2015 (11) TMI 1052 - AT - Income Tax

Penalty under section 271E - Held that - Undisputedly the assessment was completed on December 24, 2010 and reference to the Additional Commissioner of Income-tax was made by the Assessing Officer on December 30, 2010. Copy of the reference letter is placed on record and the penalty order was passed on July 28, 2012 which is clearly after the expiry of the period of six months from the action initiated for levying the penalty. See M/s Ashok Kumar Pathak Versus Jt. C.I.T 2015 (11) TMI 1006 - ITAT LUCKNOW Thus if the penalty order is passed after a period of six months from the action initiated for levying the penalty, the penalty order is barred by time - Decided in favour of assessee.

Summary

Issues:
1. Time-barred penalty order under section 271E of the Income-tax Act, 1961.
2. Violation of provisions of section 269T of the Act for penalty imposition.

Issue 1: Time-barred penalty order under section 271E of the Income-tax Act, 1961:
The appellant challenged the penalty order, arguing it was time-barred under section 275(1)(c) of the Act, which requires penalty orders to be issued within six months of initiation. The assessment was completed on December 24, 2010, and the penalty reference was made on December 30, 2010. However, the penalty order was issued on July 28, 2012, exceeding the statutory time limit. The Tribunal cited a previous case where it was held that penalties issued after the six-month period are time-barred. Consequently, the Tribunal upheld the cancellation of the penalty order by the Commissioner of Income-tax (Appeals), ruling that the penalty was indeed time-barred and dismissing the appeal of the Revenue.

Issue 2: Violation of provisions of section 269T of the Act for penalty imposition:
The appellant contended that the transaction involved family members, where the assessee received a cheque from his mother and repaid it partly by cheque and partly in cash. The appellant argued that this did not violate section 269T of the Act, which deals with penalties for certain transactions. However, the Departmental representative supported the Assessing Officer's order. Despite this argument, the Tribunal's focus was primarily on the time-barred nature of the penalty order under section 271E of the Act. The Tribunal's decision was based on the statutory provisions and the precedent set by a previous case, leading to the dismissal of the Revenue's appeal.

In conclusion, the Appellate Tribunal ITAT LUCKNOW ruled in favor of the appellant, emphasizing the importance of adhering to statutory timelines for penalty orders under the Income-tax Act, 1961. The judgment highlighted the significance of timely compliance with legal provisions to ensure the validity of penalty impositions.