2016 (9) TMI 449 - HC - Income Tax

Penalty u/s 271D - validity of notice - period of limitation - Held that - Once it is realized that the proceedings were initiated on 26th December, 2006 when the notice was issued by the Assessing Officer, the period of limitation necessarily expired on 30th June, 2007 whereas the order imposing penalty was passed on 21st September, 2007. No elaborate reasoning is required to demonstrate that the order is hit by limitation. In that view of the matter, the substituted question is answered in the negative and against the revenue.

Summary

Issues:
Challenge to judgment of Income Tax Appellate Tribunal regarding penalty proceedings under Section 271D of Income Tax Act, 1961 for assessment year 2004-05.

Analysis:
The High Court of Calcutta heard an appeal challenging the judgment of the Income Tax Appellate Tribunal related to penalty proceedings under Section 271D of the Income Tax Act, 1961 for the assessment year 2004-05. The issue revolved around the initiation of penalty proceedings and the time limitation for passing the penalty order. The assessing officer issued a notice for penalty on 26th December, 2006, based on violations of Section 269SS of the Income Tax Act during the assessment year. The Additional Commissioner of Income Tax issued a fresh notice on 26th July, 2007, leading to a penalty order on 21st September, 2007. The Commissioner of Income Tax (Appeals) held that the penalty order was beyond the limitation period. The revenue challenged this decision, arguing that the penalty proceedings were initiated on 26th December, 2006. The appellant cited a Kerala High Court judgment emphasizing that penalty proceedings are initiated by the Joint Commissioner, not the Assessing Officer. However, the respondent referred to a Rajasthan High Court judgment stating that the limitation period starts from the first show-cause notice. The court analyzed Section 271D, noting that the jurisdiction of imposing penalty lies with the Joint Commissioner. The court referred to a Supreme Court judgment allowing the Assessing Officer to initiate penalty proceedings. Ultimately, the court held that the penalty order passed on 21st September, 2007 was beyond the limitation period, dismissing the appeal and directing parties to bear their own costs.