2018 (8) TMI 717 - HC - Income Tax

Levy of penalty u/s 271(1)(c) - Extension of Period of limitation which has otherwise expired - transferred from one officer to another officer - it was the contention of the department that the period of limitation was to be calculated from 05.10.2005, the date on which the C.I.T. (Central), who had assumed jurisdiction later, had received the order. Held that - this Court finds that such a situation where the case was transferred to another officer is not included in the situations where limitation can be extended. No explanation has been given by the Tribunal as to how it has applied the provision of Section 275 of the Act to the present case. - the three situations envisaged in Section 275 of the Act clearly do not cover the situation in the present case. Decided in favor of assessee.

Summary

Issues:
- Whether the penalty order dated 14.03.2006 is barred by limitation?

Analysis:
The appeal under Section 260-A of the Income Tax Act, 1961 was filed against the Tribunal's order dated 08.02.2008 for the Assessment Year 1993-94. The primary issue in this case was whether the penalty order dated 14.03.2006 was barred by limitation. The facts were undisputed, focusing solely on the issue of limitation. The Assessing Officer issued a notice under Section 271(1)(c) of the Act, imposing a penalty of ?6 lakhs for inaccurate income particulars furnished by the assessee. The CIT (Appeals) later restricted the penalty to ?5 lakhs.

The appellant contended that the penalty order was barred by limitation under Section 275 of the Act. Section 275 outlines scenarios where the limitation period can be extended, none of which applied to the present case where the jurisdiction was transferred from one officer to another. The Tribunal received the order after the jurisdiction transfer, leading to a dispute on the calculation of the limitation period. However, the Court found that the situation of a case being transferred to another officer was not covered in the provisions allowing for the extension of limitation. The Tribunal's application of Section 275 to the case was not explained.

Upon examination, it was concluded that the three situations specified in Section 275 did not encompass the circumstances of the case. Consequently, it was determined that the limitation had indeed expired, and the penalty order was not passed within the prescribed period. As a result, the question of law was answered in favor of the assessee, leading to the allowance of the appeal against the penalty order.

In summary, the judgment focused on the specific issue of whether the penalty order was barred by limitation under Section 275 of the Income Tax Act, ultimately ruling in favor of the assessee due to the expiration of the limitation period and the lack of provision for extending it in cases of jurisdiction transfer between officers.