2019 (5) TMI 1500 - AT - Income Tax

Penalty u/s 158BFA(2) - Claim of the Appellant is that the order imposing penalty is barred by limitation - HELD THAT - The penalty order u/s 158BFA should have been passed within six months from the end of the month in which order of the Tribunal dated 03.08.2007 was received by the concerned authority. However, in the instant case, the penalty order is dated 19.05.2011, which in our considered view is beyond the limitation period as prescribed in section 158BFA(3)(c) of the Act. Penalty order is held to be barred by limitation and, therefore, quashed. - Decided in favour of assessee.

Summary

Issues:
Challenge to penalty order under section 158BFA(2) of the Income Tax Act, 1961 for block period 01.04.1989 to 13.01.2000; Condonation of delay in filing appeal; Imposition of penalty u/s 158BFA(2) of the Act; Barred by limitation; Interpretation of section 158BFA(3)(c) regarding the time limit for passing penalty order.

Analysis:

1. Challenge to Penalty Order:
The appeal challenged the penalty order under section 158BFA(2) of the Income Tax Act for the block period. The key contention was that the penalty order was without jurisdiction, bad in law, and void-ab-initio. The issue revolved around the legality and validity of the penalty imposed.

2. Condonation of Delay:
The appeal was initially considered barred by limitation due to a delay of 30 days. However, the assessee requested condonation of the delay supported by affidavits. The Tribunal, after careful consideration, condoned the delay based on the reasonableness of the cause presented by the assessee.

3. Imposition of Penalty and Limitation:
The core dispute was regarding the imposition of the penalty under section 158BFA(2) of the Act and whether it was barred by limitation. The Revenue argued that the limitation period started from the date of the High Court's order, contending that the penalty order was within the prescribed time limit.

4. Interpretation of Section 158BFA(3)(c):
The Tribunal analyzed section 158BFA(3)(c) of the Act, which sets the time limit for passing penalty orders. It stipulates that the penalty order should be passed within a specified period from the end of the month in which the relevant order was received. The Tribunal found that the penalty order in question was passed beyond the limitation period prescribed by this section.

5. Judicial Precedent and Decision:
The Tribunal relied on a decision of the Coordinate Bench in a similar case to support its interpretation of the law. The decision highlighted that penalty orders passed beyond the limitation period specified in section 158BFA(3)(c) are time-barred. The Tribunal, following this precedent, dismissed the Revenue's appeal, holding the penalty order as barred by limitation and subsequently quashed it.

6. Outcome:
Ultimately, the Tribunal allowed the appeal filed by the assessee, holding the penalty order to be barred by limitation and quashing it. As a result, the Tribunal did not delve into the merits of the case, as the penalty order was invalidated due to being time-barred according to section 158BFA(3)(c) of the Income Tax Act.