9911796707
TMI Blog2014 (9) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... ars is bad in law and the same needs to be deleted. 3. The assessee company craves leave to add, to amend, alter I delete and I or modify the above ground of appeal on or before the final date of hearing. " 2. Assessee-company, engaged in the business of investment, financing, discounting etc. , filed its return of income on 29. 10. 2002 declaring loss of Rs. 10, 57, 330/-. Assessing officer (AO) finalised the assessment u/s. 143(3) of the Act, on 27. 01. 2005, determining the total loss of Rs. 6, 760/-. Effective Ground of appeal pertains to imposition of penalty u/s. 271(1)(c) of the Act. During the assessment proceedings AO found that the assessee had claimed an expenditure of Rs. 10, 50, 578/- on account of discounting charges. He directed the assessee to file details of discounting charges. After considering the reply of the assessee, the AO asked it to file the confirmation of the party and the copy of the agreement requiring it to pay discount charges. The assessee did not provide the necessary details and informed him that the party in question, M/s. Protech Circuit Breakers Ltd. (PCBL), Baorda had closed down its business, that it was that it was providing the amounts pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evied penalty of Rs. 7, 49, 972/-, 200% of the tax sought to be evaded. 2. 1. Against the penalty order of the AO, the assessee preferred an appeal before the First Appeal Authority(FAA). After considering the submissions of the assessee and the assessment order, he held that the objection raised by the assessee relating to limitation/passing of the penalty order beyond the permissible limit was not correct and tenable, that the assessee had filed an appeal to the ITAT, that the appeal was dismissed on 05. 09. 2008, that it had withdrawn the appeal, that the limitation would start from 05. 09. 2008 only, that the order imposing the penalty had been passed within the stipulated time, permitted under the Act. He further held that his predecessor had found it strange that the identity of the parties were not known to the assessee to whom payments were still to be made"and at no stage the assessee could furnish the supporting evidence for it's claim of discounting charges, that the assessee was in no position to explain and substantiate its claim of discounting charges. FAA relied upon the judgment of the Hon'ble Supreme Court delivered in the case of Reliance Petroproducts Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led before the Tribunal, that it had filed inaccurate particulars. He relied upon the case of Rayala Corporation P. Ltd. (288 ITR 452) of Hon'ble Madras High Court. In the rejoinder the AR stated that the in the matters of Rayala Corporation P. Ltd. (supra) and Mohair Investment and Trading Co. P. Ltd. (345 ITR 51) of Hon'ble High Courts had not considered the budget speech and other related material. 2. 3. We have heard the rival submissions and perused the material before us. The undisputed facts of the case are that the AO had made certain additions to the income of the assessee, while finalsing the assessment, that the appeal filed by the assessee was dismissed by the FAA, that the assessee itself withdrew the quantum appeal filed before the Tribunal, that the AO levied penalty u/s. 271(1)(c)of the Act and same was confirmed by the FAA, that the assessee has raised the issue of time limit before us, that the AR fairly agreed that two of the Hon'ble High Courts had decided the issue against the stand taken by him, that according to the assessee the Hon'ble Courts had not considered the speech of the FM and the other material. Here, we would like to mention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the importance of reports of administrative committee and the speech of the FM, while dealing with the provisions of section 24 of the Indian Income tax Act, 1922. Counsel appearing on behalf of the assessee had drawn the attention of the Hon'ble court to the report of the Direct Taxes Administration Enquiry Committee 1958-59, which contained extracts from the speech of the FM made in Parliament while piloting proviso (a) to Explanation 2 of section 24(1) of the Act. Deciding the matter the Hon'ble Court held as under: "It is only in cases where the language of any section of the statute is vague and the language is capable of being interpreted in different ways that a court may derive some guidance from the speech of the Minister who was piloting the particular piece of legislation in the legislature. In our view, the language of proviso (a) to Explanation 2 is quite clear and we need not, therefore, seek any guidance in the interpretation of this proviso from the speech of the Finance Minister. . . . . . Administration Enquiry Committee. But it is not necessary for us to express