Shri Sanjay Kumar Agarwal, Chhatarpur v. DCIT-RAnge-1, Gwalior

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER AND SHRI H.S. SIDHU JUDICIAL MEMBER IT(SS)A NO.02/AGR/2007 BLOCK PERIOD: 01.04.1989 TO 18.01.2000 SHRI PARMANAND AGRAWAL VS. ASSSTT. COMMISSIONER OF INCOME TAX C/O.M/S CHOUDHARY LAXMNDAS SARAF RANGE-I GWALIO R. CHOWK BAZAR CHHATARPUR. (PAN : AELPA 1350 A). IT(SS)A NO.03/AGR/2007 BLOCK PERIOD: 01.04.1989 TO 18.01.2000 SHRI OMPRAKASH AGRAWAL VS. ASSSTT. COMMISSIONER OF INCOME TAX C/O.M/S CHOUDHARY LAXMNDAS SARAF RANGE-I GWALIO R. CHOWK BAZAR CHHATARPUR. (PAN : AELPA 2989 P). IT(SS)A NO.04/AGR/2007 BLOCK PERIOD: 01.04.1989 TO 18.01.2000 SHRI SANJAY KUMAR AGRAWAL VS. ASSSTT. COMMISSIO NER OF INCOME TAX C/O.M/S CHOUDHARY LAXMNDAS SARAF RANGE-I GWALIO R. CHOWK BAZAR CHHATARPUR. (PAN : AELPA 2999 D) IT(SS)A NO.05/AGR/2007 BLOCK PERIOD: 01.04.1989 TO 18.01.2000 SHRI JAI PRAKASH AGRAWAL VS. ASSSTT. COMMISSION ER OF INCOME TAX C/O.M/S CHOUDHARY LAXMNDAS SARAF RANGE-I GWALIO R. CHOWK BAZAR CHHATARPUR. (PAN : ACMPA 1110 H)) 2 IT(SS)A NO.06/AGR/2007 BLOCK PERIOD: 01.04.1989 TO 18.01.2000 SMT. SUNITA AGRAWAL VS. ASSSTT. COMMISSIONER O F INCOME TAX C/O.M/S CHOUDHARY LAXMNDAS SARAF RANGE-I GWALIO R. CHOWK BAZAR CHHATARPUR. (PAN : ACJPA 6553 H) IT(SS)A NO.07/AGR/2007 BLOCK PERIOD: 01.04.1989 TO 18.01.2000 M/S CHOUDHARY LAXMNDAS SARAF VS. ASSSTT. COMMISSI ONER OF INCOME TAX CHOWK BAZAR RANGE-I GWALIOR CHHATARPUR. (PAN : AACIC 1151 E). (APPELLANTS) (RESPONDENT) ASSESSEES BY : SHRI G.N. PUROHIT ADVOCATE REVENUE BY : SHRI HOMI RAJVANSH CIT D.R. ORDER PER BENCH : SINCE ALL THESE APPEALS INVOLVE COMMON ISSUE RELAT ING TO THE DELETION OF THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 158B FA(2) OF THE INCOME TAX ACT 1961 (THE ACT HEREINAFTER) FOR THE BLOCK PERIOD 01.04.1989 T O 18.01.2000 BY THE CIT(A) IN THE CASE OF RESPECTIVE ASSESSEES ALL THESE APPEALS ARE DISPOSE D OF BY THIS COMMON ORDER. 2. THE LD. A.R. AND THE LD. D.R. AGREED THAT THE FA CTS INVOLVED IN ALL THESE APPEALS ARE COMMON. THEREFORE ALL THESE APPEALS SHOULD BE DIS POSED OF ON THE BASIS OF THE SUBMISSIONS MADE IN IT(SS)A NO.04/AGR/2007 IN THE CASE OF SHRI SANJAY KUMAR AGRAWAL. 3. ARGUMENTS WERE MADE ONLY IN THE CASE OF SHRI SAN JAY KUMAR AGRAWAL AND BOTH THE PARTIES AGREED WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN THE CASE OF SHRI SANJAY KUMAR AGRAWAL 3 THE SAME VIEW MAY BE TAKEN IN ALL THE OTHER CASES. WE THEREFORE ARE DISPOSING OF ALL THESE APPEALS BY TAKING THE BRIEF FACTS FROM IT(SS)A NO.0 4/AGR/2007 IN THE CASE OF SHRI SANJAY KUMAR AGRAWAL. 