JAI KRISHNA CLUB, Jaipur v. CIT, Alwar

MA 1/JPR/2015 | 2006-2007
Pronouncement Date: 30-04-2015 | Result: Allowed

Appeal Details

RSA Number 123124 RSA 2015
Assessee PAN AAATS8594C
Bench Jaipur
Appeal Number MA 1/JPR/2015
Duration Of Justice 3 month(s) 9 day(s)
Appellant JAI KRISHNA CLUB, Jaipur
Respondent CIT, Alwar
Appeal Type Miscellaneous Application
Pronouncement Date 30-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-04-2015
Assessment Year 2006-2007
Appeal Filed On 21-01-2015
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHES JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI JM & SHRI T.R. MEENA AM M.A. NOS. 01 & 02/JP/2015 (ARISING OUT OF I.T.A. NOS. 541 & 542/JP/2014) ASSTT. YEARS-2006-07 & 2007-08 M/S JAI KRISHNA CLUB VINAY MARG OPP G.D. GIRLS COLLEGE ALWAR. CUKE VS. COMMISSIONER OF INCOME TAX ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAATS 8594 C VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT M.A. NOS. 17 & 18/JP/2015 (ARISING OUT OF I.T.A. NOS. 541 & 542/JP/2014) ASSTT. YEARS-2006-07 & 2007-08 COMMISSIONER OF INCOME TAX ALWAR. CUKE VS. M/S JAI KRISHNA CLUB VINAY MARG OPP G.D. GIRLS COLLEGE ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAATS 8594 C VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEES BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : MRS. NEENA JEPH (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 17/04/2015 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 30/04/2015 M.A. NO. 01 02 17 & 18/JP/2015_ JAI KRISHNA CLUB VS. CIT 2 VKNS'K @ ORDER PER: T.R. MEENA A.M. THE ASSESSEE AS WELL AS THE REVENUE HAVE FILED THES E MISCELLANEOUS APPLICATIONS AGAINST THE ORDER OF THIS BENCH OF ITA T JAIPUR IN ITA NOS. 541 & 542/JP/2014 WHICH WAS PASSED ON 28/11/2014. 2. THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT AS PER EXPLANATION-3 OF SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 (IN SH ORT THE ACT) THE ASSESSING OFFICER OR CIT(A) CAN IMPOSE PENALTY U/S 2 71(1)(C) OF THE ACT. THERE IS NO POWER TO COMMISSIONER EITHER IMPOSE PENALTY DI RECTLY OR DIRECT THE A.O. TO INITIATE THE PENALTY U/S 271(1)(C) OF THE ACT FO R WHICH HE PLACED RELIANCE ON THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KESHRIMAL PARASMAL 157 ITR 484. THE HON'BLE HIGH COURT HAS DISM ISSED THE APPEAL U/S 256(2) OF THE ACT AS NO QUESTION OF LAW ARISES OUT F ROM THE ORDER OF THE TRIBUNAL. THE LD ASSESSING OFFICER FAILED TO INITIATE THE PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT ALTHOUGH THE CASE WAS PRIMA FA CIE COVERED BY THE DEEMING PROVISION PROVIDED IN EXPLANATOIN-3 TO SECT ION 271(1)(C) OF THE ACT. NO OFFICE NOTE AS REGARD THE REASONS FOR NON-INITIA TION OF PENALTY PROCEEDING HAS BEEN MADE BY THE ASSESSING OFFICER. IT IS SETTL ED LAW THAT CIT U/S 263 M.A. NO. 01 02 17 & 18/JP/2015_ JAI KRISHNA CLUB VS. CIT 3 CANNOT DIRECT THE ITO TO MAKE A FRESH ASSESSMENT FOR INITIATING PENALTY PROCEEDING BUT AS PER EXPLANATION-3 TO SECTION 271( 1)(C) ONLY THE ASSESSING OFFICER OR THE CIT(A) CAN LEVY THE PENALTY IF