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2025 (3) TMI 93 - AT - Income TaxLevy of penalty u/s 271(1) beyond period of limitation - assessee has not discharge of initial onus of filing voluntary return u/s 139(1) of the Act thus he concealed his income - HELD THAT - In the instant case the assessment was completed u/s 147/143(3) of the Act on 28/11/2019 and as per the provisions of section 275(1) (c) the time limit for passing the penalty order would be up to 30th Sept. 2020. Due to Covid-19 the time limits for levy of penalty under any provision of the Act falling during the period of continuation of Covid-19 were extended by various Circulars and finally in terms of Notification No.113/2021/f.No.370142/35/2020-TPL-Part-1 it was extended till 31st March 2022 which is the end date up to which the limit for completion of order imposing penalty chargeable under the Act was extended. As penalty order was passed as on 1st April 2022 the same is beyond the time limit extended by the CBDT. Appeal of the assessee is allowed.
The appeal in the case of Shri Mahavir Singh v. ITAT Delhi was filed by the Assessee against the penalty imposed under section 271(1) of the Income Tax Act, 1961. The key issues presented and considered in this case are as follows:1. Whether the penalty order was barred by limitation as per the provisions of Section 275 of the Act.2. Whether the penalty imposed on the Assessee was justified under section 271(1)(c) of the Act.In the detailed analysis of the issues:Issue 1: Barred by Limitation- Relevant legal framework and precedents: Section 275(1)(c) of the Income Tax Act, 1961 sets the time limit for passing a penalty order. The CBDT extended the time limit due to the Covid-19 pandemic through Notification No.113/2021.- Court's interpretation and reasoning: The Appellate Tribunal considered the provisions of Section 275(1)(c) and the CBDT notification. The Tribunal found that the penalty order passed on 1st April, 2022, was beyond the extended time limit of 31st March, 2022.- Key evidence and findings: The assessment was completed on 28/11/2019, and the penalty order was passed on 1st April, 2022. The CBDT notification extended the time limit for imposing penalties.- Application of law to facts: The Tribunal applied the provisions of Section 275(1)(c) and the CBDT notification to determine the limitation period for the penalty order.- Conclusions: The Tribunal held that the penalty order was barred by limitation and consequently quashed the penalty.Issue 2: Justification of Penalty- Relevant legal framework and precedents: Section 271(1)(c) of the Income Tax Act, 1961 deals with the imposition of penalties for concealing income.- Court's interpretation and reasoning: The Assessee challenged the penalty order on various grounds, including lack of clear satisfaction by the Assessing Officer and incorrect computation of penalty amount. The Tribunal considered these arguments.- Key evidence and findings: The Assessing Officer initiated penalty proceedings under section 271(1)(c) as the Assessee failed to file a return of income despite having taxable income. The penalty was levied based on the alleged concealment of income.- Application of law to facts: The Tribunal assessed the grounds raised by the Assessee and the reasoning provided by the lower authorities for imposing the penalty.- Conclusions: The Tribunal did not delve deeply into the merits of the penalty imposed under section 271(1)(c) as it found the penalty order to be barred by limitation. Therefore, the Tribunal did not make a final determination on the justification of the penalty.Significant Holdings:- The Tribunal held that the penalty order imposed on the Assessee was barred by limitation as per the provisions of Section 275(1)(c) and the CBDT notification. Consequently, the penalty was quashed.In conclusion, the Appellate Tribunal allowed the appeal of the Assessee on the grounds that the penalty order was beyond the extended time limit and thus barred by limitation. The Tribunal did not delve into the substantive merits of the penalty imposed under section 271(1)(c) due to the limitation issue.
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