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TMI Blog2023 (9) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us: "1. Ld. CIT(A) erred in confirming penalty of Rs. 1,00,000/- levied by the A.O u/s. 271B, without appreciating the facts of the case properly. The penalty levied by the A.O and confirmed by CIT(A) is arbitrary and not justified. 2. Without prejudice to ground no.1 Ld. CIT(A) erred in confirming penalty without appreciating the fact that the A.O has levied penalty without providing any opportunity of being heard to the appellant. 3. Without prejudice to ground no.1, the penalty confirmed by Ld. CIT(A) is illegal inasmuch as the penalty order passe by the A.O was barred by limitation. The penalty order is liable to be quashed. 4. The appellant reserves the right to add, amend or alter any ground/s of appeal." 3. Succinctly stated, as the assessee despite having substantial turnover from the business of manufacturing and trading of iron and steel items, had failed to file his return of income, therefore, proceedings u/s. 147 of the Act were initiated in his case by the A.O. Notice u/s. 148 of the Act dated 30.03.2000 was issued by the A.O. 4. The A.O, thereafter, framed the assessment vide order passed u/s. 147 r.w.s. 144 dated 15.03.2002, assessing income of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng penalty could be passed after the expiry of financial year in which the proceedings, in the course of which action for imposition of penalty was initiated, are completed, or six months from the end of the month in which action for imposition on penalty is initiated, whichever is later. 3.3 We are enclosing herewith a copy of the assessment order dated 15.03.2002 (page no. 01 to 03) A perusal of such assessment order shows that the penalty proceeding u/s 271(1)(b) was initiated by AO along with passing of the assessment order and therefore. as per sec. 275(1)(c), the penalty order could be passed either by 31.03.2002 or 30.09.2002, whichever is later. Therefore, the penalty could have been imposed only by 30.09.2002 whereas it has been imposed on 27.07.2015. Therefore, the penalty order is barred by limitation. 3.4 The language of sec. 275(1) is noteworthy. It says "no order imposing a penalty under this Chapter shall be passed". Having regard to the language used, it is evident that beyond the limitation period prescribed u/s 275(1), no penalty order can be passed. 3.5 It appears that since the ITAT decided the case of appellant on 17.12.2014. the AO has counted the limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h section 271 B of the Act. The relevant assessment order was admittedly a subject matter of appeal before the Appellate Tribunal. The appeal was dismissed by the ITAT, Raipur vide order dated 17.12.2014, which was received in the office of C1T-1, Raipur on 20.01.2015. These facts are clearly mentioned at Para 5 of the penalty order itself, - "5. The Hon'ble CIT(A), Raipur dismissed the appeals of the assessee on 10.07.2003. The Hon'ble ITAT, Bilaspur Bench, Bilaspur vide order dated 15.02.2008 set-aside the order of the Ld. CIT(A), Raipur. The Department had challenged the above order before the Hon'ble High Court of Chhattisgarh, Bilaspur. The Hon'ble High Court vide its order dated 17.01.2012 had restored it back to the Hon'ble ITAT. Subsequently, the Hon'ble ITAT, Raipur Bench, Raipur has dismissed all the appeals of the assessee vide order dated 17.12.2014 (received in the 0/0 the C1T-1, Raipur on 20.10.2015) and upheld the AO's order." 9.2.1 On these facts, it is evident that the period of limitation for imposing penalty has to be construed in accordance with the provisions of clause (a) of sub-section (1) of section 275. The period of six mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of accounts audited u/s. 44AB of the Act. Explaining the logic behind his aforesaid contention, it was submitted by the Ld. AR that as the requirement of getting books of account audited could arise only where books of accounts were maintained, therefore, if for some reason the assessee had not maintained books of account, then, the assessee could only be visited with penalty u/s. 271A of the Act, i.e. failure on his part to maintain books of account as required under law. In sum and substance, it was the claim of the Ld. AR that now when the assessee had been penalized for not maintaining books of accounts by subjecting him to the rigors of section 271A of the Act, therefore, there was no justification for the A.O to have penalized him for not getting audited such books of accounts which were admittedly not maintained by the assessee. The Ld. AR in order to fortify his aforesaid contention relied on the judgment of the Hon'ble High Court of Allahabad in the case of CIT Vs. S.K Gupta & Co. (2010) 322 ITR 86 (All). Also, support was drawn by the Ld. AR from the order of the ITAT, "SMC" Bench, Pune in the case of Ram Prakash C Puri Vs. ACIT (2001) 77 ITD 210 (Pune) and order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble High Court by observing as under: "4. We have heard Sri A.N. Mahajan, learned standing counsel for the Revenue and Sri R.R. Kapoor, learned counsel appearing for the respondent assessee. 5. Sri Mahajan contended that the Tribunal has erred in law while upholding order of the CIT(A) cancelling the penalty in as much as the assessee had failed to get its books of account audited. 6. The submission of Shri Mahajan is misconceived for the reason that the requirement of getting the books of account audited could arise only where the books of accounts are maintained. If for some reason the assessee has not maintained the books of account the appropriate provision under which penalty proceedings can be initiated is under s. 271A of the Act which recourse has also been taken by the assessee as would appear from the order of the Tribunal. 7. The Tribunal was, therefore, justified in upholding the order of the CIT(A) cancelling the penalty imposed under s. 271B of the Act. 8. The appeal fails and is therefore, dismissed." Also, as stated by the Ld. AR, similar view has been taken in the following judicial pronouncements: (i) ITAT, "SMC" Bench, Pune in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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