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2024 (12) TMI 317 - HC - Income TaxBar of limitation for imposing penalties - Penalty imposed u/s 271D - HELD THAT - The controversy, as to the date on which the penalty proceedings are to be construed as initiated, is no longer res integra. The said issue is covered by the decision of this court in JKD Capital Finlease Ltd. 2015 (10) TMI 1281 - DELHI HIGH COURT and Turner General Entertainment Networks India Pvt. Ltd. 2024 (11) TMI 506 - DELHI HIGH COURT the date of receipt of the reference is required to be considered as the date of initiation of the proceedings. The order of penalty was required to be passed within six months from the end of the month in which the reference was received. There is no dispute that the reference was received by respondent no. 3 from the AO on 18.01.2023. As the proposal to initiate the penalty proceedings had been forwarded by the AO to respondent no. 3 on 18.01.2023. Further, this court is also unable to countenance that respondent no. 3 had not taken any steps immediately after receipt of the said reference and it waited almost one year to ask for further documents, which was beyond the period prescribed for passing the impugned order u/s 271DA of the Act. Assessee appeal allowed.
Issues:
Impugning notices under Income Tax Act, 1961; Penalty imposition under Section 271DA; Barred by limitation; Date of initiation of penalty proceedings; Interpretation of Section 275(1)(c) of the Act. Analysis: The petitioner challenged notices and a penalty order under the Income Tax Act, 1961, citing violation of Section 269ST. The petitioner contended that the penalty order was time-barred. The petitioner, a partnership firm in real estate brokerage, faced penalty proceedings due to alleged violations. A search under Section 132 of the Act on related entities triggered scrutiny of the petitioner's returns for the AY 2020-21. The Assessing Officer (AO) referred the case for penalty proceedings under Section 271DA after finding potential violations of Section 269ST. Respondent no. 3 delayed action on the reference, requesting evidence over a year later. The main issue revolved around the interpretation of the limitation period under Section 275(1)(c) of the Act for imposing penalties. The court referred to precedents like Principal Commissioner of Income Tax v. JKD Capital & Finlease Ltd and Commissioner of Income Tax (TDS)-2 Delhi v. Turner General Entertainment Networks India Pvt. Ltd. The court held that the date of receipt of the reference initiated the penalty proceedings, requiring the penalty order within six months from that date. The court rejected the Revenue's argument to consider a later date as the initiation, emphasizing the delay by respondent no. 3. The court ruled in favor of the petitioner, setting aside the impugned order due to the delay in passing it beyond the prescribed limitation period. The court criticized respondent no. 3 for the prolonged inaction and delay in concluding the penalty proceedings, ultimately allowing the petition and disposing of any pending applications.
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