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Facts
The Revenue appealed against the orders of the CIT(A) which quashed penalty orders passed under Section 271(1)(c) of the Income Tax Act, 1961, on the grounds of being barred by limitation under Section 275(1)(c). The penalty was imposed on the assessee for concealment of income based on additions made after a search.
Held
The Tribunal held that the penalty order was passed beyond the statutory time limit prescribed by Section 275(1)(c) of the Act. The communication of the penalty order to the assessee with a DIN generated much later than the order's date indicated that the order was not passed within the stipulated timeframe and was therefore time-barred.
Key Issues
Whether the penalty order passed under Section 271(1)(c) was barred by limitation under Section 275(1)(c) of the Income Tax Act, 1961, due to discrepancies in the date of passing and communication with DIN.
Sections Cited
271(1)(c), 275(1)(c), 143(1), 132(1), 274(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
These are appeals preferred by the Revenue against the orders of the Commissioner of Income-tax (Appeals), Kolkata (hereinafter referred to as the “Ld. CIT(A)”] even dated 02.01.2025 for the AY 2015-16 & 2016-17.
The only issue raised by the Revenue in both the appeals is against the orders of ld. CIT (A) quashing the penalty orders passed u/s 271(1)(c) of the Income-tax Act, 1961 (the Act) for both assessment years on the ground of being barred by limitation u/s 275(1)(c) of the Act, without considering the observations of the ld. AO in the remand report. For the sake of convenience, we will take the facts for A.Y. 2015-16.
Aggrieved by the order assessee preferred the appeal before the ld. CIT (A), wherein the ld. CIT (A) quashed the penalty order as being barred by limitation u/s 275(1)(c) of the Act after calling for a remand report from the AO and also after taking into account the submission and contention of the assessee by observing and holding as under: - “5.0 Decisions: 5.1 All the Grounds relate to action of A.O in imposing penalty u/s 271(1)(c) of the Act for concealment of income. I have gone through the fact of the case, penalty order and the submissions filed by the appellant. During the course of assessment proceedings, Assessing Officer noticed that the name of the concerns namely Bhagawati Capital, Bhagawati Sportex etc. were mentioned under the head “KT” in seized material. Since, the above-mentioned entities were group concern of Kailash Tibrewal, he assumed that the appellant Shri Kailash Kumar Tibrewal is the lender of cash loan. Hence, the A.O added Rs.3,75,00,000/- to the total income of the assessee and initiated penalty u/s 271(1)(c) of the Act for concealment of income on 30.09.2021 along with assessment order. 5.2 Here, I would like to re-produced section 275 of the Act which deal with ‘Bar of limitation for imposing penalties’: Section 275:
The screenshot of order-sheet showing that relevant penalty order u/s. 271(1)(c) of the act in the case of the assessee was passed on 31.03.2022 and the intimation letter was generated by the ITBA system on 25.04.2022. The relevant portion is as under:
Now, on the alleged issue of refixation of hearing notice u/s. 271(1)(c) was issued to the assessee on 13.04.2022 beyond the allowed timeframe of passing the penalty order i.e. within 31.03.2022. In this connection, it is stated that huge number of time barring assessment order and penalty order were uploaded on the ITBA system on the very last day at late hour of 31.03.2022. In many cases, penal provisions were initiated where the addition are being made in the assessment and refixed for hearing again in the mid of April 2022. With other cases, the assessee case was also inadvertently re-fixed again on 13.04.2022 by issuing the hearing notice. The aforesaid mistake is clerical in nature and inadvertently refixation of hearing notice was issued to the assessee on 13.04.2022.
We note that u/s 271(1)(c) of the Act, the penalty is barred by limitation on 31.03.2022 as per the record before us. The penalty order is dated 31.03.2022, however the communication was sent to the assessee on 25.04.2022 that the order/ notice/ letter dated 31.03.2022 having document number ITBA/COM/M/17/2022- 23/1042842838(1), which is dated 25.04.2022. Therefore, the penalty order is barred by limitation as DIN was generated on 25.04.2022 and not while passing the penalty order. Therefore, we do not find any reason to interfere with the finding of the ld. CIT (A), who has passed a very speaking and reasoned order. Accordingly, we are upholding the appellate order by dismissing the appeal of the
In the result, the appeals of the Revenue are dismissed.
Order pronounced in the open court on 30.07.2025.