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Facts
The Assessee filed an appeal against the penalty order of Rs. 62,41,185/- imposed under Section 271E for contravention of Section 269T. The penalty was confirmed by the Ld. CIT(A), leading to the present appeal.
Held
The Tribunal held that the penalty order was passed beyond the period prescribed under Section 275(1) of the Act. Therefore, the penalty order confirmed by the Ld. CIT(A) was quashed.
Key Issues
Whether the penalty order passed under Section 271E was barred by limitation as per Section 275(1) of the Income Tax Act, 1961.
Sections Cited
271E, 269T, 143(3), 263, 275(1)
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Income Tax Appellate Tribunal, DELHI
ORDER
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Assessee against the order of the Commissioner of Income Tax (Appeals)/National Faceless appeal Centre (Ld. CIT(A)/NFAC’ for short), dated 29/10/2024for the Assessment Year 2015-16.
Brief facts of the case are that, an order of penalty under section 271E dt. 31/08/2022 came to be passed by the A.O. by imposing penalty of Rs. 62,41,185/- on the ground of contravention of provisions of Section -269T of Income Tax Act, 1961 ('Act' for short). Aggrieved by the order of penalty, the Assessee preferred an Appeal before the Ld. CIT(A).
The Ld. CIT(A) vide order dated 29/10/2024, dismissed the appeal of the Assessee by confirming the penalty. As against the order of the Ld. CIT(A) dated 29/10/2024, the Assessee preferred the present Appeal.
The Ld. Counsel for the Assessee vehemently submitted that no satisfaction has been recorded by the Officers for initiation of the penalty proceedings u/s 271E of the Act either during the proceedings u/s 143(3) of the Act or during the proceedings u/s 263 of the Act. Therefore, in the absence of recording any satisfaction, the initiation of penalty and the levy of penalty is illegal and void-ab-initio. The Ld. Counsel for the Assessee relied on the Judgment of CIT Vs. Jai Laxmi Rice Mills Ambala City in 64 taxmann.com 75 (S.C). Further, the Ld. Counsel also submitted that the order of penalty dated 31/08/2022 is barred by limitation. Even if the period of limitation is calculated from any of the proceedings i.e. 143(3) and 263 of the Act, the order of the penalty has been passed beyond the limitation prescribed u/s 275(1) of the Act.
Thus, sought for setting aside the order impugned.
Per contra, the Ld. Department's Representative relying on the order of the Lower Authorities, sought for dismissal of the Appeal of the Assessee.
We have heard both the parties and perused the material available on record. In the present case, before initiating the penalty proceedings u/s 143(3) of the Act, an order u/s 143(3) of the Act has been passed on 02/05/2017. The financial year expires on 31/03/2018 and six months expires from the end of the month in which the penalty initiated (i.e.
02/05/2017) on 30/11/2017. Thus, the time limit for passing of order of penalty was on 31/03/2018.
Even if we take order passed u/s 263 of the Act i.e. on 08/03/2021 for the purpose of calculating the period of limitation for passing the order of penalty, the Financial years expires on 31/03/2021 and the six months expires from the end of month in which penalty initiated (i.e.
08/03/2021) was on 30/09/2021.
In the present case, the impugned penalty order passed on 31/08/2022, which is beyond the period prescribed u/s 275(1) of the Act. Therefore, order of penalty which has been confirmed by the Ld. CIT(A) vide order impugned is hereby quashed.
Since, we have quashed the order of penalty on the ground of limitation, other grounds of appeal of the Assessee requires no adjudication.
In the result, Appeal of the Assessee is partly allowed.