2019 (4) TMI 504 - AT - Income Tax

Levy of penalty u/s 271B - violation to get his accounts audited u/s 44AB - Bar of limitation for imposing penalties - HELD THAT - In the present case, the quantum of turnover is fundamental to the levy of penalty. This is as the turnover, a subject matter of dispute in the quantum proceedings, is a given as far as the penalty proceedings are concerned, so that it ought not to, on facts and common principles, be proceeded with without first resolving the same. The legislative intent must be the foundation of any interpretative exercise CIT v. Baby Marine Export 2007 (3) TMI 206 - SUPREME COURT . The word relevant in section 275(1)(a) would, in our view, imply an order which becomes relevant on account of the issue under appeal in quantum proceedings being relevant for the purpose of levy of penalty under Chapter XXI of the Act. The other decisions mentioned in the written submissions, though not relied upon or referred to during hearing, have also been though perused. The decision in Subodh Kumar Bhargava v. CIT 2008 (11) TMI 45 - HIGH COURT DELHI is on the meaning of the words whichever period expires later , which has no bearing or is not relevant in the present case; the penalty being admittedly in time w.r.t. s. 275(1)(a). Again, there is no dispute that the time limitation is mandatory, as held in CIT v. Chhajer Packaging & Plastics (P.) Ltd. 2007 (9) TMI 213 - BOMBAY HIGH COURT that being the very premise of the instant appeal. The impugned penalty order is not barred by time. The assessee has not made out any case on the merits of the levy of penalty; the turnover/gross receipt under question having been held in the appellate proceedings to be of the assessee. - Decided against assessee.

Summary

Issues:
1. Whether the impugned penalty order is barred by time and non-est in law.

Analysis:
1. The appeal arose from the Commissioner of Income Tax (Appeals)'s order dismissing the assessee's appeal contesting the penalty under section 271B of the Income Tax Act, 1961 for A.Y. 2009-10.

2. The main issue was whether the penalty order was time-barred. The assessee argued that the penalty order was barred by time under section 275(1)(c), while the Revenue contended it was covered under section 275(1)(a), making the penalty within time.

3. The Tribunal examined the provisions of section 275, which set the time limitation for penalties under Chapter XXI of the Act. The exclusion of the period of adjudication under the appellate procedure aims to avoid multiplicity of proceedings and ensure firm findings of fact for penalty proceedings.

4. The assessee claimed that the failure to obtain and furnish the audit report under section 44AB was independent of the quantum proceedings. However, the Tribunal found that the turnover dispute in the quantum proceedings directly affected the obligation to get accounts audited and levy of penalty under section 271B.

5. The Tribunal held that the impugned penalty order was not barred by time. The turnover/gross receipt in question was determined to be of the assessee in the appellate proceedings, supporting the levy of penalty. The appeal was dismissed accordingly.

6. The decision was pronounced on February 27, 2019, with the Tribunal ruling in favor of the Revenue and upholding the penalty order against the assessee.

This detailed analysis of the legal judgment highlights the key issues, arguments presented by both parties, relevant legal provisions, and the Tribunal's decision, providing a comprehensive understanding of the case.