M Dhara & Brothers, Howrah v. C.I.T.-XVI,Kolkata, Kolkata

ITA 2881/KOL/2013 | 2009-2010
Pronouncement Date: 30-04-2015

Appeal Details

RSA Number 288123514 RSA 2013
Assessee PAN AAFFM3283Q
Bench Kolkata
Appeal Number ITA 2881/KOL/2013
Duration Of Justice 1 year(s) 3 month(s) 29 day(s)
Appellant M Dhara & Brothers, Howrah
Respondent C.I.T.-XVI,Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 30-04-2015
Assessment Year 2009-2010
Appeal Filed On 31-12-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI P. K. BANSAL AM & SHRI MAHAVIR SINGH JM ] I.T.A NO. 2881 /KOL/201 3 ASSESSMENT YEAR : 200 9 - 1 0 M. DHARA & BROTHERS VS. COMMISSIONER OF INCOME - TAX - XVI (PAN: AA FFM3283Q ) KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 0 8 .0 4 .2015 DATE OF PRONOUNCEMENT: 30 . 04 . 2015 FOR THE APPELLANT: SHRI K. M. ROY FCA FOR THE RESPONDENT: S HRI VARINDER MEHTA CIT DR ORDER PER SHRI MAHAVIR SINGH JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER PASSED BY CIT - XVI KOLKATA VIDE M. NO. CIT - XVI/263/13 - 14/3755 - 758 DATED 1 7 . 12 .201 3 . ASSESSMENT WAS FRAMED BY ACIT CIRCLE - 48 KOLKATA U/S. 143(3) OF THE INCOME - TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 9 - 1 0 VIDE HIS ORDER DATED NIL . 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE REVISION ORDER PASSED BY CIT U/S. 263 OF THE ACT FOR REVISING THE ASSESSMENT FRAMED BY AO. FOR THIS ASSESSEE HAS RAISED FOLLOWING EFFECTIVE GROUND NO.2: 2. THAT THE PROPOSED INITIATION OF PENALTY IS BEYOND THE PURVIEW AND SCOPE OF SECTION 263. 3. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE STATED THAT HE IS CHALLENGING ONLY THE ISSUE OF INITIATION OF PENALTY PROCEEDINGS U/S. 271D OF THE ACT FOR VIOLATION OF SECTION 269SS OF THE ACT IN THE REVISION ORDER PASSED BY CIT U/S. 263 OF THE ACT. HE DREW OUR ATTENTION TO PARA 10 AND 10.1 OF SECTION 263 ORDER WHICH READ AS UNDER: 2 ITA NO. 2881 /K/201 3 M. DHARA & BROTHERS . AY 200 9 - 1 0 10. IT IS AL SO F O UND FROM THE R ECO RD S THAT TH E A SSESSEE HAD T A KEN U N SE CURED L OA N O F R S.6 00 000 / - I N T O TAL FROM V AR I OU S PE R S ON S IN CA S H AND E A C H O F T H E CASE T H E L OA N A M O U N T W AS AB OV E R S. 20 000/ - I . E . IN VI O LAT I O N O F S E C. 26 9S S . T HE A S S E SSEE IN THE COURSE O F P ROCEED I NG U/S. 26 3 A DMI T TED TH A T ' W E HA V E TAKE N C ASH LOAN IN E X CE S S O F R S . 