2023 (11) TMI 1283 - AT - Income Tax

Levy of penalty u/s 271D - time limit for initiating penalty proceedings - Violation of sec 269SS in respect of cash receipt of loans - HELD THAT - The assessee s case herein falls u/s 275(1)(c) of the Act wherein penalty order should be passed on or before 30/09/2017 i.e. 6 months from the end of the month in which penalty proceedings were initiated by the Ld. AO by recommending to Ld. JCIT. We find that the lower authorities had proceeded on the basis that the time limit had to be reckoned from the date of issuance of first notice by JCIT which was done on 11/08/2017. We find that the law is very clear that penalty proceedings u/s 271D and 271E of the Act are to be initiated by the AO by recommending the same to JCIT and, thereafter, the Ld. JCIT shall issue show cause notice to the assessee and pass penalty orders thereon u/s 271D and 271E of the Act. Hence, the due date had to be reckoned only from the date of triggering of the proceedings from the side of the AO to Ld. JCIT. Admittedly, the Ld. AO had made reference to Ld. JCIT on 25/03/2017 for initiating penalty proceedings in the instant appeals. Six months from the end of the month in which the action for imposition of penalty is initiated expired on 30/09/2017. Accordingly, the penalty order framed on 29/11/2017 would become barred by limitation as per provisions of section 275(1)(c) We have no hesitation to conclude that the penalty orders framed for both the assessment years are barred by limitation and, hence, liable to be quashed.

Summary

Issues:
Appeals challenging penalty orders under section 271D of the Income Tax Act, 1961 for Assessment Years 2009-10 & 2010-11.

Detailed Analysis:

1. Background:
The appeals filed by the Assessee challenge penalty orders under section 271D of the Income Tax Act, 1961 for AY 2009-10 & 2010-11. The penalty orders were passed by the Joint Commissioner of Income Tax, Central Range, Meerut, against cash receipts of loans from a specific individual.

2. Legal Provision and Timeline:
The issue revolves around the timeliness of the penalty order under section 271D. The relevant provision, section 275(1)(c), sets a time limit for passing penalty orders. In this case, the penalty order was passed on 29/11/2017, and the critical date for determining timeliness was 30/09/2017, six months from the initiation of penalty proceedings by the Assessing Officer.

3. Interpretation of Timeliness:
The Tribunal emphasized that the time limit for penalty proceedings starts from the initiation by the Assessing Officer, not from the date of the first notice by the Joint Commissioner. The penalty order dated 29/11/2017 was found to be beyond the statutory time limit of 30/09/2017, rendering it barred by limitation under section 275(1)(c) of the Act.

4. Precedent and Judicial Interpretation:
The Tribunal cited a case where the High Court held that the initiation of penalty proceedings by the Assessing Officer is the relevant starting point for determining the time limit. The Court clarified that the date of the Assessing Officer's recommendation for penalty proceedings triggers the limitation period, not the date of the Joint Commissioner's notice.

5. Conclusion and Decision:
Relying on the legal principle established by the High Court precedent, the Tribunal concluded that the penalty orders dated 29/11/2017 for both assessment years were barred by limitation and, therefore, liable to be quashed. The Tribunal allowed the appeals of the Assessee based on the limitation issue, without giving an opinion on the merits of the penalty.

6. Final Outcome:
Both appeals of the Assessee were allowed, and the penalty orders were quashed on the grounds of being time-barred. The decision was pronounced in the open court on 24th November 2023.