TaxTMI 
TaxTMI 
2023 (9) TMI 1701
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....961 without reasonable cause. 3. The assessee craves leave to add, amend, alter, drop any of the grounds of appeal." 3. Additional ground raised by the assessee, is as follows: "On the facts and circumstances of the case, the learned Commissioner of Income Tax(Appeal) erred in confirming order passed u/s 271B by the Assessing Officer, which is barred by limitation." 4. The facts of the case which can be stated quite shortly are as follows: The assessee before us is a partnership firm. During the assessment year under consideration, the Assessing Officer observed that as per ITS data, the assessee has received contractual receipts to the tune of Rs. 1,02,98,778/- from M/s Vishal Diamonds. However, the assessee did not file the return of income. Therefore, after getting prior approval from the competent authority, case of the assessee was reopened u/s 147 of the Act and notice u/s 148 of the Act was issued to the assessee on 31.03.2019 through ITBA e-proceedings and the same was duly served upon the assessee. In response to notice u/s 148 of the Act, the assessee has filed the return of income on 27.04.2019, declaring total income at Rs. Nil....
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....ere not having knowledge of compliance and therefore the same was not filed. After the said assessment year the firm has complied with all the provisions of Income Tax Act, 1961." 7. Thereafter, the assessee`s case was transferred to NFAC and further show cause notices dated 24.02.2021, 09.03.2021, 05.05.2021 and 28.07.2021 were issued to the assessee. However, the assessee did not respond to any such notices. Therefore, the case was decided by the assessing officer, keeping in view the reply of assessee. From the perusal of the reply, it was observed by the Assessing Officer that the assessee has not brought out any reasonable cause for non-furnishing of return of income and audit report even though the assessee was liable to get his accounts audited and furnish the details thereof in the return of income. Furthermore, ignorance of law is not excuse in the eyes of law. Therefore, the contention of the assessee that partners were not having knowledge of compliance of the provision of the Income Tax Act, is not tenable. In view of the above facts and circumstances, the Assessing Officer held that this is a fit case for levy of penalty u/s 271B of the Act for non- furnishing the d....
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....e, such penalty order is barred by limitation, hence may be quashed. 12. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 13. We have considered the rival submissions and perused the relevant finding given in the order ld. NFAC/Ld.CIT(A). We note that Assessing Officer levied penalty of Rs. 1,50,000/- for failure to obtain audit report and furnish the same. The penalty was initiated by the Assessing Officer in its assessment order, as per order passed u/s 143(3) r.w.s. 147 dated 24.12.2019. The Assessing Officer accepted the returned income of assessee at Rs. Nil. No any appeal was filed by the assessee against the assessment order. Therefore, the finality of income assessed was closed on 24.12.2019. With regard to penal proceedings, show cause notice was first issued on 24.12.2019. In response to the show cause- notice, the assessee replied on 09.01.2020. The Assessing Officer while passing order u/s 271B of the Act, has reproduced the assessee`s reply in the penalty order. The Assessing Officer passed th....
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.... limitation prescribed under section 275 cannot be applicable to the cases under appeal. The learned counsel for the assessee, on the other hand, claimed that section 275 would be applicable. The assessment years under consideration before us are 1970-71 to 1974-75. The penalty proceedings were initiated vide assessment order 14-9-1976. Section 275, as it stood at the relevant time, reads as under :- "275. Bar of limitation for imposing penalties.- No order imposing penalty under the Chapter shall be passed- (a) in a case where the relevant assessment or other order is the subject matter of an appeal to the Appellate Assistant Commissioner under section 246 or an appeal to the Appellate Tribunal under sub-section (2) of section 253, after the expiration of a period of - (i) two years from the end of the financial year in which the proceedings in the course of which action for imposition of penalty has been initiated, are completed, or (ii) six months from the end of the month in which the order of the Appellate Assistant Commissioner or, as the case may be, the Appellate Tribunal is received by the Commissioner, whichever period expires later, ....
