Pr. Commissioner Of Income Tax Central v. M/S Govindkripa Buildmart Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. D.B. Income Tax Appeal No.166/2015 Pr. Commissioner of Income Tax, Centralvs. M/s Govindkripa Buildmart Pvt. Ltd. D.B. Income Tax Appeal No.167/2015 Pr. Commissioner of Income Tax Central vs. M/s Govindkripa Buildmart Pvt. Ltd. DATE OF ORDER ::: 19.10.2016 HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE MAHENDRA MAHESHWARI Mr. Archana for Mr. Anil Mehta for the appellant. Mr. Mahendra Gargieya for the respondent. ***** 1.By way of the appeals, the department hasassailed the judgment & order of the Tribunalwhereby the Tribunal has partly allowed the appealpreferred by the assessee and dismissed the appealof department where CIT(A) has partly allowed theappeal of the assessee. 2.This Court while admitting the appeal framedfollowing substantial questions of law:- “(i) Whether the ITAT has erred in lawand on face by holding that the timelimit prescribed for completion ofpenalty proceedings under Section275(1)(a) is applicable and not 275(1)(c). (ii) Whether the ITAT has erred in lawin holding that in quantum appeal, theCIT(A) as well as ITAT has notconsidered the nature of transactionand has given wrong findings.” 3.The brief facts of the case are that a searchunder Section 132 of the Act was carried out atthe assessee's business premises and residential premises of its members, during which stock-in-trade, valuables, cash, jewellery, documents,books of accounts and/or loose papers were foundand seized. During the course of assessmentproceedings u/s 153A r.w. Section 143(3) of theIncome Tax Act the assessing officer initiated thepenalty proceedings on 30/12/2009. Meanwhile theassessee went in appeal against the additions madeby the assessing officer. The order of the CIT(A)was received on 30/3/2011 against which furtherappeal was filed before the ITAT. The order ofITAT was received on 14/2/2012. In the meantime areference was made to the Addl. CIT, centralrange, Jaipur for imposing penalty u/s 271E of theIncome Tax Act 1961. Show cause notice was issuedvide letter dt. 24/2/2012 by the Addl. CIT andpenalty amounting Rs. 1,77,00,000/- was imposed byorder dated 30/3/2012. 4.Both the appeals were directed to be heardlooking to the earlier order passed by this Courtwhere it has been observed that in the interest ofboth the sides, it will be advisable to disposeoff the matter at initial stage on 4/1/2016 &26/7/2016, therefore, the matter has been taken uptoday. 5.Counsel for the appellant contended that theTribunal has seriously committed an error inlevying the penalty on 30/3/2011. In fact, thecompetent authority-Commissioner issued noticewithin the limitation and therefore, question is not required to be answered whether 275(1)(a) whois the competent authority under the Act. 6.Counsel for the respondent contended that thesecond issue has come to be decided by thedecision of this Court in CIT Vs. Hissaria Bros.reported in (2007) 211 CTR 156 (Raj.) and CIT Vs.Jitendra Singh Rathore reported in (2013) 83 DTR0227 (Raj.) as well as Bombay Tribunal in LodhaBuilders (P) Ltd. vs. Assistant Commissioner ofIncome Tax reported in (2014) 163 TTJ 778 (MumTrib) and Supreme Court in CIT vs. Hissaria Bros.reported in (2016) 288 CTR 244 (SC) and circularof CBDT which reads as under:- not required to be answered whether 275(1)(a) whois the competent authority under the Act. 6.Counsel for the respondent contended that thesecond issue has come to be decided by thedecision of this Court in CIT Vs. Hissaria Bros.reported in (2007) 211 CTR 156 (Raj.) and CIT Vs.Jitendra Singh Rathore reported in (2013) 83 DTR0227 (Raj.) as well as Bombay Tribunal in LodhaBuilders (P) Ltd. vs. Assistant Commissioner ofIncome Tax reported in (2014) 163 TTJ 778 (MumTrib) and Supreme Court in CIT vs. Hissaria Bros.reported in (2016) 288 CTR 244 (SC) and circularof CBDT which reads as under:- “1. It has been brought to thenotice of the Central Board ofDirect Taxes (hereinafter referredto as the Board) that there areconflictinginterpretationsofvarious High Courts on the