DECCAN MINERALS PRIVATE LIMITED,MUMBAI vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1) , MUMBAI

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ITA 5829/MUM/2024Status: DisposedITAT Mumbai30 January 2025AY 2015-16Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty order was passed beyond the limitation period prescribed under Section 275(1)(c) of the Income Tax Act. The proceedings were initiated on 27/11/2018, and the penalty order should have been passed by 31/05/2019.

What were the facts?

The assessee filed its return of income for AY 2015-16, which was accepted without additions. The AO initiated penalty proceedings u/s 271(1)(c) based on incorrect grounds and issued a show-cause notice on 27/11/2018. However, the penalty order was passed much later on 04/09/2021.

What were the issues?

Whether the penalty order passed by the Assessing Officer was barred by limitation as per Section 275(1)(c) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 147,Section 148,Section 143(3),Section 275(1)(c),Section 274

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, ‘D’ BENCH

For Appellant: Shri Anil Mathur & Shri
For Respondent: Shri R.R. Makwana
Hearing: 23/01/2025Pronounced: 30/01/2025

आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 21/09/2024 filed by NFAC, Delhi in relation to penalty proceedings u/s. 271(1)(c) for the A.Y.2015-16.

2.

In various grounds of appeal assessee has challenged the levy of penalty of ₹ 31,34,607/- and also challenged the impugned penalty order passed by the ld. Assessing Officer dated 04/09/2021 that it is barred by limitation u/s 275(1)(c).

1.

3. The brief facts qua the issue of limitation are that assessee has filed its return of income on 10/11/2017 for A.Y.2015-16 declaring taxable income of ₹94,98,810/-. Later on, assessee’s case was reopened u/s 147 on the ground that assessee has not filed return of income for A.Y.2015-16. In compliance with the notice u/s.148, assessee submitted the details and information that it has already filed its return of income and income as per return declared by the assessee on 10/11/2017 was duly accepted and assessed vide order dated 26/11/2018. In the assessment order ld. Assessing Officer has initiated the penalty u/s.271(1)(c) and issued notice u/s.274 read with section 271(1)(c) on 27/11/2018, on the ground that return was filed only in response to notice u/s.148, even though there was no disallowance was made in the order u/s 148/143(3). Since there was no addition or disallowance, assessee did not prefer any appeal against the quantum order. After issuing show-cause notice on 27/11/2018, ld. Assessing Officer did not pass any order. After lapse of considerable time of almost 30 months, another show-cause notice was issued on 26/05/2021 and penalty of ₹31,34,607/- was levied vide order dated 04/09/2021. Thus, it has been stated that in terms of Section 271(1)(c), penalty order should have been passed within financial year in which the proceedings for imposition of penalty has been initiated or completed or six months from the end of the month in which the action for imposition of penalty is initiated which is later. Here, the penalty proceedings were initiated on Deccan Minerals Pvt. Ltd. 27/11/2018 and therefore, penalty order should have been passed either before 31/03/2019 or latest by 31/05/2019.

4. From the perusal of the records, it is seen that it is not in dispute that the return of income was filed on 10/11/2017 and reasons were recorded for reopening, on the ground that assessee has not filed return for A.Y.2015-16 which fact itself is incorrect because the return was e-filed. In the assessment order passed u/s.143(3) r.w.s. 147 dated 26/11/2018, no addition or disallowance was made and the assessment was finalized on the total income as declared in the return of income. Thus, there was no appeal which was filed against the said order. It is a matter of record that penalty proceedings were initiated for concealment of income and notice u/s.274 r.w.s. 271(1)(c) was issued on 27/11/2018. Then, after more than 2 ½ years another show- cause notice issued was on 26/05/2021 which was duly complied by the assessee. Thereafter, penalty order was passed on 14/09/2021 levying penalty of ₹31,34,607/-. For the sake of ready reference, the relevant extract of the provisions of Section 275(1)(c) are reproduced hereunder:- “275(1) No order imposing a penalty under this Chapter shall be passed- (a).... (b)..... (c) in any other case, after the expiry of 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 Deccan Minerals Pvt. Ltd. end of the month in which action for imposition of penalty is initiated, whichever period expires later."

5. Since assessee has not preferred any appeal, therefore, the period of imposing the penalty order as per clause ‘c’ was either upto 31/03/2019 or 31/05/2019 and later period being 31/05/2019. Accordingly, the penalty order should have been passed on or before 31/05/2019. Thus, the penalty order dated 04/09/2021 is clearly barred by limitation, then same is quashed.

6. Before us, assessee has relied upon the judgment of Hon’ble Jurisdictional High Court in the case of CIT vs. Chhajer Packaging and Plastics Pvt. Ltd., reported in (2007) 165 taxmann.com 109 stating that no penalty can be levied if conditions of Section 271(1)(c) was not complied with. Accordingly, penalty order passed by the ld. AO is quashed and consequently appeal of the assessee is allowed.

7.

In the result, appeal of the assessee is allowed.

Order pronounced on 30th January,2025.

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