4. THE BRIEF FACTS IN THE CASE OF SHRI SANJAY KUMAR AGRAWAL ARE THAT THE CIT(A) INITIATED PENALTY PROCEEDINGS UNDER SECTION 158BFA(2) WHILE D ISPOSING OF THE APPEAL IN THE CASE OF THE ASSESSEE VIDE ORDER DATED 14.02.2003 IN RESPECT OF THE UNDISCLOSED INCOME WHICH WAS CONFIRMED BY THE CIT(A). IN ALL THESE CASES NO PENALTY UNDE R SECTION 158BFA(2) WAS INITIATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DATED 30. 01.2002 EVEN THOUGH THE ORDER WAS PASSED WITH PRIOR APPROVAL OF THE ADDITIONAL CIT-I GWALIO R. VIDE ORDER DATED 14.02.2003 THE CIT(A) DIRECTED TO INITIATE PENALTY PROCEEDINGS UNDER SECT ION 158BFA(2) BY ISSUING SHOW CAUSE NOTICE TO THE ASSESSEE. THE ASSESSEE IN REPLY TO THE SHOW CA USE NOTICE ISSUED BY THE CIT(A) CONTESTED THE INITIATION OF THE PENALTY. FIRSTLY IT WAS CONTEND ED THAT THE CIT(A) HAS INITIATED PENALTY UNDER SECTION 271(1)(C) OF THE ACT READ WITH SECTION 158B FA(2). THE PROVISIONS OF SECTION 271(1)(C) HAD NO APPLICATION TO THE INITIATION AND IMPOSITION OF THE PENALTY UNDER SECTION 158BFA(2). IT WAS POINTED OUT THAT THE CIT(A) HAS NOT RECORDED SA TISFACTION FOR THE INITIATION OF PENALTY. IT WAS ALSO CONTENDED BEFORE HIM THAT THE PENALTY CAN BE I MPOSED BY THE CIT(A) IF HE WOULD HAVE MADE ENHANCEMENT OR HE WOULD HAVE DEDUCTED ANY CONCEALME NT OF THE INCOME. THE ONLY ADDITION MADE BY THE CIT(A) WAS OF RS.90 500/- ON ACCOUNT OF ACCRETION IN CAPITAL FOR THE FINANCIAL YEAR 1991-92. THE BALANCE SHEET WAS ENCLOSED BY THE ASS ESSEE ALONG WITH THE RETURN FOR THE ASSESSMENT YEAR 1995-96 SUBMITTED MUCH BEFORE THE D ATE OF THE SEARCH I.E. 18.01.2000. THE SAID AMOUNT WAS DULY DISCLOSED TO THE DEPARTMENT. IT WAS CONSIDERED FOR THE PURPOSE OF ASSESSMENT. THE ADDITION IS NOT BASED ON THE MATER IAL FOUND DURING THE COURSE OF SEARCH. THE 4 CIT(A) DID NOT AGREE WITH THE CONTENTION MADE BY TH E ASSESSEE BUT HE IMPOSED THE MINIMUM PENALTY VIDE ORDER DATED 08.02.2007 BY OBSERVING AS UNDER :- AS REGARDS MERITS OF THE ADDITIONS CONFIRMED BY TH E LD. CIT(A) ARE CONCERNED IT IS REITERATED THAT THE SAME ARE WELL BASED. ON THE BASIS OF INCRIMINATING DOCUMENTS AND MATERIAL FOUND DURING T HE COURSE OF SEARCH OPERATIONS AT THE PREMISES OF THE APPELLANT THE UN DISCLOSED INCOME WAS ASSESSED OUT OF WHICH THE PENALTY HAS BEEN INITIATED BY THE LD. CIT(A) ON THE UNDISCLOSED INCOME CONFIRMED BY HIM VIDE THE SAME APPELLATE ORD ER. CONSIDERING THE ABOVE THE CONCEALMENT OF INCOME ON THE PART OF THE APPELL ANT ASSESSEE IS WELL ESTABLISHED WHICH IS BASED UPON THE INCRIMINATING D OCUMENTS AND MATERIAL FOUND AND IN POSSESSION OF THE DEPARTMENT THE UNDISCLOSE D INCOME ON WHICH THE PENALTY IS INITIATED ALREADY