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2019 (10) TMI 702 - AT - Income TaxPenalty levied u/s 158BFA(2) after the expiry of limitation period - period of limitation relating to the levy of penalty - change of jurisdiction of the concerned CIT / Principal CIT - HELD THAT - The ITAT vide letter dated 27.1.2016 pointed out this fact to the CIT-I and requested that the copy of the order be sent to the concerned jurisdictional CIT. Thereafter the orders were sent by the office of the Principal CIT-I to the office of the Principal CIT (Central). It is pertinent to mention here that change of jurisdiction of the concerned CIT / Principal CIT was the internal matter of the Department. No intimation was given to the Tribunal or placed on the file regarding the change of jurisdiction of the Principal CIT. The office of the ITAT Chandigarh sent the orders to the concerned Principal CIT as per the information regarding the jurisdiction available on the file / Form 36. Whether the limitation would start run from the ITAT had sent the order to the Principal CIT with whom the jurisdiction lied as per the record though was transferred later on to another Principal CIT ? - As decided in ODEON BUILDERS PVT. LTD. GULBARGA ASSOCIATES (P) LTD. 2017 (3) TMI 1266 - DELHI HIGH COURT once the ITAT sends a copy of an order to the Principal CIT / CIT and even the CIT (Judicial) going by the details as provided to it in the memo of parties and even if therefore there is a change concerning the jurisdiction of the CIT it will not have the effect of postponing the commencing of the period of limitation in terms of section 260A(2)(a) of the Act. The Hon ble Delhi High Court while further answering the question No. (vii) has held that where there is a common order of the ITAT covering the several appeals the limitation would begin to run when a certified copy is received first by either the CIT (Judicial) or one of the officers of the Department and not only when the CIT concerned receives it. The issue is squarely covered by the aforesaid decision of the Hon ble Delhi High Court. The penalty order in this case has been passed beyond the period of limitation hence the same is void ab initio and the same is accordingly set aside. - Decided in favour of assessee.
Issues Involved:
1. Validity of the penalty order under Section 158BFA(2) of the Income Tax Act, 1961. 2. Limitation period for passing the penalty order under Section 158BFA(3)(c) of the Income Tax Act, 1961. Detailed Analysis: 1. Validity of the Penalty Order under Section 158BFA(2): The assessee contested the penalty imposed under Section 158BFA(2) of the Income Tax Act, 1961, arguing that it was levied after the expiry of the limitation period prescribed under Section 158BFA(3)(c). The penalty proceedings were initiated on 29.07.2002, but the penalty order was passed on 28.04.2017. The assessee argued that the order was barred by limitation as it was issued more than two years after the end of the financial year in which the ITAT's order was received by the Department. 2. Limitation Period for Passing the Penalty Order: The core issue was determining the correct limitation period for the penalty order. According to Section 158BFA(3)(c), the penalty order should be passed before the expiry of six months from the end of the month in which the ITAT's order is received by the Principal CIT or Commissioner, whichever period expires later. The ITAT's order was pronounced on 19.09.2014 and was received by the Principal CIT-1, Chandigarh, on 08.01.2015. However, due to jurisdictional issues, the order was returned and then forwarded to the Principal CIT (Central), Gurgaon. The penalty order was eventually passed on 28.04.2017. Key Legal Interpretation: The Tribunal referred to the Delhi High Court judgment in 'CIT-7 Vs Odeon Builders Pvt Ltd.' which clarified that the limitation period begins when the ITAT's order is received by any of the named officers in the Department, including the CIT (Judicial). The internal administrative changes in jurisdiction do not affect the commencement of the limitation period. The relevant excerpts from the Delhi High Court judgment were cited to support this interpretation. Conclusion: The Tribunal concluded that the penalty order was passed beyond the prescribed limitation period. The limitation period started from the date the ITAT's order was first received by the Principal CIT-1, Chandigarh, i.e., 08.01.2015. Since the penalty order was passed on 28.04.2017, it was beyond the permissible period and thus void ab initio. Judgment: The appeal of the assessee was allowed, and the penalty order under Section 158BFA(2) was set aside as it was passed beyond the limitation period. Order Pronounced: The order was pronounced in the Open Court on 10.02.2019.
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