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TMI Blog2009 (6) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... t has also been stated that the cross-objection has been filed by way of abundant precaution to challenge the impugned penalty order on the ground of limitation at the belated stage. It is also stated that the delay of approximately six months in filing the cross- objection is wholly bona fide as the respondent/cross-objector was not aware of its legal right to challenge this issue by way of cross-objection. The reliance has been placed on the following case law : (i) National Thermal Power Co. Ltd. v. CIT (1999) 157 CTR (SC) 249 : (1998) 229 ITR 383 (SC); (ii) S. Nazeer Ahmed v. State Bank of Mysore & Ors. (2007) 11 SCC 75; (iii) Assam Company (India) Ltd. v. CIT (2002) 176 CTR (Gau) 406 : (2002) 256 ITR 423 (Gau); (iv) CIT v. Mohd. Ayyub & Sons Agency (1992) 197 ITR 637 (All). 3. The learned Departmental Representative objected for admission of the cross-objection and stated that there is no reasonable cause explained by the assessee for filing the cross-objection belatedly. 4. After considering the submissions of both the parties and the contents of the petition for condonation of delay, we are of the view that although the explanation given by the assessee may not be suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law and facts but its adjudication does not depend upon specific ground to be raised by the parties. Limitation decides the accrual of rights of one party and extinguishment of rights of other party to the dispute. Therefore if the issue of limitation is taken up in arguments by the parties, it would be sufficient for the Court to consider and examine it after hearing other party on the objections raised as to whether action of the authorities is within limitation or not. We are also of the view that once IT Act provides time limitation for taking an action against a taxpayer then not taking action within that time would create a right in favour of the assessee. Issue of limitation is a mandate to the judicial forum and it is required to adjudicate the same if it is brought into its knowledge or even suo motu when it strikes to the Court during appeal proceedings. In this regard we refer to the decision of Hon'ble Supreme Court in Union of India v. British India Corporation Ltd. & Ors. (2004) 190 CTR (SC) 385 : (2004) 268 ITR 481 (SC). The facts in that case were : 'The assessee filed returns under the Business Profits Tax Act, 1947, for the chargeable accounting periods endin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The above position as provided under the law cannot be disputed nor has it been disputed before us. But in all fairness it is always desirable that if the defendant would like to raise such an issue, he would better raise it in the pleadings so that the other party may also note the basis and the facts by reason of which suit is sought to be dismissed as barred by time. It is true that the Court may have to check at the threshold as to whether the suit is within limitation or not. Similar view was held by Hon'ble Supreme Court in Ittyavira Mathai v. Varkey Varkey & Anr. AIR 1964 SC 907 (Civil Appeal No. 372 of 1960, dt. 15th Jan., 1963) in the context of s. 3 of Limitation Act that it is true that s. 3 of the Limitation Act is premptory and that it is the duty of the Court to take notice of this provision and give effect to it even though the point of limitation is not referred to in the pleadings .....' Hon'ble Supreme Court relied on the decision of Hon'ble Privy Council in Maqbul Ahmad v. Onkar Pratap Narain Singh AIR 1935 PC 85. In Harish Uppal v. Union of India (from Delhi), Special Leave Petn. (C) No. 5087 of 1984, with Civil Misc. Petn. No. 34318 of 1985, dt. 30th March, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been shown as agricultural income. The AO also pointed out that the learned CIT(A) had allowed a relief on account of additions made on disallowance of Rs. 3,77,167 and against the said order of the learned CIT(A), the appeal filed by the Department was dismissed by the Tribunal vide order dt. 13th Oct., 2006. The AO also pointed out that a penalty notice dt. 23rd March, 2004 was issued and served on the assessee. The submission of the assessee was that the offer to tax the income was with a condition that penalty proceedings under s. 271(1)(c) of the Act were not to be initiated. The AO did not find merit in the submissions of the assessee and levied the penalty of Rs. 3,80,000. 10. The assessee carried the matter to learned CIT(A) and submitted as under : "1.On p. 4 of his assessment order, the AO himself mentioned that there was a land in the names of partners in District Lucknow and copies of Khasra and Khatauni were filed on 20th Feb., 2004 and 8th Dec., 2003. 2.Since the land belonged to the partners, it was not in the balance sheet of the appellant firm. Copies of the purchase deeds of agricultural land appearing in the names of the partners were filed. 3.Expenses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 271(1)(c) imposing the penalty of Rs. 3,80,000 has been passed by the ITO-1(1), Lucknow. 12. The learned counsel for the assessee, during the course of hearing, reiterated the above submissions and further submitted that the penalty order under s. 271(1)(c) dt. 20th April, 2007 is wholly without jurisdiction as the same is barred by limitation as per the provisions contained in proviso to s. 275(1). 13. In his rival submissions, the learned Departmental Representative did not dispute the dates and events given by the learned counsel for the assessee however, submitted that the appeal was pending before the Tribunal so the limitation starts from the order of the Tribunal and not from the order of the CIT(A) received by the AO. He also submitted that the proviso to section cannot substitute the main section. It was contended that the ratio decidendi of a case was to be read in context of the facts which were present before the Hon'ble judicial forum. Reliance was placed on the following case law : 1. Saci Allied Products Ltd. UP v. CCE (2005) 7 SCC 159; 2. CST v. H.M. Esufali H. M. Abdulali (1973) 90 ITR 271 (SC); 3. Union of India v. Dharamendra Textile Processors (2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the financial year in which the proceedings in the course of which action for imposition of penalty has been initiated, are completed or within one year from the end of the financial year in which the order of the CIT(A) is received whichever is later. In the present case, the learned CIT(A) passed the order on 11th March, 2005, the penalty proceedings were initiated by the AO in March, 2004 when the assessment order was passed on 23rd March, 2004. The learned CIT(A) had passed the order dt. 11th March, 2005 so the penalty order was to be passed within one year from the end of the financial year in which the order of the CIT(A) was received by the AO. In the present case the appeal was filed by the Department in Tribunal in the month of May, 2005, therefore the order must have been received before the said date, hence the relevant financial year ended on 31st March, 2006, as such the penalty order was to be passed upto 31st March, 2007. However, the AO has passed the penalty order levying the penalty under s. 271(1)(c) of the Act on 20th April, 2007 therefore, the penalty order passed was barred by limitation and does not survive. Accordingly, the plea taken by the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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