High Court Of Madras
Rayala Corporation (P) Ltd. vs. Union Of India & Ors.
Sections 271(1)(c), 275(1)(a)
K. Mohan Ram, J.
Writ Petn. No. 7992 of 2006 & WPMP No. 8895 of 2006
5th April, 2006
Counsel Appeared :
George Cheriyan, for the Petitioner : Mrs. Pushya Sitaraman, for the Respondents
JUDGMENT
K. Mohan Ram, J. :
The prayer in the writ petition is for the issuance of a writ of declaration declaring that in the petitioner’s case where an appeal ITA No. 103/Mad/2005 is pending under s. 253 of the IT Act, 1961, before the Tribunal, Chennai, the proviso to s. 275(1)(a) of the IT Act, 1961 (hereinafter referred to as “the Act”), does not nullify the availability to the third respondent of the period of limitation of six months from the end of the month when the order of the Tribunal, Chennai, is received by the third respondent herein.
2. With the consent of both learned counsel, the writ petition itself is taken up for final disposal.
3. The facts that are necessary for the disposal of the above writ petition are set out below : Against the assessment order of the third respondent dt. 29th March, 2004, and the penalty proceedings initiated under s. 271(1)(c) of the Act, the petitioner company has filed an appeal under s. 246A of the Act to the CIT(A). Admittedly, the appeal was disposed of by the CIT(A)-V, by partly allowing the appeal. Aggrieved by the order of the CIT(A), the petitioner company has filed the statutory appeal under s. 253 of the Act before the Tribunal, Madras Bench, and the said appeal has been admitted and numbered as ITA No. 103/Mad/2005. According to the petitioner, the appeal is pending before the Tribunal.
4. It is the further case of the petitioner that by an order dt. 17th Nov., 2005, passed in WPMP No. 39766 of 2005 in WP No. 37145 of 2005, this Court has stayed the demand, made by the third respondent in the assessment order, in question. It is the further case of the petitioner that on 3rd March, 2006, the third respondent issued a notice of hearing of the penalty proceeding initiated under s. 271(1)(c) of the Act, fixing the date of hearing as 14th March, 2006. The petitioner appeared before the third respondent and filed a memo dt. 10th March, 2006, requesting the third respondent to keep the penalty proceedings in abeyance till the disposal of the appeal filed by the petitioner in ITA No. 103/Mad/2005 before the Tribunal, Madras Bench, under s. 253 of the Act. It is the case of the petitioner that the third respondent, during the hearing, informed the representative of the petitioner company that he would not be able to keep the proceedings in abeyance in view of the insertion of the proviso to s. 275(1)(a) of the Act by the Finance Act, 2003, w.e.f. 1st June, 2003, curtailing the limitation period provided under s. 275(1)(a) of the Act.
In the said circumstances, the above writ petition has been filed for a declaration, declaring that in the petitioner’s case where an appeal is pending before the Tribunal, Chennai, the proviso to s. 275(1)(a) of the Act, does not nullify the availability to the third respondent of the period of limitation of six months from the end of the month when the order of the Tribunal, Chennai, is received by the third respondent herein.
The contention of the petitioner is that the proviso to s. 275(1)(a) is not applicable to the cases where further appeal has been preferred to the Tribunal under the provisions of s. 253 against the orders of the CIT(A). In the event an appeal is filed by an assessee under s. 253 before the Tribunal against an order of the CIT(A), the limitation period for the levy of penalty will be as provided for in s. 275(1)(a), i.e., six months from the end of the month in which the order of the Tribunal is received by the Chief CIT.
Learned counsel for the petitioner took me through the provisions contained in s. 275(1) of the Act and reiterated the abovesaid contentions. Mrs. Pushya Sitaraman, learned senior standing counsel for the IT Department, fairly agreed with the interpretation sought to be placed by learned counsel for the petitioner and submitted that the relief sought for by the petitioner in this writ petition may be granted. Sec. 275(1)(a) of the IT Act, 1961, reads as follows : “275. (1) No order imposing a penalty under this Chapter shall be passed— (a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the CIT(A) under s. 246 or s. 246A or an appeal to the Tribunal under s. 253, after the expiry of 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 the order of the CIT(A), or, as the case may be, the Tribunal is received by the Chief CIT or CIT, whichever period expires later.” A reading of the abovesaid provision makes it clear that the interpretation placed by learned counsel for the petitioner on the said provision is acceptable. There is no dispute in this case that the petitioner has filed an appeal before the Tribunal and the same is pending. In such a case, the limitation period for the levy of penalty will be as provided for under s. 275(1)(a), i.e., six months from the end of the month in which the order of the Tribunal is received by the Chief CIT. There cannot be any doubt on this aspect. Accordingly, this Court is of the view that the proviso to s. 275 (1)(a) of the Act, does not nullify the availability to the third respondent of the period of limitation of six months from the end of the month when the order of the Tribunal, Chennai, is received by the third respondent herein.
Accordingly, this writ petition is disposed of. Consequently, the connected WPMP is also closed. No costs.
[Citation : 288 ITR 452]
