M/S Dewan Engineering Works Sirhind v. The Commissioner Of Income Tax, Patiala And Another

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No.938 of 2008(O&M)Date of decision: 14.10.2009 M/s Dewan Engineering Works Sirhind Vs. The Commissioner of Income Tax, Patiala and another. -----Appellant ----Respondents CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE GURDEV SINGH Present:-Mr. Rajiv Sharma, Advocate for the appellant. Mr. Rajesh Katoch, Advocate for the respondents. Adarsh Kumar Goel,J. 1.The assessee has preferred this appeal under section 260Aof the Income Tax Act, 1961 (in short, ‘the Act’) against the orderdated 18.8.2008 passed by the Income Tax Appellate Tribunal,Chandigarh ‘A’ Bench in M.A No.158/Chd/2007 arising out of its ownorder dated 9.4.2007 in ITA No.766/Chd/2007, for the assessment year1986-87, proposing to raise following substantial questions of law:- “i) Whether, on the facts and in the circumstances of thecase, the Tribunal has fallen in error in holding that thepenalty imposed by the AO has not become barred by timelimitation despite there being bar under section 275(1)(a)of Income Tax Act, 1961 that no penalty can be imposedafter the expiry of six months from the end of the month inwhich the order of the CIT(A) is received by the CIT? ii) Whether, on the facts and in the circumstances of thecase, the Tribunal has fallen in error in holding that sincethe quantum appeal was pending before the Tribunal, the limitation period for imposing penalty had not yet expired,despite the fact that as per the ratio of the judgment ofHon’ble Supreme Court in the case of Computwel SystemsLimited v. W.Husan and another, reported in 260 ITR 86(SC), the appeal could be regarded as pending only if thedelay had been condoned?” 2.Reassessment proceedings were taken against the assesseein the light of material found during search and in the light of facts thatwere revealed, proceedings for penalty were also initiated. The levy ofpenalty was challenged by the assessee on the ground that it wasbeyond the stipulated period of limitation under section 275 of the Acti.e. six months from the date of receipt of order of the appellateauthority. This plea was rejected by the CIT(A) and the said order has been upheld by the Tribunal. The Tribunal held as under:- “We have considered the submissions. Thelearned CIT(A) has dealt with the issue in para 4 of itsorder wherein the assessee submitted that it could notfile the appeal before the Tribunal against the orderdated 25.2.1998 in time and belated appeal was filedon 24.8.1998 which was late by 108 days. The delaywas declined to be condoned by the Tribunal videorder dated 26.6.2003. The relevant assessment folderhas been considered by the learned CIT(A). TheAssessing Officer issued the notice dated 8.7.1998 asto why the penalty should not be imposed undersection 271(1)(c) to which the assessee vide its letterdated 16.7.1998 requested the Assessing Officer todrop the penalty proceedings till the finalization ofappeal. In response to this letter, the Assessing officer “We have considered the submissions. Thelearned CIT(A) has dealt with the issue in para 4 of itsorder wherein the assessee submitted that it could notfile the appeal before the Tribunal against the orderdated 25.2.1998 in time and belated appeal was filedon 24.8.1998 which was late by 108 days. The delaywas declined to be condoned by the Tribunal videorder dated 26.6.2003. The relevant assessment folderhas been considered by the learned CIT(A). TheAssessing Officer issued the notice dated 8.7.1998 asto why the penalty should not be imposed undersection 271(1)(c) to which the assessee vide its letterdated 16.7.1998 requested the Assessing Officer todrop the penalty proceedings till the finalization ofappeal. In response to this letter, the Assessing officer vide letter dated 22.7.1998 asked the assessee tosubmit supporting evidence of filing the appeal beforethe Tribunal, which was followed by anotherreminder, dated 31.7.1998 issued to the assessee.Thereafter, the assessee vide its letter dated 24.8.1998mentioned that assessee filed the appeal on 24.8.1998for the assessment years 1986-87, 1990-91 to 1992-93before the Tribunal and requested to keep the penaltyproceedings in abeyance till the decision of theTribunal. In such a situation, we are not in agreementwith the argument of the assessee that it is barred bylimitation because firstly the period of six monthsfrom the end of the month in which CIT(A)’s orderwas received, still time was there and secondly, thematter was got delayed by the assessee himself with arequest that the penalty proceedings may be kept inabeyance in such a situation, now the AssessingOfficer cannot blame the department, it is pertinent tomention here that the Tribunal dismissed the appealthe assessee and delay was also not condoned. It isalso a fact that as on 24.8.1998 the appeal against theorder of the learned CIT(A) was pending before theTribunal. Therefore, we have not found any merit inthe contention of the assessee. The conclusion of thelearned CIT(A) is upheld.” 3.We have heard learned counsel for the parties and perusedthe record. 4.Learned counsel for the appellant submits that since theorder of the CIT(A) was dated 22.1.1998, limitation for passing orderof penalty commenced from the receipt of the said order. The Tribunal wrongly held that the limitation will commence from the date ofreceipt of order of the Tribunal as the appeal filed before the Tribunalwas beyond limitation and delay was not condoned. In thesecircumstances, the filing of appeal and pendency thereof had to beignored. Reliance has been placed on judgment of the Hon’bleSupreme Court inComputwel(supra). 5.Learned counsel for the revenue opposes this submissionand points out that the judgment relied upon is distinguishable, thesame being in relation to proceedings under the Scheme known as ‘KarVivad Samadhan’, introduced by Finance Act No.2 of 1998. As per thesaid scheme, the assessee sought to exclude time taken in pursuing therevision petition under section 264 of the Act which was barred bylimitation and delay was not condoned. The Hon’ble Supreme Courtheld that the revision petition having been filed beyond delay whichwas never condoned could not be treated as pending. The said analogycannot be applied for limitation under section 275 of the Act. He reliesupon judgment of the Hon’ble Supreme Court inMela Ram & Sonsv. CIT,(1956) 29 ITR 607. The issue considered therein was in thecontext of limitation for further appeal. Appeal before the lowerappellate court was beyond time. It was held that date of orderdismissing the appeal as time barred was the date from which thelimitation was to commence.6.In the present case, the assessee filed appeal before theTribunal and also wrote a letter seeking deferment of penaltyproceedings till the appeal was decided. On the request of the assessee, the proceedings were deferred and penalty proceedings were initiatedafter order of the Tribunal. Even if delay was not condoned and theassessee filed time barred appeal and on that ground sought defermentof penalty proceedings, the assessee could not be heard to say thatfiling of appeal should be ignored. No one can take advantage of hisown wrong.The judgment in Computewel (supra) being in differentcontext is distinguishable. 7.No substantial question of law arises. 8.The appeal is dismissed. (Adarsh Kumar Goel)Judge October 14, 2009‘gs’ (Gurdev Singh)Judge