our view regarding the same, because views expressed in such reports need not necessaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement of objects and reasons or the speech of the Minister could not be used as an aid to the interpretation of a provision. Finally, we would like to refer to the judgment of the Hon'ble Apex Court, that reiterates the principle that unless and until there is any ambiguity in the provisions of any Act, on external help should be taken and the Act should be read as it is. In the case of Padmasundra Rao, while deciding the issue under Land Acquisition Act, 1894, the Hon'ble Court(255ITR147)has held as under: "The court cannot read anything into a statutory provision which is plain and unambiguous. A statute is the edict of the Legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself. The court only interprets the law and cannot legislate. If a provision of law is misused and subjected to the abuse of the process of law, it is for the Legislature to amend, modify or repeal it, if deemed necessary. Legislative casus omissus cannot be supplied by judicial interpretative process. A casus om ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Income-tax Appellate Tribunal erred in holding that penalty has been levied after expiry of limitation period as laid down under section 275(1)(a) of the Income-tax Act ?" Facts of the case were that the assessee filed its return of income on 29. 10. 2001. Vide assessment order dated 28. 02. 2003, the AO completed that assessment and intimated the assessee about his intention of initiating penalty proceedings. FAA confirmed that order of the AO of 23. 12. 2005 and the Tribunal dismissed the appeal of the assessee on 11. 08. 2008. On 26. 02. 2009 the AO levied penalty u/s. 271(1)(c) of the Act and same was confirmed by the FAA on 12. 10. 2009. Consequently, the assessee approached the Tribunal which allowed the appeal of the assessee, vide order dated 30. 04. 2010, holding that penalty was imposed beyond the period of limitation as prescribed under section 275(1)(a) of the Act. While discussing the matter the Hon'ble recorded the arguments of the assessee in following manner: "On the contrary, the submission on behalf of the assessee was that the provision had been amended and the proviso introduced to carve out a new set of cases which dealt with the order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the relevance of the proviso it was further held that the proviso to section 275(1)(a) had only the effect of extending the period of imposing penalty from six months to one year within the receipt of the order of the Commissioner after June 1, 2003. We also find that while deciding the issue the Hon'ble Delhi High Court in the case of Mohir Investment & Trading Co. Pvt. Ltd. (supra) has considered the explanatory note and memorandum explaining the amendment. It is true that in the order specific mention of these documents is not there, but the order clearly shows that they had been considered. Hon'ble Court has mentioned that by introducing the proviso a separate category was carved out where the limit was extended. We find that in the CBDT circular (supra) at paragraph 80. 2 it is mentioned that penalty proceedings were to be completed within 1 year from the end of the financial year. Here it would be useful to take notice of the judgment of Rayala Corporation P. Ltd. (supra) of Hon'ble Madras High Court. In that matter Hon'ble Court had held that the limitation period for the levy of penalty would be as provided for under section 275(1)(a) that is six mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve gone through the cases relied upon by the assessee delivered by the various benches of the Tribunal, but we are unable to agree with views expressed in them in because of the above referred two judgments of the Hon'ble High Courts. We have gone through them and find that the issue has been discussed at length. We find that there is no reason as to why same should not be followed. As far as provisions of sections 115, 143, 115(o) are concerned, it is suffice to say that they all deal with substantive law and determine the rights of the assessee. A perusal of chapter XXI reveal that section 271 is a substantive provision whereas section 274 provides the procedure to be followed in giving effect to the said substantive charging provision and section 275 creates a bar of limitation against the imposition of penalty. Thus, while deciding the question of limitation as mentioned in the section, we are of the opinion that penalty order passed by the AO was within the time-limit envisaged by the Act. We also find that the FAA has reduced the penalty from 200% to 100%. Thus, his order, in our opinion, is reasonable and justifiable and it does not suffer from any legal or factual infir ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
