TaxTMI 
TaxTMI 
2009 (1) TMI 36
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....1)(c), the same having been passed more than six months from the end of the month in which the show cause notices were issued" 2. The assessee/respondent is a company incorporated in Japan and has a liaison office in India. A survey operation under section 133A of the Income Tax Act, 1961 (hereinafter referred to as "the said act") was carried out in the assessee's premises at 8, Balaji Estate, Guru Ravidas Marg, Kalkaji, New Delhi, on 4.12.1998. In the course of the survey, statements of various expatriates working for the assessee were recorded and they admitted that a part of their salary was being paid to them in India and some part was being received by them in their native country. Consequent upon the said survey, the assessee sent a letter dated 18.01.1999 to the income-tax officer and enclosed therewith in respect of each of the individual expatriates the following documents:- 1. Income-tax computations for the financial years 1987-88 to 1993-94 2. Salary certificates from the employer, stating the salary paid to the individual employees 3. Form-16's issued to the individual employees by the employers in India. A summary statement of the total amount which wa....
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....tax and interest deposited by it and the other companies of the IKEA group on account of their expatriate employees. Consequent upon such a request, the chartered accountants of the assessee sent a letter dated 12.07.1999 to the Joint Commissioner of income-tax enclosing therewith the reconciliation statement in respect of the additional tax and interest deposited by the IKEA group on account of their expatriate employees. Insofar as the assessee was concerned, the additional tax liability was shown as Rs 49,91,289/-, which was the same as indicated in the earlier letter dated 18.01.1999 and as mentioned in the said show cause notice. The said reconciliation statement also indicated the interest liability to be Rs.49,93,958/-. Consequently, inasmuch as an additional amount of Rs.1,52,00,000/-had been deposited on 08.01.1999, the amount of refund due from the tax department was shown as Rs 52,14,753/-. 5. In response to the show cause notice, the assessee sent a written reply on 26.07.1999 to the Additional Commissioner of income-tax. In the said reply, the assessee took the position that the assessee had been under a genuine belief that as the payments were made outside India by....
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.... passed by the Joint Commissioner of income-tax, the assessee preferred appeals before the Commissioner of income-tax (appeals), who, by an order dated 04.12.2002 accepted the plea of the petitioner on the point of limitation and set aside the penalty order dated 16.03.2000. Since the Commissioner of income-tax (appeals) had accepted the plea of limitation, he did not examine the question of penalty on merits inasmuch as it had become academic. The Commissioner of income-tax (appeals) followed the decision of the Tribunal in the case of Lurgi India company Ltd wherein the Tribunal had observed that for the purpose of section 271C, the time available for passing an order imposing penalty is six months from the end of the month in which action for imposition of penalties initiated. The Commissioner of income-tax (appeals) also referred to the decision of the Tribunal in the case of Mitsui and Co Ltd versus CIT (1999) 65 TTJ 1 in order to emphasize the distinction between the provisions of section 271C and the provisions of section 271(1)(c) where the penalty proceedings have to be initiated during the course of assessment proceedings. He held that penalty proceedings under sect....
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....f, continuation, or culmination of any other proceeding is not a requirement for initiating penalty proceedings under section 271C of the said Act and no such pre-condition ought to be read into the statute. Secondly, it was contended, even if it be assumed that penalty proceedings were initiated in the course of verification proceedings, the said proceedings stood completed on 18.01.1999 when the assessee submitted all the details of additional tax and interest payable after having paid the same and that, too, in excess on 08.01.1999. The show cause notice dated 26.06.1999 itself only referred to the letter dated 18.01.1999 (wrongly mentioned as 18.12.1999). There is no mention of any pending proceeding. It was, therefore, submitted that the revenue's reliance on the letter of 12.07.1999 is a mere pretence of showing that some verification proceeding was pending and that the same was completed only on 12.07.1999. The learned counsel for the respondent submitted that the information given in the letter of 12.07.1999 was nothing but a repetition of the information already supplied through the letter dated 18.01.1999. Moreover, the letter of 12.07.1999 was more for the purposes of th....
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....hin sub-clauses (a) or (b) and, in that sense, section 275(1)(c) is a residuary provision. 12. There are two periods of limitation prescribed under sub-clause (c), the first period relates to those category of cases where action for the imposition of penalty has been initiated in the course of "some" proceedings. In such a situation, the period of limitation prescribed is upto the end and including the financial year in which such proceedings are completed. 13. The second part of Section 275(1)(c) pertains to all cases falling under clause (c). This is so because the action for imposition of penalty is contemplated in both parts. Penalty can only be imposed under Chapter XXI by following the procedure prescribed in Section 274 of the said Act which stipulates that no order imposing a penalty can be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. Thus, in any eventuality, before an order imposing a penalty can be passed, the assessee has to be heard or has to be given a reasonable opportunity of being heard. This can only happen when action for imposition of penalty is initiated and the assessee is put to notice with reg....
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.... proceedings. In such cases, the first part of Section 275(1)(c) would have no application and it is only the period of limitation prescribed in the second part which would apply. Since only one period of limitation would be applicable, the expression "whichever period expires later" would have to be read as that very period of limitation." From the above observations in Subodh Kumar Bharagava (supra), it is clear that that every penalty order under section 275(1)(c) emanates from a notice/show cause notice. However, such notice may or may not arise in the course of some other proceeding. Where it does arise in the course of some other proceeding, two periods of limitation would be available. One starting from the completion of the other proceeding and ending with the end of the financial year. The second, starting from the end of the month in which the penalty proceeding is initiated and ending six months therefrom. In such a situation, the later of the two end-points of limitation would apply. But, where the penalty proceeding does not emanate from any other proceeding, then only the six month period from the end of the month of initiation of the penalty proceeding would be av....
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....scope and ambit of the provisions of section 133A of the act. The survey operation commenced and concluded on 04.12.1998. As regards the submission that verification proceedings were pending, we note that under the said act there is no proceeding which goes by the name of verification proceedings. It is true that in the course of some proceedings such as assessment proceedings, the assessing officer may undertake verification of certain facts but, there is no provision for an independent and formalized verification proceeding under the said Act. Thus, apart from the fact that no verification was underway when the show cause notice was issued, the plea of pendency of verification proceedings cannot be accepted even in law. 16. Clearly, the present case falls in the third category of cases referred to in Subodh Kumar Bhargava (supra) where the initiation of action for imposition of penalty is not in the course of some proceedings. Thus, the first part of Section 275(1)(c) would have no application and it is only the period of limitation prescribed in the second part which would apply. And, as held in Subodh Kumar Bhargava (supra), since only one period of limitation would be appli....