9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (8) TMI 853 - HC - Income TaxPenalty u/s 158BFA(2) - period of limitation - relevant date - on the issue of additions, ITAT and HC decided the matter in favor of assessee whereas Supreme Court has finally decided the matter in favor of Revenue - HELD THAT - While it is clear that relevant provision relied on by learned counsel for writ petitioner talks only about first appeal to the first appellate authority, the order of ITAT and stops with the same, there is another provision which deals with a scenario which does not fall in such a factual setting. That provision is Section 158BFA(3)(e). A careful analysis of this provision makes it clear that this provision itself provides for two periods of limitation qua penalty under section 158BFA(2). One period is the end of assessment year in which assessment proceedings came to be passed. In this case, assessment order came to be passed on 31.8.2004 and therefore, that financial year ended on 31.3.2005. In the considered view of this court, this limb of time frame does not apply to instant case on hand as two successive appeals, namely statutory appeal to CIT(A) and statutory appeal to ITAT u/s 253 did not get completed in less than a year. From the date on which penalty proceedings are initiated? - In the instant case, if it is construed that penalty proceedings were initiated on 31.8.2004, as already alluded to supra, the same could not be continued owing to writ petitioner assessee's appeal before first appellate authority. To be noted, first appellate authority confirmed the tax levy, but reduced the interest component, resulting in both assessee and Revenue carrying the matter in appeal to ITAT. Obviously, Revenue had to wait for the outcome of appeals before ITAT. As already mentioned supra, the outcome of appeals before ITAT was in favour of writ petitioner assessee. Absent assessment order, the question of penalty proceedings does not arise and therefore, penalty proceedings initiated on 31.8.2004 continued to lie dormant. Further notice dated 12.9.2018 continuing penalty proceedings which was involuntarily lying dormant was issued. This 12.9.2018 notice is well within six months from the date of the order of Hon'ble Supreme Court and therefore, it cannot be gainsaid that impugned order is barred by limitation. For the purpose of enhanced clarity and specificity, this Court deems it appropriate to mention that limitation qua penalty proceedings under IT Act is prescribed under two provisions with regard to two different types of penalties. With regard to penalty u/s 271(1)(c), limitation is statutorily prescribed in section 275, with regard to penalty u/s 158BFA(2) as in the instant case, limitation is statutorily prescribed u/s 158BFA(3)(c). With regard to both these provisions, namely Sections 275 and 158BFA(3)(c) which prescribe different periods of limitation for two different types of penalties, both these provisions were brought into statute books in their present form before section 260A was brought into statute books. To be noted, section 260A provides for a statutory appeal to High Court and this was brought into statute books only on 01.10.1998. To put it differently, when two different periods of limitation for two different kinds of penalties were statutorily prescribed under IT Act, ITAT was the last forum qua statutory appeals. The discussion and dispositive reasoning leads us to an inevitable conclusion that the impugned order is not barred by limitation and the same is not liable to be set aside as time barred.
Issues Involved:
1. Whether the impugned order dated 12.03.2019 is barred by limitation under Section 158BFA(3)(c) of the Income Tax Act, 1961. Detailed Analysis: Factual Matrix in a Nutshell: - Income Tax Act, 1961: The subject matter of the writ petition arises under this Act. - Search and Evidence Collection: Search by Income Tax Officials commenced on 17.07.2002 and lasted till 21.08.2002, leading to the collection of evidence indicating understatement of real income for the block period from 01.04.1996 to 17.07.2002. - Assessment Order: An assessment order dated 31.08.2004 was passed, quantifying undisclosed investments and cash payments, resulting in a tax liability of over ?60.57 lakhs and interest of over ?4.54 lakhs. - Appeals: The petitioner appealed the assessment order, which was confirmed by the Commissioner of Income Tax (Appeals) on 15.02.2005. Both the petitioner and the Revenue appealed to the ITAT, which ruled in favor of the petitioner on 28.04.2006. The Revenue's further appeals to the High Court and Supreme Court were ultimately resolved by the Supreme Court on 02.05.2018, resuscitating the original assessment order. - Penalty Proceedings: Initiated on 31.08.2004 but lay dormant due to ongoing appeals. A notice dated 12.09.2018 was issued post the Supreme Court's decision, leading to the impugned order imposing a penalty of ?60.57 lakhs. Discussion and Dispositive Reasoning: - Primary Contention: The petitioner argued that the impugned order is barred by limitation under Section 158BFA(3)(c) of the IT Act, which prescribes a six-month period from the date of receipt of the ITAT order (28.04.2006), expiring on 27.10.2006. - Revenue's Argument: The Revenue contended that the ITAT order did not attain finality due to subsequent appeals, and the limitation should be reckoned from the Supreme Court's order dated 02.05.2018. The penalty proceedings were thus continued with the notice dated 12.09.2018, well within six months of the Supreme Court's decision. - Court's Analysis: - Section 158BFA(3)(e): The court noted that this provision allows for two periods of limitation. The first is the end of the assessment year in which the assessment order was passed (31.03.2005), which does not apply here due to ongoing appeals. The second is from the date penalty proceedings are initiated, which in this case was 31.08.2004 but lay dormant due to appeals. - Continuation of Proceedings: The notice dated 12.09.2018 was deemed a continuation of the penalty proceedings initiated on 31.08.2004, and thus within the permissible period post the Supreme Court's order. - Section 275 of IT Act: The court distinguished between penalties under Section 271(1)(c) and Section 158BFA(2), noting that the latter's limitation is governed by Section 158BFA(3)(c), which predates Section 260A appeals to the High Court. - Doctrine of Merger: The court applied this doctrine, indicating that the Supreme Court's order merges with the ITAT's order, thus validating the continuation of penalty proceedings. Conclusion: The court concluded that the impugned order is not barred by limitation and is not liable to be set aside as time-barred. Decision: The writ petition is dismissed, and parties are left to bear their respective costs. Consequently, the connected miscellaneous petition is closed.
|
