Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI SUDHANSHU SRIVASTAVA
This appeal has been preferred by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) – XXVIII, New Delhi wherein vide order dated 28/12/2011, the Ld. CIT (Appeals) has confirmed penalty of Rs. 21,50,000/- imposed under section 271D of the Income Tax Act, 1961. The appeal pertains to assessment year 2001 – 02.
Assessment year 2001-02 2. The brief facts of the case are that assessment for assessment year 2001–02 in the case of one Sh. Ashok Arora was completed under section 147/143 (3) of the Income Tax Act, 1961 on 26th of December 2008. The proceedings under section 147 of the Income Tax Act, 1961 were initiated in the case of Sh. Ashok Arora on the basis of a Tax Evasion Petition wherein it was alleged that Sh. Ashok Arora had advanced cash loan of Rs. 21,50,000/- to Sh. P.R. Gupta, that is, the assessee and in some instances had received post dated cheques from the assessee.
Subsequently, Sh. P.R. Gupta was asked to show cause as to why penalty may not be imposed under section 271D of the Income Tax Act, 1961 for failure to comply with the provisions of section 269SS of the Income Tax Act, 1961. In response, the assessee stated that there were ongoing litigations with Sh. Ashok Arora and it was also contended that Sh. Ashok Arora had been forging documents and cheques. It was also submitted that Sh. Ashok Arora had mala fide intention against him and that the assessee had never taken or accepted any loan in cash from Sh. Ashok Arora during the year under consideration. However, the submission did not find favour with the AO and he proceeded to impose penalty of Rs. 21,50,000/- which was, on appeal, Assessment year 2001-02 confirmed by the Ld. CIT (Appeals). Now the assessee is in appeal before the ITAT and has challenged the imposition of the penalty by raising the following grounds of appeal –
“1. That the learned Assessing Authority has grossly erred and mistaken under law and according to the facts and in the circumstances of the case in imposing penalty u/s 271D.
2. That on the matter of fact and in the circumstances of the case, no adequate opportunity of being heard in person has been given to me by the learned Assessing Authority.
3. That no Annexures from 1 to 9 as mentioned in the Penalty Order has been given to me earlier which is later on attached with the Penalty Order.
4. That even after remanding back of my case to the assessing authority, the assessing authority again has not given me the opportunity of being heard in person.
5. That any additional ground may be taken at the time of hearing of the appeal.”
3. At the outset, the Ld. Authorised Representative submitted that the penalty order dated 16/11/2009 and passed under section 271D of the Income Tax Act, 1961 was barred by limitation. It was submitted that the show cause notice issued under section 269SS of the Income Tax Act was dated 23/01/2009 and, therefore, as per the provisions of section 275 (1) (c), the penalty order should have been passed latest by Assessment year 2001-02 30/09/2009. It was submitted that due to the penalty order having been passed beyond the limitation period, the penalty order was liable to be quashed at the very threshold itself.
4. In response, the Ld. Senior DR, though supported the orders of the lower authorities, could not controvert the fact that the impugned notice was issued on 23/01/2009 and that the impugned order was passed on 16/11/2009.
We have heard the rival submissions and have perused the material on record. It is seen that this issue is no longer res integra. The Hon’ble Delhi High Court has held in CIT Vs. Worldwide Township Projects Ltd. in that penalty order u/s 271D of the Income Tax Act, 1961 has to be passed in terms of section 275(1)(c) of the Act which provides that the penalty order has to be passed in the financial year in which the proceedings for imposing the penalty are initiated or within six months of the initiation of such proceedings, whichever is later. The Hon’ble Delhi High Court further held that the limitation period for passing the order u/s 271D will not be governed by section 275(1)(a) of the Act. Subsequent to the judgment of the Hon’ble Delhi High Court, the CBDT has also Assessment year 2001-02 issued Circular No.10/2016 Dated 26-4-2016 on the issue clarifying that the time limit for passing penalty order u/s 271D or 271E is governed by section 275(1)(c). The said Circular is reproduced here-in-under for a ready reference-
“The issue whether the limitation for imposition of penalty under sections 271D and 271E of the Income-tax Act, 1961, (hereinafter referred to as the Act) is determined under section 275(1)(a) or section 275(1)(c) of the Act, has given rise to considerable litigation.
The Hon'ble Delhi High Court in the case of Commissioner of Income Tax v. Worldwide Township Projects Ltd., vide its order dated 21-5-2014 in considered the issue and observed that, "It is well settled that a penalty under this provision is independent of the assessment. The action inviting imposition of penalty is granting of loans above the prescribed limit otherwise than through banking channels and as such infringement of Section 269SS of the Act is not related to the income that may be assessed or finally adjudicated. In this view Section 275(1)(a) of the Act would not be applicable and the provisions of Section 275(1)(c) would be attracted." The judgment has been accepted by the Central Board of Direct Taxes.
In view of the above, it is a settled position that the period of limitation of penalty proceedings under sections 271D and 271E of the Act is governed by the provisions of section 275(1)(c) of the Act. Therefore, the limitation period for the imposition of penalty under these provisions would be 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 limitation period is not dependent on the pendency of appeal against the assessment or other order referred to in section 275(1)(a) of the Act.
Accordingly, no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this issue before various Courts/Tribunals may not be pressed upon.
5. The above may be brought to the notice of all concerned.”
5.1 It is undisputed that in the present appeal, the penalty proceedings were initiated on 23/01/2009 and, therefore, in terms of section 275(1)(c), the penalty order should have been passed latest by 30/09/2009, being six months from the end of the financial year. However, the order was passed on 16/11/2009 which was beyond the limitation period.
Accordingly, without going into the merits of the case, we deem it fit to quash the penalty order as being barred by limitation.
In the final result, the appeal of the assessee stands allowed.
The order is pronounced in the open court on 31st October, 2017.