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Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI
Before: SHRI ANIL CHATURVEDI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, M/s. NKC Projects (P) Limited (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 15.12.2017 passed by the Commissioner of Income-tax (Appeals)-22, New Delhi qua the assessment year 2011-12 on the grounds inter alia that :-
“1. That the learned Commissioner of Income Tax (Appeals) 22, New Delhi has erred both in law and on facts in failing to appreciate that penalty order dated 28.11.2016 u/s 272A(2)(k) of the Act was barred by limitation and therefore deserved to be quashed as such 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that period of limitation for framing the impugned order had to be reckoned on the expire of six months from the end of the month of the order dated 30.11.2012 under section 201(1) of the Act, therefore the order of pen arty ought to have been framed by 30.5.2013 and hence the impugned order dated 28.11.2016 is barred by limitation and thus deserves to be quashed as such.
1.2 That even otherwise the fact that the reference was made in November, 2012 and the show cause notice was issued in November, 2015 i.e. after a gap of more than 36 months, the proceedings were initiated highly belatedly and thus on this count alone, the notice on the basis of a stale reference and, order made consequent there to are illegal, invalid and untenable being also barred by limitation.
2 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding penalty of Rs.75,100/- in an order dated 28.11.2016 under section 272A(2)(K) of the Act.
2.1 That delay caused in filing of the e- TDS returns was purely beyond the control of the assessee and there was no intention whatsoever to delay the filing of the quarterly returns, when the TDS was very much remitted from time to time.
2.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was no malafide intention in filing TDS returns belatedly by assessee company and tax at source having been deducted and paid by the assessee.
2.3 That the learned Commissioner of Income Tax (Appeals) has otherwise also failed to appreciate that since there was no loss to revenue and the default was at best at technical and venial breach which is not in contumacious disregard of the provisions of law, penalty levied is otherwise too not in accordance with law.
2.4 That the learned Commissioner of Income Tax (Appeals) has otherwise erred both in law and on facts in concluding mechanically that there was no reasonable cause for late filing the returns and circumstances for late filing returns were beyond the control of the assessee.
2.5 That without prejudice the computation of penalty levied u/s 272(A)(2)(k) of the Act is otherwise too not in accordance with law and excessive. It is therefore prayed that the order dated 28.11.2016 u/s 272A(2)(k)) of the Act framed be held to be barred by limitation and thus be quashed as such. Furthermore, penalty levied of Rs.75,100/- u/s 272A(2)(k)) of the Act and sustained by the learned Commissioner of Income Tax (Appeals) may kindly be deleted and appeal of the appellant company be allowed as such.”
Briefly stated the facts necessary for adjudication of the controversy at hand are : On failure of the assessee to furnish the quarterly statement within the prescribed limit under section 200(3) of the Income-tax Act, 1961 (for short ‘the Act’) read with Rule 31A of the Income-tax Rules, 1962 (for short ‘the Rules’), a reference was made for verification u/s 201/201(1A) for Financial Year 2010-11. Since the assessee has filed quarterly e-TDS return not in accordance with the provisions contained u/s 200(3) of the Act, penalty proceedings have been initiated u/s 272A(2)(k) of the Act. Declining the contentions raised by the assessee and finding that there was no reasonable cause to the assessee to comply with the provisions contained u/s 200(3) of the Act, AO levied penalty of Rs.75,100/- u/s 272A(2)(k) of the Act for late filing of return as under :-
F.Y. 2010-11 Quarterly Due Date Date of Delay Penalty Returns submission (no. of Days) u/s 272A(2)(k) (in Rs.) 24Q Q1 15.07.2010 29.01.2011 198 Rs.19,800/- Q2 15.10.2010 10.02.2011 118 Rs.11,800/- Q3 15.01.2011 14.03.2011 58 Rs.5,800/- Q4 15.05.2011 17.05.2011 2 Rs.200/- 26Q Q1 15.07.2010 29.01.2011 198 Rs.19,800/- Q2 15.10.2010 10.02.2011 118 Rs.11,800/- Q3 15.01.2011 14.03.2011 58 Rs.5,800/- Q4 15.05.2011 16.05.2011 1 Rs.100/- Total Rs.,75,100/-
Assessee carried the matter by way of appeal before the ld. CIT (A) who has upheld the penalty levied by the AO by dismissing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Ld. AR for the assessee challenging the impugned order passed by the ld. CIT (A)/AO contended that penalty order has been passed beyond the period of limitation and as such is liable to be set aside. However, on the other hand, ld. DR for the Revenue relied upon the order passed by the AO as well as ld. CIT (A).
Undisputedly, penalty proceedings has been initiated on the basis of assessment order (quantum proceedings dated 30.11.2012). It is also not in dispute that quantum proceedings in this case were to be completed by the end of financial year i.e. 31.03.2013. It is also not in dispute that penalty proceedings were to be completed by 31.03.2013 u/s 275(1)(c) of the Act.
In the backdrop of the aforesaid facts, when we examine the penalty order dated 28.11.2016, it is apparent that penalty proceedings were initiated by way of issuance of notice dated 17.05.2016 as referred by AO in para 6 of the penalty order.
Ld. AR for the assessee contended that the penalty order dated 28.11.2016 is hopelessly time barred because quantum proceedings in this case were to be completed by 31.03.2013 u/s 275(1)(c) of the Act whereas issuance of penalty notice in this case on 17.05.2016 is time barred.
Identical issue has been dealt with by Hon’ble Delhi High Court in case of Pr.CIT vs. Mahesh Wood Products Pvt. Ltd. (2017) 394 ITR 312 (Delhi) and held that the limitation in such cases would began to run from the date of letter sent by AO recommending initiation of the penalty proceedings by returning following findings :-
“Held, dismissing the appeals, that under section 275(1)(c) of the Income-tax Act, 1961, the starting point of "initiation" of penalty proceedings, would be the date on which the Assessing Officer wrote a letter to the Additional Commissioner recommending the issuance of the notice. Though the Additional Commissioner had the discretion whether or not to issue a notice, if he did decide to issue a notice, the limitation would begin to run from the date of the letter sent by the Assessing Officer recommending "initiation" of the penalty proceedings. In the assessee's case, the limitation under section 275(1)(c) began to run on July 23, 2012 and the last date for passing the penalty orders was January 31, 2013. Therefore, the penalty orders issued on February 26, 2013 were barred by limitation. No question of law arose.”
Coordinate Bench of the Tribunal in case of ITO vs. JKD Capital & Finlease Limited (2015) 43 ITR (T) 683 (Delhi-Trib.) also decided the identical issue in favour of the assessee.
It is also brought to our notice by the ld. AR for the assessee that in AY 2010-11, identical issue has been decided by the ld. CIT(A) in favour of the assessee. So, in view of the matter and by following the decision rendered by Hon’ble Delhi High Court in case of Pr. CIT vs. Mahesh Wood Products Pvt. Ltd. (supra), we are of the considered view that once the limitation for initiation of the penalty proceedings starts running it would not stop because AO was required to complete the quantum proceedings for AY 2011-12, the year under consideration, by 31.03.2013 and u/s 275(1)(c) of the Act, penalty proceedings in any case were also to be completed by 31.03.2013, hence notice for initiation of penalty proceedings u/s 272A(2)(k) read with section 274(1) of the Act dated 17.05.2016 is beyond jurisdiction being hopelessly time barred. So, in these circumstances, AO as well as CIT (A) have erred in levying/confirming the penalty which is ordered to be deleted. Consequently, the appeal filed by the assessee is allowed. Order pronounced in open court on this 18TH day of November, 2021.