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....on upon the assessee and, therefore, the Assessing Officer cannot pass any order levying penalty under section 271(1)(c) upon the assessee. In principle, we agree with this contention of the Ld. D.R. However, the question is whether any order under section 245D(1) was passed by the Settlement Commission for the assessment years 1970-71 to 1974-75? The assessee had filed application under section 245C before the Settlement Commission for assessment year 1975-76. The order under section 245D(1) was also for assessment year 1975- 76. Therefore, the Settlement Commission has the exclusive jurisdiction to deal with all the matters relating to assessment year 1975-76. During the course of settlement proceedings for assessment year 1975-76, the assessee requested for reopening and settlement of earlier assessment years, i.e. assessment years 1970-71 to 1974-75. It would be evident from the following observation at pages 14 and 15 of the order of the Settlement Commission :- "On 1-1-1979 fresh notices of hearing were issued to the parties fixing the case for 27-1-1979. In the meantime, on 19-1-1979, the assessee submitted another letter dated 16-1-1979 which reads as follows :- ....
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....; but we feel it is incumbent on us to do so on the facts of the case in order to ensure an effective settlement of the case before us as in enjoined by law on us." 8.4 Thus, in the order under section 245D(4) dated 1-3-1979, the Settlement Commission first considered the question whether the earlier years should be reopened by the Commission or not and on being satisfied that the earlier years are required to be reopened, they reopened the assessment proceedings of earlier years. Thereafter at page-29, para-42 of the order, the Settlement Commission observed as under :- "Having decided to reopen the completed assessment proceedings for the assessment year 1970-71 to assessment year 1974-75, we may next deal with the point whether the Commission is now competent in law to assume jurisdiction over other proceedings e.g. various penalty proceedings, proceedings before the Commissioner of Income-tax under section 273A etc. relating to these years." At page-68, para-113 of the order, the Settlement Commission observed as under :- "In view of what has been stated by us above, we hold that, as a result of our reopening the completed assessment proceedi....
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....years. Thus, the period of immunity under section 245H would begin only on passing of the order under section 245D(4) by the Settlement Commission on 1-3-1979 and not earlier, as contended by the revenue. 9. The next question is up to which date the immunity remained in force, i.e., till the date of the passing of the order by the Hon'ble Apex Court or till the date of the service of the order upon the revenue authorities. The Hon'ble Apex Court vide their order dated 11-3-1996 held as under :- "The appeals are accordingly allowed and the order of the Settlement Commission is set aside to the extent it has dropped the penalty proceedings relating to assessment years 1970-71 to 1974-75 and to the extent it has waived the penalties for the said assessment years. The orders and directions made by it shall not affect the said penalty proceedings which can now proceed according to law. The Settlement Commission shall modify its judgment and order in terms of and in accordance with this judgment." Thus, the Hon'ble Apex Court set aside the order of the Settlement Commission to the extent it dropped the penalty proceedings relevant to assessment years 1970-71 to....
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....tial order required to be passed by the Settlement Commission. The revenue has acted on the decision of the Hon'ble Apex Court wherein the Apex Court after setting aside the order of the Settlement Commission has held that the penalty proceedings can now proceed according to law. Therefore, the provision under section 260 relating to the service of the order of the Hon'ble Apex Court upon the ITAT and the passing of the consequential order by the ITAT would not be applicable for determining the period of limitation for the penalty orders passed by the Assessing Officer in consequence to the decision of Hon'ble Apex Court dated 11-3-1996. 11. The Ld. D.R. has also relied upon section 268 of the Income-tax Act which reads as under:- "268. In computing the period of limitation prescribed for an appeal or an application under this Act, the day on which the order complained of was served and, if the assessee was not furnished with a copy of the order when the notice of the order was served upon him, the time requisite for obtaining a copy of such order, shall be excluded." From the above it is evident that section 268 is applicable for computing the period of ....
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....riod, the penalty proceedings had already become barred by limitation as under :- (i) Penalty proceedings under section 271(1)(c) were initiated on 14-9-1976 in the assessment order passed under section 143(3)/147. (ii) Two years from the end of the financial year 1975-76 would be over on 31-3- 1979. The Settlement Commission vide order dated 1-3-1979 waived the penalty imposable for the year under consideration. (iii) On 1-3-1979, 30 days were left for the penalties to be barred by limitation (1-3- 1979 to 31-3-1979). (iv) The immunity granted by the Settlement Commission under section 245H remained in force up to 11-3-1996, i.e., the date of the order of the Hon'ble Apex Court. (v) Therefore, the penalty was to be levied within 30 days from 11-3-1996, i.e., by 11- 4-1996. (vi) The penalty notice issued on 9-5-1996 was after the period when the penalty has already become barred by limitation. 13.1 Therefore, any time requested by the assessee during the course of penalty proceedings and allowed by the Assessing Officer on such request would be immaterial, because the penalty proceedings have already become barred by li....