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TMI Blog2019 (8) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT/NCC-20(1) / CHN made by sole respondent (hereinafter 'impugned order' for brevity) is barred by limitation. Notwithstanding several averments made, grounds / contentions raised in the affidavit filed in support of the writ petition and the counter affidavit filed by the lone official respondent, both learned counsel before this court agreed without any disagreement or disputation that the entire writ petition now turns on limitation issue and arguments were advanced on this basis. 3 In the light of the narrow compass on which instant writ petition now turns, short facts shorn of micro details will suffice and the same is given infra under the caption 'Factual Matrix in a Nutshell'. 4 Factual Matrix in a Nutshell : (a) Subject matter of instant writ petition arises under the 'Income Tax Act, 1961' ('IT Act' for brevity). (b) Genesis of this writ petition was on 17.07.2002 when a search by the Income Tax Officials commenced in the office and residential premises of the writ petitioner. This search lasted till 21.8.2002. (c) In the course of search, evidences were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, i.e., assessment made by the assessing officer on 31.8.2004 stood resuscitated qua tax liability and interest. To be noted, in the order made by the original authority on 31.8.2004, it was made clear that penalty proceedings under Section 158BFA(2) of IT Act will be initiated separately qua undisclosed income for the said block period. While this was mentioned in the assessment order itself, a separate 'Show Cause Notice' ('SCN' for brevity) was also issued on the same day, i.e., 31.8.2004 calling upon assessee to appear in person on date and time specified therein to show cause as to why penalty under section 158BFA(2) of IT Act should not be imposed. (h) This SCN also did not progress owing to assessment order going through four levels of appellate adjudication, i.e., before appellate authority, ITAT, Hon'ble Division Bench of this Court and Hon'ble Supreme Court of India, the details and trajectory of which have been set out supra. (i) Therefore, after the order of Hon'ble Supreme Court of India on 2.5.2018, when the original assessment order made by the original authority on 31.8.2004 stood resuscitated, respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) However, as would be evident from the trajectory which the assessment order took in the instant case, assessment proceedings did not stop with the order of ITAT. The order of ITAT was carried in appeal to this court by the Revenue under Section 260A of IT Act unsuccessfully and thereafter Revenue had carried it to Hon'ble Supreme Court successfully. (c) One important and significant aspect of the matter is both sides submitted without any disputation that all appeals, i.e., first appeal by writ petitioner Assessee, two appeals by writ petitioner assessee and Revenue to ITAT, Tax Case Appeal to this court by Revenue and S.L.P in Hon'ble Supreme Court were all filed within the prescribed time limits. (d) Adverting to the aforesaid provisions of law, learned counsel for writ petitioner contended that the statute (to be precise, section 158BFA(3)(c)) very clearly mentions about the order of first appellate authority, namely Commissioner of Appeals-I in this case and ITAT, but does not talk about TCA in this court or further proceedings in Hon'ble Supreme Court. (e) In an attempt to buttress this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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 Commissioner (Appeals) and statutory appeal to ITAT under Section 253 of IT Act did not get completed in less than a year. (i) The next limb talks about a period, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions were brought into statute books in their present form before section 260A of IT Act was brought into statute books. To be noted, section 260A of IT Act 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. (m) There is one more way of looking at this aspect of the matter. Section 260A appeal to this court is on substantial question/s of law only and therefore ITAT is in any case the last forum on facts. (n) One more way of looking at the matter, albeit on a demurrer premise is, even if 12.9.2018 notice is not construed as continuation of 31.8.2004 SCN, impugned order will not be hit by limitation as section 158BFA(3)(e) does not talk about penalty proceedings 'already initiated' in past tense, but it talks about penalty proceedings in praesenti. To be noted, the term used is 'is' and not 'was'. (o) Be that as it may, though an attempt made by learned counsel for wr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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