STANDS CONFIRMED BY THE LD. CI T(A) WHO HAD INITIATED SAID PENALTY PROCEEDINGS. I HAVE THEREFORE REASON TO BELIEVE THAT THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME OF ` 90 500/-. THE MINIMUM PENALTY LEVIABLE IN THIS CASE IS ` 59 730/- AND MAXIMUM IS ` 1 79 190/-. CONSIDERING THE FACTS OF THE CASE I IMPOSE A PENALTY OF ` 59 730/- U/S. 271(1)(C) READ WITH SECTION 158BFA OF THE I.T. ACT. 5. BEFORE US THE LD. A.R. ON MERIT REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). ON LEGALITY HE REFERRED TO PROVISIONS OF SECTION 158B FA(3) AND CONTENDED THAT THE ORDER PASSED FOR IMPOSING THE PENALTY IS BARRED BY LIMITATION. FOR THIS OUR ATTENTION WAS SPECIFICALLY DRAWN TO SECTION 158BFA(3)(E). IT WAS VEHEMENTLY CONTENDED THAT IN THE CASE OF THE ASSESSEE THE ACTION FOR IMPOSITION OF PENALTY WAS INITIATED BY THE CIT( A) VIDE ORDER DATED 14.02.2003. THE PENALTY COULD HAVE BEEN IMPOSED EITHER BY 31.03.2003 OR WIT HIN 6 MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED WHICHEVER EXPIRES LATER. IN THE CASE OF THE ASSESSEE 6 MONTHS EXPIRES ON 31 ST AUGUST 2003 BUT THE PENALTY HAS BEEN IMPOSED BY T HE CIT(A) VIDE ORDER DATED 08.02.07. THUS IT WAS CONTENDED THAT THE PENALTY IMPOSED BY THE ASSESSING OFFICER HAS TO BE DELETED. 5 6. THE LD. D.R. ON THE OTHER HAND CONTENDED THAT UNDER SECTION 158BFA(2) THE CIT(A) HAS NOT TO RECORD OR ARRIVE AT A SATISFACTION FOR THE C ONCEALMENT OF PARTICULARS OF INCOME OR FILING OF INACCURATE PARTICULARS. THE ASSESSING OFFICER OR T HE CIT(A) HAS ONLY TO DIRECT DURING THE COURSE OF ANY PROCEEDINGS THAT A PERSON SHALL PAY BY WAY O F PENALTY A SUM WHICH SHALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE OR WHICH SHALL NOT EXCEE D THREE TIMES OF THE AMOUNT OF TAX SO LEVIABLE. THE ASSESSING OFFICER OR THE CIT(A) HAS THEIR DISCR ETION TO DIRECT THE IMPOSITION OF PENALTY. THE PENALTY HAS TO BE LEVIED IN RESPECT OF THE UNDISCLO SED INCOME DETERMINED BY THE ASSESSING OFFICER. THE CIT(A) HAS IMPOSED THE PENALTY ON THE INCOME AS HAS BEEN DETERMINED BY THE ASSESSING OFFICER UNDER CLAUSE 158BC(C). THE SECTI ON NOWHERE TALKS OF THAT THE CIT(A) CAN IMPOSE THE PENALTY UNDER SECTION 158BFA(2) ONLY ON THE INCOME AS HAS BEEN ENHANCED BY HIM. HE RELIED ON THE ORDER OF THE CIT(A). