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TMI Blog2024 (11) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in January 2008 to verify whether the TDS has been correctly deducted and deposited timely into Government s account. The order was passed by the AO on 30.03.2011, holding the assessee to be in default for not paying the relevant TDS and the penalty proceedings were referred to the Additional CIT, Range-50 for levy of penalty. Thus, the last date by which the penalty order could have been passed was 30.09.2011 as the six months from the end of the month from which action for imposition of penalty was initiated, would expire on 30.09.2011. However, in this case, admittedly, penalty order was passed on 29.07.2013, and therefore, ITAT had rightly concluded that the orders were barred by limitation. ITAT was correct in law in deleting penalty levied by the AO on the ground that penalty order dated 29.07.2013 was passed beyond the time period framed by Section 275 (1) (c) of the Act and 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 in favour of assessee. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON'BLE MR. JUSTICE RAVINDER DUDEJA For the Appellant Through: Mr. Puneet Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -50, which was received on 14.02.2013 by the Manager, Finance of the assessee company. 7. Penalty Order dated 29.07.2013 was passed by the JCIT, Range-50 under Section 271C, 272A (2) (c) 272A (2) (k) of the Act, thereby, penalizing the assesseee for non-deduction of TDS and for failure to deliver or cause to be delivered a copy of the statement within time prescribed in sub Section 3 of Section 200 or the proviso to sub Section 3 of Section 206 of the Act. 8. Aggrieved by the penalty order, the assessee preferred an appeal before the CITA. The appeal was allowed and the penalty so levied was deleted. 9. Being dissatisfied, the Revenue preferred an appeal before the ITAT, but the same was also dismissed. 10. The order passed by the ITAT has been assailed by filing the present appeal. SUBMISSIONS, ANALYSIS FINDINGS ON QUESTION OF LAW A 11. Undisputably, Show Cause Notice dated 31.01.2013 as also the Order of Penalty dated 29.07.2013 were passed in the name of M/s. Infovision Information Services Pvt. Ltd. , while the assessee had changed its name to M/s. Adma Solutions Pvt. Ltd. In view of the same, CITA took the view that impugned order of penalty was passed in the name of an entity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. is not such a defect which cannot be cured and is therefore not fatal. We, accordingly, set aside the finding returned by the ITAT to the aforesaid extent and answer the question of law in favour of the appellant. SUBMISSIONS, ANALYSIS FINDINGS ON QUESTION OF LAW B 17. ITAT while relying upon KareemulHajazi v. State of NCT of Delhi in CRL. No. 940/2010 dated 07.01.2011 held that the period of six months prescribed u/s 275 (1) (c) of the Act ought to be treated as a reasonable period for issuance of show cause notice and therefore the show-cause notice was found to have been issued with inordinate delay and penalty was held to be not sustainable. 18. Learned counsel for the appellant has argued that Section 275 (1) (c) nowhere lays down the limitation for issuance of SCN, rather, it only contains the limitation on passing of an order beyond the period of six months from the initiation of penalty proceedings or the end of the financial year in which such proceedings were initiated or whichever is later. He contends that the date of reckoning limitation would be the date of issuance of SCN. According to the learned counsel, SCN in this case was issued on 31.01.2013 and Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expires later ... 22. It is apparent that while legislature provides time frame for conclusion of penalty proceedings once initiated, there is no indication as to when the period of six months ought to commence. However, it does not mean that the Department is empowered to take action at its own will without caring for the reasonableness of the time under which actions are to be taken, even though, the law does not prescribe any time limit for such actions. In the case of State of Punjab v. Bhatinda District Co-op Mil (P) Union Ltd. (2007) 11 SCC 363, the question that arose before the Supreme Court was regarding initiation of proceedings by exercise of jurisdiction by the statutory authority. The Apex Court held that the exercise of jurisdiction must be within a reasonable period of time and considering the provisions of the Punjab General Sales Tax Act, 1948, it was held that a reasonable period of time for initiating proceedings would be five years. 23. While considering as to what would constitute reasonable period in the similar facts and circumstances, the Division Bench of this Court in the case of Commissioner of Income Tax, Delhi XVII v. NHK Japan Broadcasting Corpn., [200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Mahesh Wood Products Pvt. Ltd., 2017 SCC OnLine Del. 8214 , a reference was made by AO to the prescribed authority on 23.07.2012 and the SCN was issued on 28.08.2012. Therefore, as per the date of reference, the limitation was to expire on 31.01.2013 and as per the SCN, the limitation would have expired on 28.02.2013. The penalty order was passed on 26.02.2013. This Court, on the facts of the said case, held the same to be barred by limitation by reckoning the date of initiation of penalty to be the date of making reference by the AO to the prescribed authority. The relevant portion of the said judgment reads as follows:- 7. Mr. Sanjay Kumar, learned counsel/or the Revenue has sought to place reliance on the decision of this Court in Commissioner of Income Tax (TDS) v. IKEA Trading Hong Kong Ltd., [2011] 333 ITR 565 (Del) to urge that it is the date of issuance of the Show Cause Notice ('SCN') that would be the relevant starting point. Accordingly he submits that the date of issuance of the SCN by the ACIT being 28 August, 2012, limitation would expire on 28February, 2013. Therefore, the penalty orders having been passed on 26 February, 2013 would not be barred by limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeded to confirm the penalty in the sum of Rs. 17, 90,000. XXX XXX XXX 7. Mr. Kamal Sawhney. learned senior standing counsel appearing for the Revenue. submitted that the AO has no power to initiate the penalty proceedings under section 271E of the Act and it was only the Joint CIT who could have done so. Therefore, for the purpose of limitation under section 275 (1) (c). the relevant date should be the date on which notice in relation to the penalty proceedings were issued. In the present case. as the Additional CIT issued notice to the assessee on 12th March 2012, the order of the Additional CIT passed on 20th March 2012 was within limitation. 8. We are unable to agree with the above submission of learned Standing counsel for the Revenue. Section 275 (1) (c) reads as under: 275. (1) No order imposing a penalty under this Chapter shall be passed. .. . (c) in any other case, after the, expiry o] the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. 9. In terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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