THEY ARE SATISFIED THAT THE ASSESSEE WITHOUT REASONABLE CAUSE HAS NOT FURNISHED THE RETURN WITHIN THE PERIOD SPECIFIED U/S 153(1) I.E. WITHIN 21 MONTHS OF THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE. THE AS SESSING OFFICER CONSIDERING THE FACT OF THE CASE WAS SATISFIED THAT NON FURNISHING OF RETURN OF INCOME WITHIN THE PERIOD SPECIFIED U/S 153(1) WAS BE CAUSE OF A REASONABLE CAUSE AND THEREFORE HE HAS NOT INITIATED THE PENALT Y PROCEEDING. THEREFORE THE ASSESSMENT COMPLETED BY THE ASSESSING OFFICER V IDE ORDER DATED 29/09/2011 IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE FURTHER ARGUED THAT NON-CONSIDERATION OF THIS LEGAL POSITION ARGUED BY THE AR OF THE APPLICANT CONSTITUTES A MISTAKE APPARENT ON RECORD. RELIANCE IN THIS CONNECTION HAS BEEN PLACED IN THE CASE OF CIT VS. RA MESH CHAND MODI 249 ITR 323 AND LAXMI ELECTRONICS CORPORATION LTD. VS. C IT 188 ITR 398(ALL). THUS HE PRAYED TO RECTIFY THE APPARENT MISTAKE MADE BY THE HONBLE BENCH. 3. AT THE OUTSET THE LD DR ALSO ARGUED THAT THE CI T HAD REQUESTED TO RECTIFY THE ORDER ON THE GROUND THAT THE HONBLE IT AT HAS SET ASIDE THE APPEAL M.A. NO. 01 02 17 & 18/JP/2015_ JAI KRISHNA CLUB VS. CIT 4 WITHOUT QUOTING FOR DECIDING THE ISSUE AFRESH OR DE NOVO THEREFORE SAME MAY BE RECTIFIED. 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND GONE THROUGH T HE LEGAL SUBMISSION MADE BY THE AR OF THE ASSESSEE. THE ISSUE BEFORE US IS WH ETHER THE CIT CAN DIRECT THE ASSESSING OFFICER U/S 263 OF THE ACT IN HIS REV ISIONARY POWER TO INITIATE THE PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT OR NOT. AS PER LAW THE ASSESSING OFFICER OR COMMISSIONER OF APPEAL OR PRINCIPAL COMM ISSIONER OR COMMISSIONER IN THE COURSE OF ANY PROCEEDING UNDER THIS ACT IS S ATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME HE MAY DIRECT THAT SUCH PERSON SHALL PAY IN ADDITION TO TAX IF ANY PAYABLE BY HIM A SUM WHICH SHALL NOT BE LESS THAN BU T WHICH SHALL NOT EXCEED THREE TIMES. THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASONS OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF SUCH INCOME. THE EXPLANATION-3 OF SECTION 271(1) (C) OF THE ACT IS REPRODUCED AS UNDER:- [EXPLANATION 3.WHERE ANY PERSON 55 [***] FAILS WITHOUT REASONABLE CAUSE TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL 1989 AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID NO NOTICE HAS B EEN ISSUED TO HIM UNDER M.A. NO. 01 02 17 & 18/JP/2015_ JAI KRISHNA CLUB VS. CIT 5 CLAUSE (I) OF SUB-SECTION (1) OF SECTION 142 OR SECTION 148 AND THE ASSESSING OFFICER OR THE [***] COMMISSIONER (APPEALS) IS SAT ISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME THE N SUCH PERSON SHALL FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH AS SESSMENT YEAR NOTWITHSTANDING THAT SUCH PERSON FURNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE PERIOD AFORESAID IN PURSUAN CE OF A NOTICE UNDER SECTION 148 .] 