2009 (2) TMI 239 - AT - Income Tax

Summary

Issues:
1. Time-barred penalty order under section 271(1)(c) of the IT Act, 1961.

Analysis:
The appeal before the Appellate Tribunal ITAT Delhi-B revolves around the confirmation of a penalty amounting to Rs. 4,25,313 under section 271(1)(c) of the IT Act, 1961 for the assessment year 1998-99. The primary contention raised by the assessee is that the penalty order is time-barred and should be quashed. The argument presented is based on the timeline of events starting from the filing of the return of income on 31st March 1999, the assessment made on 31st January 2003, and the subsequent initiation of penalty proceedings. The assessee's representative highlighted the provisions of section 275(1)(a) and (c) of the Act to support the claim that the penalty order, passed on 24th March 2005, exceeded the statutory time limit for imposition.

The Departmental Representative, on the other hand, relied on the order of the CIT(A) and contended that the limitation for passing the penalty order should be counted from the date of the CIT(A)'s order. The Tribunal delved into the interpretation of the relevant provisions and referred to a previous case to analyze the issue. The Tribunal emphasized that when an appeal against the assessment order is dismissed as time-barred, the said order cannot be considered the subject-matter of appeal. Therefore, the assessment order cannot be deemed as subject to appeal if the appeal is time-barred and dismissed. The Tribunal's decision was influenced by the fact that the delay condonation application was pending before the CIT(A), indicating that the challenge to the assessment order would only arise if the delay hurdle was overcome.

In conclusion, the Tribunal allowed the appeal of the assessee and quashed the penalty, emphasizing that the assessment order cannot be considered the subject-matter of appeal when the appeal is time-barred and dismissed. The decision was based on a thorough analysis of the statutory provisions and previous case law, highlighting the importance of a valid and timely appeal process in determining the subject-matter of appeal in penalty proceedings under the IT Act, 1961.