M/S Bansal Wine Products, Ludhiana v. The Commissioner Of Income Tax, Ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. ITR No.15 of 1998 Date of decision: 22.9.2010 M/s Bansal Wine Products, Ludhiana -----Petitioner Vs. The Commissioner of Income Tax, Ludhiana ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. D.K.Kaushal, Advocate for the petitioner.Mr. Rajesh Katoch, Advocate for the respondent. Adarsh Kumar Goel,J. 1.The Income Tax Appellate Tribunal, Chandigarh hasreferred following question of law for opinion of this Court underSection 256(1) of the Income Tax Act, 1961 (for short, ‘the Act’),arising out of its order dated 22.10.1996 in ITA No.921/Chandi/96,relating to assessment year 1980-81:- “Whether on the facts and circumstances of the case,the ITAT was right in law in upholding the CIT(A)’sdecision on debarring the assessee from pleading,during penalty proceedings, the invalidity of theassessment having become barred by time simplybecause such pleading was omitted by mistake, duringthe assessment proceedings?” 2. The Assessing Officer in the course of assessment invokedSection 144B of the Act for proposing addition beyond specifiedamount and after due approval completed the assessment. Penalty wasalso levied apart from making addition to the declared income. Theassessment became final but on appeal against the levy of penalty, theassessee raised an objection that Section 144B of the Act was notapplicable in view of concurrent jurisdiction being available with theAssessing Officer under section 125A(1) of the Act and thus, theperiod spent in proceedings under section 144B of the Act could not beexcluded. If the said period is not excluded, the assessment was barredby limitation, the assessment order having been passed on 27.8.1983which was beyond 31.3.1983. This plea was rejected. Apart fromholding that plea raised by the assessee only in appeal against levy ofpenalty could not be considered, following finding of the AssistantCommission of Income Tax (ACIT) was affirmed:- “Further, according to section 144B(1), it wasmandatory for the ITO to forward the draft assessmentorder to the IAC because difference between incomereturned and proposed to be assessed was more thanRs.1 lakh. It is pertinent to note that word ‘shall’ hasbeen used in section 144B(1) of the IT Act and as suchthere was no option with the ITO except to forward thedraft assessment order to the IAC for approval beforefinalizing the assessment.” We have heard learned counsel for the parties and perused 4.We find that the Tribunal decided the matter on meritsagainst the assessee and though it was alternatively observed that theassessee could not be allowed to raise the said question, even after dueconsideration thereof, decision was taken against the assessee. If thedecision of the Tribunal on merits was justified, even if the assesseewas allowed to raise the issue of limitation for the first time in penaltyproceedings, the assessee could not succeed as it has been held by theTribunal that Section 144B of the Act was rightly invoked, thedifference in proposed addition and assessed income being more thanRs.1 lac. Even though, we are of the opinion that the assessee couldhave raised the question for the first time in penalty proceedings, inview of finding on merits, the assessee could not succeed. The questionis answered accordingly. 5.The reference is disposed of. (Adarsh Kumar Goel) Judge September 22, 2010‘gs’ (Ajay Kumar Mittal) Judge