20 000/ - DU RIN G O U R EX TR EME EXIGENCY W HI CH M A Y KIN DL Y B E COND ONE B Y Y OU R HONO U R...... 10.1. FROM THE RE CO RD I T IS SEE N THA T THE AO HAD COLLE C T ED LOAN C O NFIRMATION FOR THE UN SECURED L O AN BUT FAIL E D T O SEE THAT THE LOAN WAS TAKEN IN C A SH AND TH E AG GREGATE OF LOAN AMO UNT TOTALLING TO RS.6 00 000/ - IN F I F T EE N CASE S W ER E A BOV E R S. 20 000/ - IN EA CH CASES WHICH WERE IN VIOLATION OF PROVISION OF SEC. 269SS OF T HE ACT A N D A TTRAC TE D PE N A LT Y U / S 2 71 D . FAILURE T O N OTICE T HE V I O LA T I O N O F SE C 2 6 9 SS AND NON LEVY OF PENALTY U/S. 271D WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. AFTER GOING THROUGH THE ABOVE DIRECTION OF CIT U/S. 263 OF THE ACT TO INITIATE PENALTY PROCEEDINGS U/S. 271D OF THE ACT FOR VIOLATION OF PROVISION OF SECTION 269SS OF THE ACT LD. COUNSEL FOR THE ASSESSEE ON THIS PROPOSITION FILED COPY OF JUDGMENT OF HON B LE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. LINOTYPE & MACHINERY LTD. (1991) 192 ITR 337 (CAL) WHEREIN EXACTLY ON SIMILAR PROPOSITION HON BLE CALCUTTA HIGH COURT HAS DEALT THE ISSUE AT PARA 6 & 7 OF ITS ORDER WHICH READ AS UNDER: 6. AT THE HEARING DR. PAL LEARNED COUNSEL HAS DRAWN OUR ATTENTION TO THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF ADDL. CIT V. J. K. D'COSTA [1982] 133 ITR 7. 7. THERE ALSO A SIMILAR QUESTION AROSE AND THE COMMISSIONER OF INCOME - TAX INVOKED THE PROVISIONS OF SECTIO N 263 OF THE ACT. THE DIVISION BENCH OF THE DELHI HIGH COURT HELD AS FOLLOWS (AT P. 11) : 'THE ONLY QUESTION BEFORE US IS WHETHER THE TRIBUNAL WAS RIGHT IN REVOKING THE ORDER OF THE ADDITIONAL COMMISSIONER IN SO FAR AS IT PERTAINS TO THE QUESTION OF PENALT IES UNDER SECTIONS 271(1)(A) AND 273(B). HERE WE FIND OURSELVES IN COMPLETE AGREEMENT WITH THE VIEW TAKEN BY THE TRIBUNAL. IT IS WELL - ESTABLISHED THAT PROCEEDINGS FOR THE LEVY OF PENALTY WHETHER UNDER SECTION 271(1)(A) OR UNDER SECTION 273(B) ARE PROCEED INGS INDEPENDENT OF AND SEPARATE FROM THE ASSESSMENT PROCEEDINGS. THOUGH THE EXPRESSION 'ASSESSMENT' IS USED IN THE ACT WITH DIFFERENT MEANINGS IN DIFFERENT CONTEXTS SO FAR AS SECTION 263 IS CONCERNED IT REFERS TO A PARTICULAR PROCEEDING THAT IS BEING CO NSIDERED BY THE COMMISSIONER AND IT IS NOT POSSIBLE WHEN THE COMMISSIONER IS DEALING WITH THE ASSESSMENT PROCEEDINGS AND THE ASSESSMENT ORDER TO EXPAND THE SCOPE OF THESE PROCEEDINGS AND TO VIEW THE PENALTY PROCEEDINGS ALSO AS PART OF THE PROCEEDINGS WHICH ARE BEING SOUGHT TO BE REVISED BY THE COMMISSIONER. THERE IS NO IDENTITY BETWEEN THE ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS ; THE LATTER ARE SEPARATE PROCEEDINGS THAT MAY IN SOME CASES FOLLOW AS A CONSEQUENCE OF THE ASSESSMENT PROCEEDINGS. AS THE TRIBUNAL HAS POINTED OUT THOUGH IT IS USUAL FOR THE INCOME - TAX OFFICER TO RECORD IN THE ASSESSMENT ORDER THAT PENALTY PROCEEDINGS ARE BEING INITIATED THIS IS MORE A