2002 (4) TMI 227 - AT - Income Tax

Summary

Issues Involved:
1. Cancellation of penalty under section 271(1)(c) of the Income-tax Act.
2. Determination of the limitation period for imposing penalties under section 275.
3. Validity of the order of the Assessing Officer under section 271(1)(c) dated 30-6-1992.
4. Receipt and acknowledgment of the ITAT order dated 10-1-1991.
5. Merger of the ITAT orders dated 10-1-1991 and 20-12-1991.
6. Penalty under sections 271(1)(a) and 273(1)(a) based on the order under section 271(1)(c).

Detailed Analysis:

1. Cancellation of Penalty under Section 271(1)(c):
The department appealed against the CIT (Appeals) order that canceled the penalties under sections 271(1)(c), 271(1)(a), and 273(1)(a) for the assessment year 1983-84. The CIT (Appeals) had discussed the issue in detail in his appellate order under section 271(1)(c) and followed the same reasoning for the other two penalties. The Tribunal first addressed the appeal related to the cancellation of the penalty under section 271(1)(c).

2. Limitation Period for Imposing Penalties under Section 275:
The CIT (Appeals) held that the penalty order under section 271(1)(c) dated 30-6-1992 was barred by limitation. The CIT (Appeals) found that the order of the ITAT dated 10-1-1991 was received in time, and the six-month limitation period for imposing penalties should be counted from this date. The CIT (Appeals) concluded that the limitation period could not be extended by the subsequent order of the ITAT dated 20-12-1991, which was related to a Miscellaneous Application and not an appeal against the CIT (Appeals) order.

3. Validity of the Order of the Assessing Officer under Section 271(1)(c):
The Assessing Officer argued that the penalty was justified as the assessee could not substantiate the claim regarding the cash introduction of Rs. 7.5 lakhs. However, the CIT (Appeals) found that the penalty order was barred by limitation and thus invalid.

4. Receipt and Acknowledgment of the ITAT Order Dated 10-1-1991:
The CIT (Appeals) observed that the Assessing Officer's claim that the ITAT order dated 10-1-1991 was not received was not credible. The CIT (Appeals) noted that the Assessing Officer had issued notices to the assessee in March 1991, indicating that the order was available to the Assessing Officer at that time. The Tribunal agreed with the CIT (Appeals) that the order was indeed received and that the limitation period started from the date of this order.

5. Merger of the ITAT Orders Dated 10-1-1991 and 20-12-1991:
The department contended that the first ITAT order dated 10-1-1991 merged with the second order dated 20-12-1991, and thus the limitation period should start from the latter date. The Tribunal rejected this argument, stating that the second order was a rectification order and did not affect the limitation period, which started from the original order dated 10-1-1991.

6. Penalty under Sections 271(1)(a) and 273(1)(a) Based on the Order under Section 271(1)(c):
The penalties under sections 271(1)(a) and 273(1)(a) were also based on the order under section 271(1)(c). Since the Tribunal confirmed the CIT (Appeals) order regarding the cancellation of the penalty under section 271(1)(c), the penalties under sections 271(1)(a) and 273(1)(a) were also canceled for the same reasons.

Conclusion:
The Tribunal dismissed the department's appeals, confirming the CIT (Appeals) orders that canceled the penalties under sections 271(1)(c), 271(1)(a), and 273(1)(a) due to the limitation period and lack of substantiation for the penalties.