2024 (5) TMI 31 - AT - Income Tax

Levy of penalty u/s 271C - period of limitation - proper meaning for the expression expiry of 6 months - Failure to deduct TDS - Whether 6 months expiry should be reckoned from the date of which reference was made by AO who passed the quantum assessment order to ld. JCIT (TDS) or the date on which JCIT (TDS) issued notice to the assessee for the first time - whether the penalty order passed u/s 271C by the ld. JCIT would be barred by limitation as per section 275(1)(c)? - HELD THAT - We find that this dispute has been directly addressed in JKD CAPITAL FINLEASE LTD. 2015 (10) TMI 1281 - DELHI HIGH COURT wherein held Additional CIT ought to have been conscious of the limitation u/s 275 (1) (c) i.e. that no order of penalty could have been passed under Section 271-E after the expiry of the financial year in which the quantum proceedings were completed or beyond six months after the month in which they were initiated whichever was later. In a case where the proceedings stood initiated with the order passed by the AO by delaying the issuance of the notice under Section 271- E beyond 30th June 2008 the Additional CIT defeated the very object of Section 275 (1) (c). Thus it could be safely concluded that the penalty order framed by the ld. JCIT(TDS) on 25.02.2016 is squarely barred by limitation and hence penalty is required to be deleted. Appeal of the assessee is allowed.

Summary

Issues:
The only issue to be decided in this appeal is whether the penalty levied u/s 271C of the Income Tax Act is barred by limitation.

Summary:
The appeal arose from a penalty order u/s 271C of the Income Tax Act for A.Y. 2011-12. The assessee, engaged in broadcasting, failed to deduct TDS as reported by the Tax Auditor. The dispute centered on the limitation period for passing the penalty order. The key question was whether the 6-month period should be reckoned from the date of reference made by the AO or the date of the first show cause notice issued by JCIT(TDS). The Tribunal referred to a judicial precedent to interpret the limitation provision under section 275(1)(c) of the Act. It was held that the penalty order was passed beyond the statutory limitation period, rendering it barred by limitation. Consequently, the penalty was deemed to be deleted. As the penalty order was held to be time-barred, other grounds challenging the penalty's validity on merits were not addressed, deeming them academic. Therefore, the appeal of the assessee was allowed.