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 Attachment on Cash Credit of Assessee under GST Act: Delhi HC directs Bank to Comply Instructions to Vacate

Amit Sabharwal, C/o M/s Ashok Raj & Associates, 19, Navyug Market, vs. ITO, Ward-1(5), Ghaziabad.
May, 17th 2019
         IN THE INCOME TAX APPELLATE TRIBUNAL
              DELHI BENCH : SMC : NEW DELHI

     BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER

                               ITA No.886/Del/2018
                             Assessment Year: 2009-10

Amit Sabharwal,                             Vs.   ITO,
C/o M/s Ashok Raj & Associates,                   Ward-1(5),
19, Navyug Market,                                Ghaziabad.
2nd Floor,
Ghaziabad.

PAN: ALYPS1816K

      (Appellant)                            (Respondent)
            Assessee by               :      Dr. Rakesh Gupta &
                                             Shri Somil Aggarwal, Advocates
            Revenue by                :      Shri S.L. Anuragi, Sr. DR

            Date of Hearing       :          06.05.2019
            Date of Pronouncement :            .05.2019

                                      ORDER

      This appeal by the assessee is directed against the order dated 13th October,

2017 passed by the CIT(A), Ghaziabad, relating to Assessment Year 2009-10.


2.    Levy of penalty of Rs.1 lakh u/s 271B of the Act by the Assessing Officer

which has been upheld by the CIT(A) is the only issue raised by the assessee in the

grounds of appeal.

3.    Facts of the case, in brief, are that the assessee is an individual and filed his

return of income on 30th September, 2009 declaring the total income of Rs.4,73,090/-.

The Assessing Officer concluded the assessment u/s 143(3) determining the total
                                                                       ITA No.886/Del/2018


income at Rs.30,13,660/- by making various additions. The assessee preferred appeal

before the CIT(A), but, without any success. Subsequently, the assessee preferred

appeal before the Tribunal and the Tribunal vide ITA No.5413/Del/2012, order dated

5th February, 2016, restored the issue to the Assessing Officer with certain directions.

Thereafter, the Assessing Officer passed the order on 21.11.2016 determining the

total income at Rs.6,73,090/-. In the mean time, the Assessing Officer has initiated

penalty proceedings u/s 271B of the IT Act on the ground that the assessee had shown

receipts from booking (net) at Rs.20,58,378/- whereas the gross freight of

Rs.2,08,31,714/- which was admitted by the assessee to have been received. Against

the above receipts, the assessee has claimed to have paid an amount of

Rs.1,87,73,336/- and the net receipt was shown at Rs.20,58,378/-. The Assessing

Officer, therefore, issued a show cause notice asking the assessee to explain as to why

penalty u/s 271B should not be levied. Rejecting the various explanations given by

the assessee and observing that the assessee has admitted to have received gross

freight of Rs.2,08,31,714/-, the Assessing Officer, invoking the provisions of section

44AB of the Act and the provisions of section 271A of the Act, levied a penalty of

Rs.1 lakh.

4.    Before the CIT(A), it was submitted that the original assessment order was

passed by the Assessing Officer on 29th December, 2011 wherein some additions

were made by the Assessing Officer which was confirmed by the CIT(A) and on

further appeal by the assessee, the Tribunal restored the issue to the file of the

Assessing Officer. The Assessing Officer, at the time of passing the order, did not
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                                                                     ITA No.886/Del/2018


impose any penalty u/s 271B. The Assessing Officer has issued the first penalty

notice on 24th August, 2016 and levied penalty of Rs.1 lakh which is barred by

limitation. It was further argued that penalty u/s 271B was for non-auditing of

accounts and it has no relevance with addition of income. Since it is barred by

limitation, therefore, the penalty levied by the Assessing Officer deserves to be

deleted.







5.    However, the ld.CIT(A) was not satisfied with the arguments advanced by the

assessee. She noted that the assessee filed the return of income on 30th September,

2016 along with unaudited Profit & Loss Account and balance sheet. Since the

assessee failed to get its accounts audited as per the provisions of section 44AB and

since there is no limitation for initiation of penalty u/s 271B and such penalty need

not be initiated during the course of any assessment proceedings only, the ld.CIT(A)

confirmed the penalty so levied by the Assessing Officer.


6.    Aggrieved with such order of the CIT(A), the assessee is in appeal before the

Tribunal.

7.    The ld. counsel for the assessee, referred to the decision of the Hon'ble

Rajasthan High Court in the case of CIT vs. Hissaria Bros reported in 291 ITR 0244

and submitted that the Hon'ble High Court in the said decision has held that penalty

proceedings for default under ss.269SS and 269T not being related to the assessment

proceedings, completion of appellate proceedings arising out of the assessment

proceedings or other proceedings have no relevance and the limitation under s.