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. WE NOTED THAT THERE IS DIFFERENCE IN THE PROVISIONS FOR THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) AND UNDER SECTION 158BFA(2). UNDER BOTH THE PROVISIONS THE ASSESSING OFFICER AS WELL AS THE CIT(A) ARE COMPETENT TO IMPOSE THE PENA LTY. THE NATURE OF THE PENALTY IN BOTH THE SECTIONS ARE DIFFERENT. IN CASE OF THE PENALTY TO BE IMPOSED UNDER SECTION 271(1)(C) SATISFACTION OF THE ASSESSING OFFICER OR THE CIT(A) IN THE COURS E OF ANY PROCEEDING UNDER THE INCOME TAX ACT IS REQUIRED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. WHILE SECTI ON 158BFA(2) NOWHERE REQUIRES THE ASSESSING OFFICER OR THE CIT(A) TO ARRIVE AT THE SATISFACTION DURING THE COURSE OF PROCEEDINGS UNDER CHAPTER XIV-B FOR THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THE PROVISIONS OF SECTION 271(1)(C) ARE APPLICABLE IN RESPECT OF ANY PROCEEDINGS UNDER THE ACT WHILE THE PROVISIONS OF S ECTION 158BFA(2) ARE APPLICABLE ONLY IN 6 RESPECT OF PROCEEDINGS UNDER CHAPTER XIV-B. THE BA SIS OF THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) IS THE TAX SOUGHT TO BE EVADED BY REASON OF CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME WHILE THE BASIS OF IMPOSITION OF PENALTY UNDER SECTION 158BFA(2) IS THAT THE PORTION OF UNDI SCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER WHICH IS IN EXCESS OF THE AMOUNT OF THE UND ISCLOSED INCOME SHOWN IN THE RETURN. UNDER SECTION 158BFA(2) THE ASSESSING OFFICER OR THE CIT( A) MAY DIRECT A PERSON TO PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN THE AMOU NT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPEC T OF THE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 158BC . IMPOSITION OF PENALTY UNDER BOTH THE PROVISIONS NO DOUBT IS NOT MANDATORY. THE ASSESS ING OFFICER OR THE CIT(A) MAY IMPOSE THE PENALTY IF THEY DEEM IT FIT UNDER SECTION 158BFA(2) . IT IS NOWHERE STATED THAT THE CIT(A) CAN INITIATE THE PENALTY PROCEEDINGS ONLY IF HE ENHANCE S THE INCOME. WE THEREFORE ON MERIT DO NOT AGREE WITH THE LD. A.R. AND THE DECISIONS CITED BY HIM FOR RECORDING OF THE SATISFACTION BY THE ASSESSING OFFICER OR THE CIT(A) ARE NOT APPLICABLE IN THE CASE OF PENALTY IMPOSED UNDER SECTION 158BFA(2). 8. NOW COMING TO THE PLEA OF THE ASSESSEE THAT THE PENALTY IS BARRED BY LIMITATION SECTION 158BFA(3) PRESCRIBES THE LIMITATION WITHIN WHICH AN ORDER IMPOSING THE PENALTY UNDER SECTION 158BFA(2) SHALL BE PASSED. THIS IS A FACT THAT IN THE CASE OF THE ASSESSEE PENALTY PROCEEDINGS UNDER SECTION 158BFA(2) WERE NOT INITIATED BY THE A SSESSING OFFICER. PENALTY PROCEEDINGS UNDER SECTION 158BFA(2) WERE INITIATED FOR THE FIRST TIME BY THE CIT(A) DURING THE COURSE OF ORDER PASSED ON 14.02.2003. WHEN THE ASSESSEE WENT IN AP PEAL BEFORE THE CIT(A) AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 158BC (C) FOR THE BLOCK PERIOD 01.04.1989 TO 18.01.2000 THE PENALTY WAS IMPOSED BY THE CIT(A) V IDE ORDER DATED 08.02.2007. SUB-CLAUSES 7 (A) (B) (C) (D) (E) (F) OF SECTION 158BFA(3) IN OUR OPINION ARE NOT APPLICABLE IN THE CASE OF ASSESSEE. THE ONLY SUB-CLAUSE(E) OF SECTION 158BFA (3) WHICH DEALS WITH THE LIMITATION WILL BE APPLICABLE IN THE CASE OF THE ASSESSEE. THIS SUB-C LAUSE READS AS UNDER :- (A) . (B) . (C) . (D) . (E) IN ANY CASE OTHER THAN THOSE MENTIONED IN CLAUS ES (C) AND (D) 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 COMPL ETED OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED WHICHEVER PERIOD EXPIRES LATER. (F) . 9. FROM THE READING OF THIS SUB-CLAUSE IT IS APPAR ENT THAT NO ORDER FOR IMPOSING PENALTY UNDER SECTION 158BFA(2) SHALL BE PASSED AFTER THE E XPIRY OF FINANCIAL YEAR IN WHICH THE PROCEEDINGS IN THE COURSE OF WHICH ACTION FOR IMPOS ITION OF THE PENALTY HAS BEEN INITIATED ARE COMPLETED OR SIX MONTHS FROM THE END OF THE MONTH I N WHICH ACTION FOR THE IMPOSITION OF THE PENALTY IS INITIATED WHICHEVER PERIOD EXPIRES LATER . IN THE CASE OF THE ASSESSEE THE ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED DURING THE COURSE OF APPELLATE PROCEEDINGS WHICH WERE COMPLETED VIDE ORDER DATED 14.02.2003. THE FINANCI AL YEAR FOR THIS PERIOD EXPIRED ON 31.03.2003. SIX MONTHS FROM THE END OF THE MONTH I N WHICH THE ACTION FOR IMPOSITION OF THE PENALTY IS INITIATED EXPIRED IN THE CASE OF THE ASS ESSEE ON 31.08.2003 AS IN THE CASE OF THE ASSESSEE THE ACTION FOR IMPOSITION OF PENALTY WAS INITIATED ON 14.02.2003. THEREFORE AT THE MOST CIT(A) COULD HAVE IMPOSED THE PENALTY UNDER SECTION 158BFA (3) IN THE CASE OF THE ASSESSEE UPTO 31.08.2003. IN THIS CASE THE CIT(A) IN FACT HAS I MPOSED THE PENALTY ON 08.02.2007. THEREFORE IN OUR VIEW THE PENALTY ORDER PASSED BY THE CIT(A) IS CLEARLY BARRED BY LIMITATION. WE 8 ACCORDINGLY QUASH THE ORDER PASSED BY THE CIT(A) I MPOSING PENALTY ON THE ASSESSEE. THUS IT(SS)A NO.04/AGR/2007 FILED BY SHRI SANJAY KUMAR A GRAWAL IS ALLOWED. 10. SINCE IN ALL THE OTHER CASES THE FACTS INVOLVED ARE SAME AND THE DATE INVOLVED ARE ALSO THE SAME WE THEREFORE RESPECTFULLY FOLLOWING THE ORD ER PASSED IN THE PRECEDING PARAGRAPHS IN IT(SS)A NO.04/AGR/2007 QUASH THE ORDERS IMPOSING T HE PENALTY UNDER SECTION 158BFA(2) IN ALL THE OTHER CASES ALSO BY HOLDING THAT THE PENALTY OR DERS PASSED BY THE CIT(A) ARE BARRED BY LIMITATION. ACCORDINGLY PENALTY IMPOSED IN ALL TH ESE APPEALS FILED BY THE ASSESSEE ARE DELETED. 11. IN THE RESULT ALL THE APPEALS FILED BY THE ASS ESSEES ARE ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.02.2011). SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH FEBRUARY 2011 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY