR A) HAS HELD THE PENALTY LEVIED U/S 271 (1) OF THE ACT AS TIME BARRED WITHIN THE PROVISIONS OF CLAUSE OF SECTION 275 (1) OF THE ACT. IN THAT CASE THE ACTION FOR IMPOSITION OF PENALTY WAS INITIATED ON 10.1.2003 AND THE ORDER WAS PASSED U/S 271D BY THE ADDITIONAL COMMISSIONER ON 29.12.2003 / 15.1.2004 WHICH WAS H ELD BEYOND THE PERIOD OF ITA NO. 2168/DEL/13 & CO NO. 156/DEL/2013 8 LIMITATION PRESCRIBED U/S 275(1) OF THE ACT. RESPE CTFULLY FOLLOWING THE ABOVE CITED DECISIONS WE HOLD THAT THE PROVISIONS UNDER C LAUSE OF SECTION 275 (1) OF THE ACT ARE APPLICABLE IN THE PRESENT CASE OF LEVY OF PENALTY U/S 271D FOR THE PURPOSE OF COMPUTATION OF PRESCRIBED TIME LIMIT. WH EN WE EXAMINE THE OBJECTION RAISED BY THE ASSESSEE ON THE ISSUE OF LIMITATION I N VIEW OF THE PROVISIONS LAID DOWN U/S 275 (1) (C) OF THE ACT WE FIND THAT IN T HE PRESENT CASE PENALTY ORDER HAS BEEN PASSED BEYOND 6 MONTHS FROM THE END OF THE MONTH IN WHICH ASSESSMENT WAS COMPLETED. THE ASSESSMENT IN THE PRE SENT CASE WAS COMPLETED ON 30.12.2009 AND THE PENALTY ORDER U/S 271D HAS BE EN PASSED ON 10.3.2012 WHICH IS UNDISPUTEDLY BEYOND THE 6 MONTHS AND IF WE COMPUTE THE TIME LIMIT FROM THE SHOW CAUSE NOTICE DATED 7.3.2011 AS REFERR ED IN THE PENALTY ORDER SIX MONTHS EXPIRES ON 30.9.2011. HENCE THE ORDER OF TH E PENALTY LEVIED U/S 271D IS BARRED BY TIME LIMIT. IT IS HELD ACCORDINGLY. THE O BJECTION IS ACCORDINGLY ALLOWED. 8. IN THE RESULT CROSS OBJECTION IS ALLOWED. 9. IN VIEW OF THE ABOVE FINDING IN THE CROSS OB JECTION THAT THE ORDER OF PENALTY PASSED U/S 271D IS TIME BARRED APPEAL PREFERRED BY THE REVENUE (QUESTIONING THE ACTION OF THE LD. CIT(A) IN DELETING THE PENALT Y LEVIED U/S 271D OF THE ACT ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THERE IS BOOK ENTRIES ONLY AND THERE WAS NO PAYMENT OF LOAN IN CASH HENCE PROVISION U/S 269SS CANNOT BE ITA NO. 2168/DEL/13 & CO NO. 156/DEL/2013 9 ATTRACTED THUS IMPOSITION OF PENALTY IS MISCONCEIV ED ) HAS BECOME INFRUCTUOUS. THE APPEAL OF THE REVENUE IS THUS DISMISSED AS SUCH . 10. IN THE RESULT APPEAL OF THE REVENUE IS DIS MISSED. IN SUMMARY CO PREFERRED BY THE ASSESSEE IS ALLOWED AND APPEAL PREFERRED BY THE REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER 2013. SD/- SD/- (J.S. REDDY) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 31 ST OCTOBER .2013 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR ITAT