Dewan Engineering Works vs Commissioner of Income Tax and Another

Adarsh Kumar Goel, J.—The assessee has preferred this appeal u/s 260A of the Income Tax Act, 1961 (in short, "the Act") against the order dated August 18, 2008, passed by the Income Tax Appellate Tribunal, Chandigarh "A" Bench in M.A. No. 158/Chd/2007 arising out of its own order dated April 9, 2007, in I.T.A. No. 766/Chd/2007, for the assessment year 1986-87, proposing to raise the following substantial questions of law:

(i) Whether, on the facts and in the circumstances of the case, the Tribunal has fallen in error in holding that the penalty imposed by the Assessing Officer has not become barred by time limitation despite there being bar u/s 275(1)(a) of Income Tax Act, 1961, that no penalty can be imposed after the expiry of six months from the end of the month in which the order of the Commissioner of Income Tax (Appeals) is received by the Commissioner of income tax?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal has fallen in error in holding that since the 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 of the hon''ble Supreme Court in the case of Computwel Systems P. Ltd. Vs. W. Hasan and Another, , the appeal could be regarded as pending only if the delay had been condoned?

Reassessment proceedings were taken against the assessee in the light of material found during search and in the light of facts that were revealed, proceedings for penalty were also initiated. The levy of penalty was challenged by the assessee on the ground that it was beyond the stipulated period of limitation u/s 275 of the Act, i.e., six months from the date of receipt of the order of the appellate authority. This plea was rejected by the Commissioner of Income Tax (Appeals) and the said order has been upheld by the Tribunal. The Tribunal held as under:

We have considered the submissions. The learned Commissioner of Income Tax (Appeals) has dealt with the issue in para 4 of his order wherein the assessee submitted that it could not file the appeal before the Tribunal against the order dated February 25, 1998, in time and belated appeal was filed on August 24, 1998, which was late by 108 days. The delay was declined to be condoned by the Tribunal, vide order dated June 26, 2003. The relevant assessment folder has been considered by the learned Commissioner of Income Tax (Appeals). The Assessing Officer issued the notice dated July 8, 1998, as to why the penalty should not be imposed u/s 271(1)(c) to which the assessee, vide its letter dated July 16,1998, requested the Assessing Officer to drop the penalty proceedings till the finalization of appeal. In response to this letter, the Assessing Oificer, vide letter dated July 22, 1998, asked the assessee to submit supporting evidence of filing the appeal before the Tribunal, which was followed by another reminder, dated July 31, 1998, issued to the assessee. Thereafter, the assessee, vide its letter dated August 24, 1998, mentioned that the assessee filed the appeal on August 24, 1998, for the assessment years 1986-87, 1990-91 to 1992-93 before the Tribunal and requested to keep the penalty proceedings in abeyance till the decision of the Tribunal. In such a situation, we are not in agreement with the argument of the assessee that it is barred by limitation because, firstly, the period of six months from the end of the month in which the Commissioner of Income Tax (Appeals)''s order was received, still time was there and, secondly, the matter was got delayed by the assessee himself with a request that the penalty proceedings may be kept in abeyance in such a situation, now the assessee cannot blame the Department. It is pertinent to mention here that the Tribunal dismissed the appeal of the assessee and delay was also not condoned. It is also a fact that as on August 24, 1998, the appeal against the order of the learned Commissioner of Income Tax (Appeals) was pending before the Tribunal. Therefore, we have not found any merit in the contention of the assessee. The conclusion of the learned Commissioner of Income Tax (Appeals) is upheld.

We have heard learned Counsel for the parties and perused the record.

Learned Counsel for the appellant submits that since the order of the Commissioner of Income Tax (Appeals) was dated January 22, 1998, limitation for passing order of penalty commenced from the receipt of the said order. The Tribunal wrongly held that the limitation will commence from the date of receipt of order of the Tribunal as the appeal filed before the Tribunal was beyond limitation and delay was not condoned. In these circumstances, the filing of appeal and pendency thereof had to be ignored. Reliance has been placed on the judgment of the hon''ble Supreme Court in Computwel Systems P. Ltd. Vs. W. Hasan and Another, .

Learned Counsel for the Revenue opposes this submission and points out that the judgment relied upon is distinguishable, the same being in relation to proceedings under the Scheme known as "Kar Vivad Samadhan Scheme", introduced by the Finance (No. 2) Act of 1998. As per the said scheme, the assessee sought to exclude time taken in pursuing the revision petition u/s 264 of the Act which was barred by limitation and delay was not condoned. The hon''ble Supreme Court held that the revision petition having been filed beyond delay which was never condoned could not be treated as pending. The said analogy cannot be applied for limitation u/s 275 of the Act. He relies upon judgment of the hon''ble Supreme Court in Mela Ram and Sons Vs. The Commissioner of Income Tax Punjab, . The issue considered therein was in the context of limitation for further appeal. Appeal before the lower appellate court was beyond time. It was held that the date of order dismissing the appeal as time barred was the date from which the limitation was to commence.

In the present case, the assessee filed appeal before the Tribunal and also wrote a letter seeking deferment of penalty proceedings till the appeal was decided. On the request of the assessee, the proceedings were deferred and penalty proceedings were initiated after the order of the Tribunal. Even if delay was not condoned and the assessee filed a time barred appeal and on that ground sought deferment of penalty proceedings, the assessee could not be heard to say that filing of appeal should be ignored. No one can take advantage of his own wrong. The judgment in Computwel Systems [2003] 260 ITR 86 being in a different context is distinguishable.

No substantial question of law arises.

The appeal is dismissed.