2006 (4) TMI 96 - HC - Income Tax

Penalty levied u/s 271(1)(c) - period of limitation - Applicability of proviso to section 275(1)(a) - HELD THAT - On persual of provision of Section 275(1)(a) 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 u/s 275(1)(a), i.e, six months from the end of the month in which the order of the Appellate Tribunal is received by the Chief Commissioner. There cannot be any doubt on this aspect. Accordingly, this court is of the view that the proviso to section 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 Income-tax Appellate Tribunal, Chennai, is received by the third respondent herein. Accordingly, this writ petition is disposed of. Consequently, the connected W.P.M.P. is also closed.

Summary

Issues involved:
Interpretation of proviso to section 275(1)(a) of the Income-tax Act, 1961 regarding the limitation period for imposing a penalty when an appeal is pending before the Income-tax Appellate Tribunal, Chennai.

Analysis:
The petitioner sought a declaration that the proviso to section 275(1)(a) of the Income-tax Act, 1961, does not affect the availability of the six-month limitation period for imposing a penalty when an appeal is pending before the Income-tax Appellate Tribunal, Chennai. The petitioner had filed an appeal against the assessment order and penalty proceedings initiated by the third respondent. The petitioner argued that the proviso to section 275(1)(a) should not apply when an appeal is made to the Tribunal under section 253 against the orders of the Commissioner of Income-tax (Appeals). The petitioner contended that the limitation period for penalty imposition should be six months from the end of the month in which the Appellate Tribunal's order is received by the Chief Commissioner.

The court examined the provisions of section 275(1)(a) of the Income-tax Act, 1961, which state that no penalty order shall be passed after the expiry of the financial year in which the proceedings are completed or six months from the end of the month in which the Appellate Tribunal's order is received. The court agreed with the petitioner's interpretation that in cases where an appeal is pending before the Tribunal, the limitation period for imposing a penalty should be six months from the receipt of the Tribunal's order by the Chief Commissioner. The court found no dispute in the fact that the petitioner's appeal was pending before the Tribunal, thus affirming that the proviso to section 275(1)(a) does not nullify the six-month limitation period.

The court disposed of the writ petition in favor of the petitioner, granting the declaration sought. The judgment clarified that the proviso to section 275(1)(a) does not affect the availability of the six-month limitation period for imposing a penalty when an appeal is pending before the Income-tax Appellate Tribunal, Chennai. The connected Writ Petition Miscellaneous Petition was also closed, and no costs were awarded in the matter.