issuewhetherthelimitationforimposition of penalty under sections271D and 271E of the Income tax Act,1961 (hereafter referred to as theAct) commences at the level of theAssessing Officer (below the rank ofJoint Commissioner of Income Tax.)or at level of the Range authorityi.e. the Joint Commissioner ofIncome Tax./Addl. Commissioner ofIncome Tax.Some High Courts have held that thelimitation commences at the level ofthe authority competent to imposethe penalty i.e. Range Head whileothers have held that even thoughthe Assessing Officer is notcompetent to impose the penalty, thelimitation commences at the level ofthe Assessing Officer where theAssessing Officer has issued showcause notice or referred to theinitiationofproceedingsinassessment order.2.On careful examination of thematter, the Board is of the viewthat for the sake of clarity anduniformity, the conflict needs to beresolved by way of a “DepartmentalView”. 3. The Hon'ble Kerala High Court inthe case of Grihalaxmi Vision v.Addl. Commissioner of Income Tax,Range 1, Kozhikode, vide its orderdated 8.7.15 in ITA Nos. 83&86 of2014, observed that, “Question to beconsidered is whether procedings forlevy of penalty, are initiated withthe passing of the order ofassessment by the Assessing Officeror whether such proceedings havecommenced with the issuance of thenotice issued by the JointCommissioner.Fromstatutoryprovision, it is clear that thecompetent authority to levy penaltybeing the Joint Commissioner.Therefore,onlytheJointCommissionercaninitiateproceedings for levy of penalty.Such initiation of proceedings couldnot have been done by the AssessingOfficer. The statement in theassessmentorderthattheproceedings under Section 271D and Eare initiated is inconsequential. Onthe other hand, if the assessmentorder is taken as the initiation ofpenalty proceedings, such initiationis by an authority who isincompetent and the proceedingsthereafter would be proceedingswithout jurisdiction. If that be so,the initiation of the penaltyproceedings is only with theissuance of the notice issued by theJoint Commissioner to the assessmentto which he has filed his reply.”4.The above judgment reflects the“Departmental View”. Accordingly,the Assessing Officers (below therank of Joint Commissioner of IncomeTax) may be advised to make areference to the Range Head,regarding any violation of theprovisions of section 269SS andsection 269T of the Act, as the casemay be, in the course of theassessment proceedings (or any otherproceedings under the Act). TheAssessing Officer, (below the rankof Joint Commissioner of Income Tax)shall not issue the notice in thisregard. The Range Head will issuethe penalty notice and shalldispose/complete the proceedingswithin the limitation prescribed u/s275 (1)(c) of the Act.5.Where any High Court decidesthis issue contrary to the“DepartmentalView”,the“Departmental View” thereon shallnot be operative in the area fallingin the jurisdiction of the relevant High Court. However, the CCITconcerned should immediately bringthe judgment to the notice of theCentral Technical Committee. The CTCshall examine the said judgment onpriority to decide as to whetherfiling of SLP to the Supreme Courtwill be adequate response for thetime being or some legislativeamendment is called for.6.The above clarification may bebrought to the notice of allofficers.” 7.We have heard counsel for the appellant andcounsel for the respondent. 8.Taking into consideration that under Section275(1)(c) of the Act, it is no doubt thatCommissioner is the competent authority and othercontention that the notice was within limitation,in our view is misconceived inasmuch as AO on30/12/2009 issued notice to the assessee and hewas clear that no penalty proceedings required tobe initiated. We ought to have held that theDepartment has taken advantage of any wrong. 9.We are of the opinion that the issues aresquarely covered therefore, in both the appeals weanswer the question raised in favour of theassessee and against the Department. The appeals are accordingly dismissed. A copy of this order be placed in each file. (Mahendra Maheshwari), J. (K.S. Jhaveri), J.