4.1 IN THIS CASE THE ASSESSEE FURNISHED ITS RETURN ON 30/04/2010 FOR A.Y. 2006-07 AND 2007-08 IN RESPONSE TO NOTICE U/S 148 O F THE ACT. THE TIME PRESCRIBED U/S 139(1) HAS ALREADY BEEN EXPIRED THU S IT COMES UNDER EXPLANATION-3 TO SECTION 271(1)(C) OF THE ACT WHEREI N ONLY ASSESSING OFFICER OR CIT(A) HAVE POWER TO INITIATE AND IMPOSE THE PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEALING THE PARTICULARS OF INCOME. THE A.R. O F THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KESHRIMAL PARASMAL (SUPRA) WHEREIN IT HAS BEEN HELD THAT COMMISSIONER WAS NOT ENTITLED TO SET ASIDE THE ASSESSMENT ORDER P ASSED BY THE INCOME TAX OFFICER ON THE GROUND THAT THERE WAS NO MENTION OF I NITIATION OF PENALTY PROCEEDING IN THE ASSESSMENT ORDER AND THE COMMISSI ONER IN THE PROCEEDING U/S 263 OF THE ACT COULD NOT DIRECT THE I.T.O. TO MA KE A FRESH ASSESSMENT FOR INITIATING PENALTY PROCEEDING. THEREFORE NO QUESTIO N OF LAW AROSE OUT OF ORDER OF THE TRIBUNAL. THE HON'BLE RAJASTHAN HIGH COURT HAS FOLLOWED THE ORDER OF M.A. NO. 01 02 17 & 18/JP/2015_ JAI KRISHNA CLUB VS. CIT 6 HON'BLE DELHI HIGH COURT IN THE CASE OF CIT (ADDL) V S. J.K.DCOSTA (1982) 133 ITR 3 (DELHI) AND ALSO CONSIDERED THE SLP REJECTED B Y THE HON'BLE SUPREME COURT IN THE CASE OF CIT (ADDL) VS. J.K.DCOSTA (SUP RA). THE HONBLE RAJASTHAN HIGH COURT ALSO REFERRED THE HONBLE M.P. HIGH COUR TS DECISION IN THE CASE OF ADDL. COMMISSIONER OF INCOME TAX M.P. VS. INDIAN PH ARMACEUTICALS (1980) 123 ITR 874 (MP) WHICH IS IN FAVOUR OF THE REVENUE. THE MAJORITY DECISIONS ARE IN FAVOUR OF THE REVENUE. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SURENDRA PRASAD AGARWAL (2005) 275 ITR 113 (AL L) HAS HELD THAT ASSESSING OFFICER HAS TO INITIATE PROCEEDING FOR IM POSITION OF PENALTY DURING THE COURSE OF ASSESSMENT ITSELF. IF HE FAILS TO INITIA TE OR RECORD HIS SATISFACTION FOR THE INITIATION OF THE PENALTY PROCEEDING DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSMENT ORDER CAN BE SAID TO BE ERRONEOUS AS HE HAS NOT DECIDED A POINT OR RECORDED A FINDING ON AN ISSUE WH ICH OUGHT TO HAVE BEEN DONE OR HAS DECIDED IT WRONGLY. THE OMISSION OF THE ITO TO INITIATE PENALTY PROCEEDING DURING THE COURSE OF ASSESSMENT PROCEEDI NGS RENDERS THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF THE REVENUE. THE HONBLE ALLAHABAD HIGH COURT ALSO CONSIDERED THE DE CISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT (ADDL) VS. J.K.DCOSTA (SUPRA) AND OBSERVED THAT DISMISSAL OF A SPECIAL LEAVE PETITION BY THE HON'BL E SUPREME COURT WITHOUT A M.A. NO. 01 02 17 & 18/JP/2015_ JAI KRISHNA CLUB VS. CIT 7 SPEAKING ORDER WOULD ONLY MEAN THAT THE COURT WAS NOT INCLINED TO EXERCISE ITS DISCRETION IN GRANTING LEAVE TO FILE THE APPEAL. IT DOES NOT ATTRACT THE DOCTRINE OF MERGER AND THE VIEW EXPRESSED IN THE IMPUGNED ORD ER DOES NOT BECOME THE VIEW OF THE SUPREME COURT. THE DISMISSAL OF SPECIAL L EAVE PETITION BY A NON- SPEAKING ORDER WOULD REMAIN A DISMISSAL SIMPLICITER IN WHICH REMAINED TO FILE THE APPEAL TO THE SUPREME COURT IS NOT GRANTED. THIS MAY BE BECAUSE OF VARIOUS REASONS. THUS THE DISMISSAL OF SPECIAL LEA VE PETITION BY THE SUPREME COURT IN CASE OF CIT (ADDL) VS. J.K.DCOSTA (1982) 