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                                                                       ITA No.886/Del/2018


275(1)(c) applies to such proceedings and, therefore, impugned penalty orders under

s. 271D passed beyond 6 months from the end of the month in which the assessments

were completed were barred by time. He submitted that the SLP filed by the

Revenue was dismissed by the Hon'ble Supreme Court as reported in 386 ITR 0719.


8.    Referring to the decision of the Cochin Bench of the Tribunal in the case of

Noble Pictures vs. JCIT reported in 90 ITD 248, he submitted that the Tribunal in the

said decision has held that there should be a reasonable time within which penalty

proceeding is to be initiated or to be completed. Even if a time is not prescribed under

the law, however, the penalty cannot hang on the head of an assessee as sword of

Damocles indefinitely and it should be initiated and completed within a reasonable

time. Referring to the decision of the Hon'ble Calcutta High Court in the case of

Indian Handloom Textiles vs. ITO reported in 68 ITD 0560, he submitted that the

penalty proceedings u/s 271B initiated 34 months after the completion of assessment

was held to be invalid. He accordingly submitted that since, in the instant case, the

penalty proceedings have been initiated after a period of more than four years,

therefore, the penalty so levied by the Assessing Officer and upheld by the CIT(A) is

not justified. He also relied on the decision of the Hon'ble Delhi High Court in the

case of CIT vs. NHK Japan Corporation reported in 305 ITR 132.

9.    The ld. DR, on the other hand, heavily relied on the order of the CIT(A). He

submitted that the turnover of the assessee is more than the prescribed limit and,

therefore, the assessee should have got its accounts audited. Since the assessee has

                                           4
                                                                       ITA No.886/Del/2018


failed to comply with the provisions of section 44AB and there was no reasonable

cause for not getting its accounts audited, therefore, the CIT(A) was fully justified in

upholding the penalty so levied by the Assessing Officer u/s 271B of the Act.

Referring to the decision of the Hon'ble Allahabad High Court in the case of Rama

Medical Store vs. CIT 2016-TIOL-2750, he submitted that for the purpose of

imposing penalty u/s 271B, its initiation in the course of the assessment proceedings

is not necessary within the meaning of section 275(1)(c).


10.   I have heard the rival arguments made by both the sides and perused the orders

of the authorities below. I have also considered the various decisions cited before me.

I find the Assessing Officer completed the original assessment u/s 143(3) on 29th

December, 2011 determining the total income of the assessee at Rs.30,13,680/-. At

that time, as appears from para 2 onwards, the Assessing Officer has mentioned in the

assessment order that the gross receipt is at Rs.2,29,72,281/- whereas as per the

assessee the gross receipts were Rs.2,08,31,714/-. However, the Assessing Officer

has not initiated penalty proceedings u/s 271B of the Act either during the course of

initial assessment proceedings or thereafter. Only when the matter was set aside by

the Tribunal to the file of the Assessing Officer that the Assessing Officer initiated

the penalty proceedings u/s 271B of the IT Act by issue of notice on 24th August,

2016. Thus, the penalty notice was issued after more than 4 ½ years from the end of

the original assessment.    As per the provisions of section 275(1)(c), no order

imposing a penalty under this Chapter shall be passed in any case, after the expiry of







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                                                                       ITA No.886/Del/2018


the financial year in which the proceedings, in the course of which action for the

imposition of penalty has been initiated, are completed or six months from the end of

the month in which action for imposition of penalty is initiated, whichever period

expires later. As per the various decisions relied on by the ld. counsel for the

assessee, penalty is not leviable where the penalty proceedings were not initiated long

after the completion of the assessment and the assessment order was silent about the

levy of penalty u/s 271B of the Act. Since the Assessing Officer in the instant case

has initiated the penalty proceedings after a period of more than 4 ½ years from the

date of original assessment order and there was no such mention of the initiation of

penalty proceedings u/s 271B of the Act and the fact of higher gross receipt was very

much available to the Assessing Officer which has been mentioned in the body of the

original assessment order, therefore, the penalty proceeding initiated by the Assessing

Officer in the instant case in my opinion is barred by limitation. The decision relied

on by the ld. DR will not help the Revenue since the same relates to initiation of

penalty proceedings u/s 271B in the course of assessment proceedings. The decision

does not speak of levy of penalty after inordinate delay. In view of the above

discussion, I am of the considered opinion that the penalty proceedings initiated after

a long gap of more than 4 ½ years from the date of original assessment order is not

sustainable in law being barred by limitation. Therefore, the order of the CIT(A) is set

aside and the grounds raised by the assessee are allowed.




                                           6
                                                                     ITA No.886/Del/2018


11.   In the result, the appeal filed by the assessee is allowed.

       The decision was pronounced in the open court on 14.05.2019.


                                                                       Sd/-
                                                               (R.K. PANDA)
                                                          ACCOUNTANT MEMBER
Dated: 14th May, 2019
dk
Copy forwarded to
1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(A)
5.    DR
                                                   Asstt. Registrar, ITAT, New Delhi




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