MATTER OF CONVENIENCE THAN OF LEGAL REQUIREMENT. ALL THAT THE LAW REQUIRES SO FAR AS THE PENALTY 3 ITA NO. 2881 /K/201 3 M. DHARA & BROTHERS . AY 200 9 - 1 0 PROCEEDINGS ARE CONCERNED IS THAT THEY SHOULD BE INITIATED IN THE COURSE OF PROCEEDINGS FOR ASSESSMENT. IT IS SUFFICIENT IF THERE IS SOME RECORD SOMEWHERE EVEN APART FROM THE ASSESSMENT ORDER ITSELF THAT THE INCOME - TAX OFFICER HAS RECORD ED HIS SATISFACTION THAT THE ASSESSEE IS GUILTY OF CONCEALMENT OR OTHER DEFAULT FOR WHICH PENALTY ACTION IS CALLED FOR. INDEED IN CERTAIN CASES IT IS POSSIBLE FOR THE INCOME - TAX OFFICER TO ISSUE A PENALTY NOTICE OR INITIATE PENALTY PROCEEDINGS EVEN LONG B EFORE THE ASSESSMENT IS COMPLETED THOUGH THE ACTUAL PENALTY ORDER CANNOT BE PASSED UNTIL THE ASSESSMENT IS FINALISED. WE THEREFORE AGREE WITH THE VIEW TAKEN BY THE TRIBUNAL THAT THE PENALTY PROCEEDINGS DO NOT FORM PART OF THE ASSESSMENT PROCEEDINGS AND T HAT THE FAILURE OF THE INCOME - TAX OFFICER TO RECORD IN THE ASSESSMENT ORDER HIS SATISFACTION OR THE LACK OF IT IN REGARD TO THE L EVIABILITY OF PENALTY CANNOT BE SAID TO BE A FACTOR VITIATING THE ASSESSMENT ORDER IN ANY RESPECT. AN ASSESSMENT CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE BECAUSE OF THE FAILURE OF THE INCOME - TAX OFFICER TO RECORD HIS OPINION ABOUT THE LEVIABILITY OF PENALTY IN THE CASE.' FINALLY HON BLE CALCUTTA HIGH COURT HAS DECIDED THE ISSUE IN PARA 9 10 A ND 11 AS UNDER: 9. PENALTY PROCEEDINGS DO NOT FORM PART OF ASSESSMENT PROCEEDINGS. RECORDING BY THE INCOME - TAX OFFICER OF SATISFACTION OR DIRECTION TO ISSUE A NOTICE UNDER SECTION 273 OF THE INCOME - TAX ACT 1961 FOR DEFAULT COMMITTED UNDER SECTION 273(A ) FOR FAILURE TO FILE AN ESTIMATE OF ADVANCE TAX AND PAY THE TAX IS NOT AN INTEGRAL PART OF THE ASSESSMENT ORDER SO THAT FAILURE TO DO SO WOULD RENDER IT IPSO FACTO ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE CONTEXT OF SECTION 263 TH E EXPRESSION 'ASSESSMENT' REFERS TO THE PARTICULAR 'PROCEEDING' WHICH IS TO BE CONSIDERED. THE COMMISSIONER IN DEALING WITH ASSESSMENT PROCEEDINGS AND THE ASSESSMENT ORDER CANNOT EXPAND HIS POWERS TO DEAL WITH PENALTY PROCEEDINGS WHEN THEY ARE NOT BEFORE HIM. 10. IN OUR VIEW THE TRIBUNAL IN THIS CASE HAS COME TO A CORRECT CONCLUSION. IN THE ASSESSMENT ORDER THE INCOME - TAX OFFICER DID NOT RECORD THAT THE PENALTY PROCEEDINGS HAD BEEN INITIATED. HE MAY INITIATE PENALTY PROCEEDINGS BY RECORDING A DIRECTION TO THAT EFFECT IN THE ORDER SHEET BUT NO PENALTY CAN BE IMPOSED AS A MATTER OF COURSE. THE INCOME - TAX OFFICER MUST BE SATISFIED AS TO WHETHER THE FACTS WARRANT INITIATION OF PENALTY PROCEEDINGS AND IF SO WHETHER ANY