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Before: SHRI RAJESH KUMAR, AM & SHRI PAVAN KUMAR GADALE, JM Shri
आदेश / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER:
The aforesaid appeals have been filed by two different assessees against the impugned order dated 07/02/2019, passed by the CIT(A)- 59, Mumbai, for the assessment year 2014-15.
The assessee has raised the following grounds:-
1. “On the facts and circumstances of the case and in law the Commissioner of Income Tax (Appeals) erred in confirming the order of the Assessing Officer u/s.271C of the Act.
2. The Appellant carves leave to add and amend the grounds of appeal.”
3. Assessee has also raised an additional ground vide letter dated 12/01/2021 which is reproduced hereunder:-
1. “The Jt. Commissioner of Income-tax (TDS)-1(3), Mumbai (hereinafter referred to as the Assessing Officer) erred in levying the penalty of Rs.73,84,430/- under section 271C of the Act.
The ld. AR submitted that the issue raised in the additional ground is arising out of the assessment order and is only a legal issue which can be raised at any stage including at the appellate stage. The ld. AR submitted that since is of a legal nature, arising out of the assessment record, therefore, the same may kindly be admitted by placing reliance on the decision of National Thermal Power Co. Ltd., vs CIT reported in 229 ITR 383(SC). The ld. AR prayed that the additional ground may be admitted and adjudicated accordingly. The ld. DR on the other hand strongly objected to the plea of the assessee that the issue was never raised by the AO before the ld. CIT(A), therefore, assessee should not be allowed to rake up the issue.
After hearing both the parties, we find that the issue raised by the assessee is to qua the penalty order being barred by limitation u/s.275 (1)(c) of the Act which is a legal issue and the facts of the said issue are available on assessment records. We further note that the issue raised does not require any further verification of facts at the level of AO. We are therefore, inclined to admit the same for adjudication keeping in view the ratio laid down by the Apex Court in the case of National Thermal Power Co. Ltd., vs CIT referred to supra.
6.The ld. AR at the outset submitted that the penalty order u/s.271(1)(c) passed by the AO dated 30/09/2016 clearly barred by limitation. The ld. AR submitted that the assessment u/s.201(1) & 201(1A) was passed by the AO (TDS) on 29/02/2016 and a copy was forwarded to the Joint Commissioner of Income Tax (TDS) Range 1-(3), Mumbai with the request to initiate penalty proceedings u/s.271C of the Act 1961. Thereafter, the Joint Commissioner of Income Tax (TDS) 1(3) issued a show-cause notice dated 11/04/2016 to the assessee as to why the penalty of a sum equal to the amount of tax which the assessee has failed to deduct and deposit tax should not be levied u/s.271C of the Act and the penalty was finally imposed of Rs.73,84,430/- in the order dated 30/09/2016 passed u/s. 271C of the Act. According to the ld. AR, the said order of penalty is hopelessly barred by limitation as the same has not been passed within the period of limitation as per the provision of Section 275(1)(c) of the Act.
The ld. AR drew the attention on the provision of the said section and submitted that no order imposing penalty u/s 271C of the At under this chapter shall be passed 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 end of the month in which action for imposition of penalty is initiated, whichever period expires later. The ld. AR submitted that the penalty was initiated with the passing of the order u/s.201(1) / 201(1A) dated 29/02/2016, therefore, period of limitation has to be reckoned from the date of the said order i.e. 29/02/2016 and not from the date of show-cause notice dated 11/04/2016 issued by the JCIT(TDS). According to the ld. AR, the said penalty order is barred by limitation as the same has not been passed within six months from 29/02/2016 or on expiry of financial year in which the proceeding during which imposition of penalty has been initiated are completed whichever expires later. In this case, the financial year in which the order u/s.201(1) 201(1A) was passed ended on 31.3.2016 and therefore, either it should be completed before 31/03/2016 or within six months from 29/02/2016. Before us, the penalty was initiated with the order passed u/s.201(1) & 201(1A) of the Act 29.2.2016. The ld. AR relied on the Hon’ble Delhi High Court decisions JKD Capital and Finlease Ltd(2015)378 ITR 614(Delhi) and PCIT Vs Mahesh Wood Products Pvt Ltd.(2017) 394 ITR 312(Delhi). The ld. AR therefore, prayed that the penalty order may kindly be quashed as being barred by limitation, as has been held by the Hon’ble Delhi High Court in the aforesaid two decisions wherein it has been held that initiation of penalty has to be taken from the date of the concerned order and not from the date of show-cause notice issued by the issuing authority.
The ld. DR on the other hand strongly opposed the contentions of the assessee qua the penalty order being time barred and submitted that the same should be reckoned from the date of issue of show-cause notice. The DR submitted that in the present case, the show-cause notice was issued on 11/04/2016 and therefore, the penalty order was rightly passed within the limitation on 30/09/2016 and prayed before the Bench that additional ground may please be dismissed as devoid of any merits.
9.After hearing the ld. DR and perusing the material on record, we find that in this case, undisputedly, the penalty proceedings under section 271C of the Act were recommended by the AO(TDS) in the order passed u/s.201(1) / 201(1A) of the Act dated 29/02/2016 to the Joint Commissioner of Income Tax (TDS)-1(3), Mumbai for initiation of penalty proceedings u/s.271C of the Act. We note that a show-cause notice was issued by the Joint Commissioner of Income Tax (TDS) on 11/04/2016 and penalty order was finally passed on 30/09/2016. Now the issue before is whether the initiation of penalty takes place with passing of the order u/s.201(1) / 201(1A) on 29/02/2016 or with the issue of show- cause notice dated 11/04/2016. We have perused the provisions of the Act carefully and evaluated and analyzed the same in the light of the decisions cited by the ld. AR supra of Hon’ble Delhi High Court. The Hon’ble High Court has held that the date of initiation of penalty is taken from date of the order in which the penalty has been recommended by the AO and not from the date of show-cause notice. The Hon’ble Delhi High court in the case of JKD Capital and Finlease Ltd(supra) has held that no penalty could be levied after expiry of the financial year in which quantum proceedings completed or beyond six months from the month in which penalty proceedings were initiated though the decision is rendered in the context of section 271E of the Act. In the subsequent decision in PCIT Vs Mahesh Wood Products Pvt Ltd. the Hon’ble Delhi High Court has laid down the same ratio by flowing the earlier decisions in JKD Capital and Finlease Ltd. (supra) wherein it was held that the order passed was barred by limitation on the ground that initiation of penalty has to be taken from the order of assessing officer and not from the date of issue of show notice. We, therefore respectfully following the ratio laid down by the Hon’ble Delhi Court in the decisions as discussed above , set aside the order of ld CIT(A) and direct the AO to delete the penalty. Accordingly, the additional ground raised by the assessee is allowed.
Since we have allowed the additional ground, the other grounds raised by the assessee need not to be adjudicated.
ITA No.2945/Mum/2019 (A.Y.2014-15)
The issue raised in this appeal is identical to one as has been decided by us in . In this case, the order u/s.201(1) and 201(1A) of the Act was passed 05/03/2015 and penalty order was passed on 30/09/2016 and show-cause notice was given on 11/04/2016. Therefore, the facts of this case are quite similar to one as stated by us in ITA No.2944/Mum/2019. Therefore, our decision in rendered above shall apply, mutatis mutandis, to this appeal as well. Accordingly the appeal of the assessee is partly allowed.
In the result, appeals of the assessee are partly allowed.
Order pronounced on 21/01/2021 by way of proper mentioning in the notice board.