Rajendra Singh (A.M.)

1. This appeal by the revenue and the cross objections of the assessee are directed against the order dated 4.2.2009 of CIT(A) for the assessment year 1993-94. The only dispute raised in these appeals is regarding levy of penalty under section 271(1)(c) of the Income tax Act.

2. Briefly stated the facts of the case are that the assessee for the assessment year 1993-94 had declared total income of Rs.6,31,190/- in the return filed on 29.12.1993. In the original assessment made by AO under section 143(3) the following additions had been made : Rs.8,89,424/- on account of commission; Rs.5,82,500/- on account of service; and Rs.2,04,950 on account of repairs. The assessee disputed the additions and the Tribunal vide order dated 8.5.2003 in ITA No.711/Mum/1996 confirmed the addition on account of commission and service but set aside the addition on account of repair and restored the matter to the file of AO. In the fresh assessment order under section 143(3) dated 23.2.1996, the AO again added the sum of Rs.2,04,950/- on account of repair and also initiated penalty proceedings. He levied penalty in respect of the three additions @ 100% of tax sought to be evaded amounting to Rs.9,64,203/- in the penalty order dated 29.11.2005. Subsequently the addition on account of repair was deleted by the in the appeal against fresh assessments and thus only additions on account of commission and services were upheld.

2.1 The assessee had also filed miscellaneous application against the order dated 8.5.2003 of the Tribunal and this Miscellaneous Application was decided by the Tribunal on 1.3.2005 and the order in the Miscellaneous Application was received by CIT on 5.5.2003. Under the provisions of section 275, penalty order had to be passed by the end of financial year in which the proceedings during which the penalty had been instituted are completed or within six months from the date of receipt of the order of the Tribunal by the Commissioner/Chief Commissioner. The case of the department is that the period of six months had to be counted from the date of order of Tribunal in the Miscellaneous Application under section 254(2) CIT. However following the decision of Tribunal in case of ACIT vs. Delhi Industrial Syndicate (83 ITD 130) CIT(A) has held that six months period had to be counted from the date of receipt of the order of Tribunal passed under section 254(1) of the Income tax Act. CIT(A), therefore held that the penalty was barred by limitation. Aggrieved by the said decision, the revenue is in appeal.

3. Before us, no one appeared on behalf of the assessee to represent the case though notice of hearing had been received by the assessee. We, therefore, proceed to decide the appeal on the basis of material available on record and after hearing the ld. DR who strongly supported the order of AO. It was argued by the ld. DR that the Tribunal had set aside the assessment in relation to the addition on account of repair pursuant to which fresh assessment was made by the AO in which the penalty was re-initiated and levied in respect of all the three additions. Subsequently, CIT(A) vide order dated 7.7.2004 confirmed the addition on account of repair also. It was argued that limitation on levy of penalty should apply from the date of order of CIT(A) in the second round of appeal and following that, the penalty was not barred by limitation. The ld. DR placed reliance on the judgment of Honble High Court of Punjab & Haryana in the case of CIT Vs. Smt. Santosh Mahey (: 293 ITR 573) .

4. We have perused the records and considered the rival contentions carefully. The dispute is regarding levy of penalty under section 271(1)(c) In the original assessment under section 143(3) the following additions were made, Rs.8,89,424/- on account of commission; Rs.5,82,500/- on account of services; and Rs.2,04,950 on account of repairs. The Tribunal vide order dated 8.5.2003 had confirmed the addition on account of commission and services and restored the addition on account of repair to the file of AO for fresh decision. In the fresh assessment proceedings, the AO again added the sum of Rs.2,04,950/- which was confirmed by CIT(A) but as submitted by ld. Authorised Representative, this addition on account of repair has been deleted by the Tribunal. The issue is whether penalty levied in respect of addition on account of commission and services vide order dated 29.11.2005 is within time. Under the provisions of section 275, penalty order has to be passed by the end of financial year in which the proceedings during the course of which the penalty had been initiated, are completed or within six months from the date of receipt of the order of the Tribunal. In this case, the order of the Tribunal in relation to the addition on account of commission and services has been passed on 8.5.2003. Against the order of Tribunal, Miscellaneous Application had been filed which was also disposed of by the Tribunal vide order dated 1.3.2005 which was received in the office of CIT on 5.5.2005. The AO counted the limitation period of six months from the date of receipt of order of the Tribunal in the Miscellaneous Application which had been rejected by the CIT(A). The CIT(A) rejected the claim of the AO on the basis of decision of the Tribunal in case of ACIT vs. Delhi Industrial Syndicate (83 ITD 130) (supra), in which it has been held that the period of limitation had to be reckoned from the date of receipt of order of the Tribunal under section 254(1) and not from the date of receipt of any order in the Miscellaneous Application under section 254(2). There is no contrary decision of High Court or Apex Court brought to our notice by the ld. DR. Therefore, the plea based on order in the Miscellaneous Application has been rightly rejected by CIT(A).

4.1 The plea of the ld. DR that limitation period should be counted from the date of the Appellate order in the second round of the appeal, in our view, cannot be accepted because in the fresh assessment order there was only addition on account of repair which had been deleted. The addition on the account of commission and services which had been upheld by the Tribunal had been made in the original assessment proceedings during the course of which also penalty under section 271(1)(c) had been initiated. Therefore, the limitation period in respect of any penalty order in relation to the addition on account of commission and services had to be reckoned from the date of receipt of order of the Tribunal against the original assessment. In the fresh assessment proceedings, the only issue was addition on account of repair and therefore, during the fresh assessment proceedings, penalty only in respect of addition on account of repair could be initiated and not other additions which had been made in the original assessment and had become final. There is no dispute raised by the revenue that in case limitation period is counted from the date of receipt of order of Tribunal against the original assessment, the penalty is barred by limitation. The judgment of Honble High Court of Punjab & Haryana in the case of CIT Vs. Smt. Santosh Mahey (: 293 ITR 573) (supra) relied upon by the ld. DR is distinguishable as in that case, the original assessment had been fully set aside and penalty had been initiated in the fresh assessment proceedings and therefore the limitation period had been counted with respect to the fresh proceedings. The case is obviously distinguishable. We see no infirmity in the order of CIT(A) canceling the penalty and same is therefore, up held.

4. C.O. No.200/Mum/2009:

4.1 The cross objection has been filed by the assessee only to support the order of CIT(A). Since we have already upheld the order of CIT(A) and dismissed the appeal of the revenue, the cross objection filed by the assessee has become infructuous and the same is dismissed as having become infructuous.

5. In the result, appeal of the revenue as well as the cross objection of the assessee, both are dismissed.

6. Order pronounced in the open court on 16.11.2011.