1 33 ITR 3 CANNOT BE TREATED AS CREATING A BINDING PRECEDENCE UNDER ARTICLE 141. THE HON'BLE SUPREME COURT HAS CONSIDERED THE REVISIONARY POWER ASSIGNED U/S 263 OF THE ACT TO THE COMMISSIONER IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) THE ORDER IS MUCH LATER THAN THE DECIS ION DELIVERED BY THE HON'BLE RAJASHTAN HIGH COURT IN THE CASE OF CIT VS. KESHRIMA L PARASMAL. THE HON'BLE SUPREME COURT HAS HELD AS UNDER:- 'UNDER SECTION 263 OF THE ACT ORDER PASSED WITHOUT APPLY ING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND WOULD ALSO BE ERRONEOUS. IT HAS HELD THAT A BARE READING OF THIS PROVISION MAKES IT CLEAR THAT THE PREREQUISITE TO THE E XERCISE OF JURISDICTION BY THE COM MISSIONER SUO MOTU UNDER IT IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMM ISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS NAMELY (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II ) IT IS M.A. NO. 01 02 17 & 18/JP/2015_ JAI KRISHNA CLUB VS. CIT 8 PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE O F THEM IS ABSENTIF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONE OUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRON EOUS BUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD T O SECTION 263(1) OF THE ACT. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INV OKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITT ED BY THE ASSESSING OFFICER IT IS ONLY WHEN AN ORDER IS ERRONEOUS T HAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACT S OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMEN T OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDER S PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR W ITHOUT APPLICATION OF MIND.' AFTER CONSIDERING THIS OBSERVATION OF THE HON'BLE S UPREME COURT THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SURENDRA PRASAD AGARWAL (SUPRA) HAS HELD THAT NOT INITIATING PENALTY PROCEEDING BY THE ASSESSING OFFICER AT THE TIME ASSESSMENT RENDERS ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE COMMISSIONER OF INCOME TAX H AS JURISDICTION TO REVISE SUCH AN ORDER. WHEN THE HONBLE JURISDICTIONAL HIGH COURTS DECISION IS IN FAVOUR OF THE ASSESSEE THEREFORE BEING A PRECEDEN T WE HAVE TO FOLLOW THE HON'BLE RAJASTHAN HIGH COURTS DECISION IN THE CASE CIT VS. KESHRIMAL PARASMAL (SUPRA). ACCORDINGLY M.A. APPLICATIONS FIL ED BY THE ASSESSEE ARE ALLOWED IN BOTH THE YEARS AND M.A. APPLICATIONS FILE D BY THE REVENUE ARE DISMISSED. M.A. NO. 01 02 17 & 18/JP/2015_ JAI KRISHNA CLUB VS. CIT 9 5. IN THE RESULT BOTH THE MISC. APPLICATIONS FILED BY THE ASSESSEE ARE ALLOWED AND BOTH THE MISC. APPLICATIONS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/04/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 30 TH APRIL 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S JAI KRISHNA CLUB ALWAR. 2. IZR;FKHZ @ THE RESPONDENT- THE CIT ALWAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR ITAT JAIPUR 6. XKMZ QKBZY @ GUARD FILE (M.A. 01 02 17 & 18/JP/2015) VKNS'KKUQLKJ @ BY ORDER LGK;D IATHDKJ @ ASST. REGISTRAR