PENALTY SHOULD BE IMPOSED. HE HAS A D ISCRETION AS TO WHETHER PENALTY SHOULD BE IMPOSED OR NOT. HE MAY LEVY PENALTY AFTER BEING SATISFIED THAT THE CASE ATTRACTS THE PROVISIONS FOR PENALTY. FOR FAILURE OF THE INCOME - TAX OFFICER TO RECORD IN THE ASSESSMENT ORDER HIS SATISFACTION OR THE LACK OF I T THE ASSESSMENT ORDER CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE INCOME - TAX OFFICER MUST RECORD HIS OPINION ABOUT THE LEVIABILITY OF THE PENALTY ON THE FACTS OF THE CASE. THE INCOME - TAX OFFICER HAS TO BE SATISFIED THAT THE ASSESSEE HAD FURNISHED A STATEMENT OF ADVANCE TAX PAYABLE BY HIM WHICH HE KNEW OR HAD REASON TO BELIEVE TO BE UNTRUE. 11. THE COMMISSIONER OF INCOME - TAX HELD THAT THE INCOME - TAX OFFICER SHOULD HAVE TAKEN ACTION UNDER SECTION 273(A) BECAUSE THE ASS ESSEE FAILED TO FILE A REVISED ESTIMATE UNDER SECTION 212(2) AND PAY TAX ACCORDINGLY. THE COMMISSIONER OF INCOME - TAX ALSO HELD THAT THE ASSESSEE DID NOT FILE ANY EXPLANATION FOR FAILURE TO FILE A PROPER REVISED ESTIMATE AS ENVISAGED UNDER SECTION 212(2). NOR DID THE ASSESSEE 4 ITA NO. 2881 /K/201 3 M. DHARA & BROTHERS . AY 200 9 - 1 0 FILE ANY EXPLANATION TO THE SATISFACTION OF THE INCOME - TAX OFFICER THAT THE ASSESSEE HAD REASONABLE CAUSE WHICH PREVENTED IT FROM FILING THE REVISED ESTIMATE AND THUS WARRANTING WAIVER OF PENALTY UNDER SECTION 273(A). IT WAS FOR THE IN COME - TAX OFFICER TO FIND OUT WHETHER THERE WAS ANY REASONABLE CAUSE PREVENTING THE ASSESSEE FROM FILING THE REVISED ESTIMATE UNDER SECTION 212(2). IT CANNOT BE PRESUMED IN THE ABSENCE OF ANY RECORDING BY THE INCOME - TAX OFFICER THAT THE ASSESSEE DID NOT FUR NISH ANY EXPLANATION TO THE SATISFACTION OF THE INCOME - TAX OFFICER. IN OUR VIEW ON THE FACTS OF THIS CASE IT MUST BE HELD THAT THE COMMISSIONER OF INCOME - TAX CANNOT INVOKE HIS POWER UNDER SECTION 263 ON THE GROUND THAT THE ORDER PASSED BY THE INCOME - TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. SINCE THE ISSUE IS SETTLED BY THE ABOVE PROPOSITION OF LAW BY HON BLE CALCUTTA HIGH COURT IN THE CASE OF LINOTYPE & MACHINERY LTD. SUPRA RESPECTFULLY FOLLOWING THE SAME WE ALLOW THIS ISSUE OF ASSESSEE S APPEAL. 4 . IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED . 5 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.04.2015 . SD/ - SD/ - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 30TH APRIL 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT M. DHARA & BROTHERS 8/2 I.R BELLIUS LANE KADAMTALA HOWRAH - 711101. 2 RESPONDENT CIT KO L - XV I KOLKATA. 3 . THE CIT (A) KOLKATA 4. 5. ACIT CIRCLE - 48 KOLKATA DR KOLKATA BENCHES KOLKATA / TRUE COPY BY ORDER ASSTT. REGISTRAR .