2019 (7) TMI 1225 - HC - Income Tax

Penalty u/s 271(1)(c) - levied after the expiry of the limitation period u/s 275(1)(a) - Tribunal order served on the CIT (Judicial) - ITAT deleted penalty - HELD THAT - ITAT has followed this Court s decision in Odeon Builders Private Limited 2017 (3) TMI 1266 - DELHI HIGH COURT and held that even for the purposes of the penalty order under Section 271(1)(c) read with Section 275(1)(a) the limitation begins to run from the date of the order of the ITAT was served upon the CIT (Judicial). Revenue sought to distinguish the said decision in Odeon Builders Private Limited on the ground that it was in context of the Revenue filing an appeal under Section 260A. However, he was unable to dispute that the wording of Section 275 (1) (a) as far as Commissioner of Income Tax and other officers was identical to the wording in both Section 158 (BFA)(3)(c) and Section 260 A of the Act. Consequently, the Court finds no error in the ITAT having followed the decision of this Court in Odeon Builders Private Limited to hold the penalty order in the present case to be barred by limitation. - Decided against revenue

Summary

Issues:
1. Penalty imposed on the Assessee under Section 271(1)(c) of the Income Tax Act, 1961.
2. Interpretation of limitation period under Section 275(1)(a) of the Act for penalty proceedings.
3. Application of the decision in Odeon Builders Pvt. Ltd. case to penalty proceedings under Section 158 (BFA) (3) (c) of the Act.
4. Distinction between the context of the Revenue filing an appeal under Section 260A of the Act and penalty proceedings under Section 271(1)(c).

Analysis:
1. The appeal was against the order of the ITAT deleting the penalty imposed on the Assessee under Section 271(1)(c) of the Income Tax Act, 1961, for the Assessment Year 2009-2010, based on the expiry of the limitation period under Section 275(1)(a) of the Act.

2. The Court considered the timeline of events, noting that the limitation period for penalty proceedings began running from the date the ITAT's order was served upon the CIT (Judicial), as per the decision in Odeon Builders Pvt. Ltd. case. The penalty order in this case was found to be beyond the limitation period.

3. The Court applied the decision in Odeon Builders Pvt. Ltd. case to the computation of the limitation for initiation of penalty proceedings under Section 158 (BFA) (3) (c) of the Act. It held that the limitation period for penalty proceedings would begin from the date the ITAT's order was served upon the CIT (Judicial), aligning with the interpretation in Odeon Builders Pvt. Ltd. case.

4. The Court addressed the distinction raised by the Revenue regarding the context of the decision in Odeon Builders Pvt. Ltd. case being specific to appeals under Section 260A of the Act. However, it found that the wording in Section 275(1)(a) was similar to Section 158 (BFA) (3) (c) and Section 260A, leading to the conclusion that the decision in Odeon Builders Pvt. Ltd. case was applicable to penalty proceedings as well.

5. Ultimately, the Court dismissed the appeal, stating that no substantial question of law arose, and upheld the ITAT's decision based on the application of the decision in Odeon Builders Pvt. Ltd. case to the penalty proceedings in the present case.