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2022 (11) TMI 1038 - HC - Income TaxPenalty proceedings u/s 271D - violation the provisions of Section 269SS - Period of limitation - HELD THAT - AO has initiated the penalty proceedings in his/her assessment order, the said date is to be taken as the relevant date as far as the Section 275(1)(c) of the Act is concerned. In these cases, the quantum proceedings were completed by the AO on 17th/18th December, 2008, and the AO initiated the penalty proceedings in December, 2008, thus, the last date by which the penalty order could have been passed is 30th June, 2009. The six months from the end of the month from which action of imposition of penalty was initiated would expire on 30th June, 2009. In this case, admittedly, the penalty order(s) were passed on 29th September, 2009, and therefore, the ITAT rightly concluded that the order(s) were barred by limitation. Consequently, we answer the question of law against the Revenue and in favour of the Assessee by holding that, in the facts and circumstances of the present appeals, the ITAT was correct in law in deleting the penalty imposed by the Additional Commissioner of Income Tax, u/s 271D on the ground that the penalty order(s) dated 29th September, 2009, was passed beyond the time period prescribed by Section 275(1)(c) the same having been passed after the lapse of six months from the end of the month in which the penalty proceedings were initiated by the AO. - Decided against revenue.
Issues Involved:
1. Interpretation of Section 275(1)(c) of the Income Tax Act, 1961. 2. Determination of the starting point for the limitation period for passing penalty orders under Section 271D. 3. Validity of penalty orders passed after the prescribed limitation period. Issue-wise Detailed Analysis: 1. Interpretation of Section 275(1)(c) of the Income Tax Act, 1961: The primary issue was whether the Income Tax Appellate Tribunal (ITAT) erred in its interpretation of Section 275(1)(c) of the Income Tax Act. The Revenue argued that the limitation period should start from the date the prescribed authority issued the show cause notice (SCN), while the ITAT held that the limitation should start from the date the Assessing Officer (AO) initiated the penalty proceedings in the assessment order. 2. Determination of the Starting Point for the Limitation Period: The Revenue contended that the penalty orders were passed within six months from the end of the month in which the SCNs were issued (24th March 2009), making the penalty orders dated 29th September 2009 timely. They argued that since the AO is not competent to levy penalty under Section 271D, the limitation should start from the date the prescribed authority issued the SCNs. The ITAT, however, followed the precedent set by the Delhi High Court in Principal Commissioner of Income-Tax v. JKD Capital and Finlease Ltd. and Principal Commissioner of Income-Tax (Central)-2 v. Mahesh Wood Products Pvt. Ltd., which held that the limitation period begins from the date the AO initiated the penalty proceedings in the assessment order. 3. Validity of Penalty Orders Passed After the Prescribed Limitation Period: The Respondent argued that the penalty proceedings were initiated by the AO in December 2008, and thus, the penalty orders passed on 29th September 2009 were barred by limitation. The ITAT agreed, noting that the penalty proceedings were initiated in the assessment orders dated 17th and 18th December 2008. Following the precedents, the ITAT concluded that the limitation period started from the end of December 2008, making the penalty orders dated 29th September 2009 beyond the permissible period. Conclusion: The High Court upheld the ITAT's decision, affirming that the penalty proceedings were initiated by the AO in the assessment orders themselves. Therefore, the limitation period under Section 275(1)(c) started from the end of December 2008, and the penalty orders passed on 29th September 2009 were indeed barred by limitation. The Court dismissed the appeals, answering the question of law in favor of the Assessee and against the Revenue.
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