PARAMOUNT VILLAS PVT. LTD.,NEW DELHI vs. JCIT, RANGE-76, NEW DELHI

The Assistant Commissioner of Income made a reference to the ld. Joint Commissioner of Income Tax (ld. JCIT) for initiating penalty proceedings u/s 272A(2)(g) of the Act on 2.6.2015. The ld. JCIT issued penalty notice to the assessee on 30.11.2015 showcausing the assessee as to why the penalty u/s 272A(2)(g) of the Act should not be levied on the assessee for the delayed issuance of TDS certificates to the deductees. Ultimately the penalty order u/s 272A(2)(g) of the Act stood passed by the ld. JCIT on 27.5.2016 levying penalty on the assessee of Rs 24,59,362/- as per the following table:-

FY 2012-13 Quarterl Type of Due date of Actual date of Delay (No. Total No. Quarterly return- y TDS issuance of issuance of of Days) of Deduc wise Penalty u/s Returns Certific certificates to the certificates tees 272A(2)(g) (in ates deductees Rs.) A. B. C. D. E. F. G.* Q1 Form 30.07.2012 18.01.2013 172 161 12,45,000/- 16A Q2 Form 30.10.2012 15.02.2013 108 140 7,69,400/- 16A Q3 Form 30.01.2013 16.02.2013 17 129 1,83,124/- 16A Q4 Form 30.05.2013 18.06.2013 19 171 2,61,838/- 16A Total 24,59,362/- 5. As stated earlier, since the TDS remittance details and challan numbers are to be reflected in the TDS Certificate in Form 16A and that the same could be reflected only after the remittance of TDS amounts, the assessee was prevented from reasonable cause in not issuing the Form 16A to the deductees in time.

6. Apart from this, the most crucial aspect that arises for consideration is as to whether the penalty order passed on 27.5.2016 by the ld. JCIT would be barred by limitation within the meaning of provisions of section 275(1)(c ) of the Act.

7. Now the dispute to be resolved is that whether the limitation would have to be reckoned from 2.6.2015 (being the date of reference made by ld. ACIT to ld. JCIT) or from 30.11.2015 (being the date of issuance of show cause notice by ld. JCIT to the assessee). According to ld. AR, the penalty order should have been completed on or before 31.1.2016. Per Contra, the ld. DR stated that the penalty order passed on 27.5.2016 is well within the statutory time when reckoned from 30.11.2015 (being the date of issuance of show cause notice by ld. JCIT to the assessee). This issue is no longer res integra in view of the decision of the co-ordinate bench of this Tribunal authored by ld. Accountant Member in the case of Sunil Dandriyal vs JCIT in & 8070/Del/2019 dated 24.11.2023. The relevant operative portion of the said order is reproduced below:-

“3. We have heard the rival submissions and perused the materials available on record. The assessee had received Rs.10,00,000/- and Rs.1,17,50,000/- in cash in Asst. Years 2009-10 and 2010-11 respectively from Sh. Sanjay Bansal. The Ld. AO completed quantum assessment proceedings for AY 2009-10 u/s 153A r.w.sec.143(3) of the Act on 30/03/2015. The Ld. CIT(A) while disposing of the appeal for AY 2011-12 in his order dated 28/02/2018 had directed the Ld. AO to recommend the JCIT for initiation of the proceedings of penalty u/s 271D r.w.sec 269SS of the Act in respect of cash receipt of loans from Mr. Sanjay Bansal in AY 2009-10 and 2010-11 by the assessee. Accordingly, the Ld. AO made a reference to Ld. JCIT for initiation of the penalty proceedings on 25/03/2017. The Ld. JCIT passed the penalty order u/s 271D of the Act levying penalty in the sums of Rs.10,00,000/- and Rs.1,17,50,000/- for AY 2009-10 and 2010-11 respectively for violation of provisions of section 269SS of the Act. Now, the short for question that arises for our consideration is as to whether the said penalty order passed by the Ld. JCIT on 29/11/2017 is within the time prescribed under the statute. For this purpose, it would be relevant to reproduce the provisions of section 275(1) of the Act:- 275. 15[(1)] No order imposing a penalty under this Chapter shall be passed— 16[(a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the 17[***] Commissioner (Appeals) under section 246 18[or section 246A] or an appeal to the Appellate Tribunal under section 253, 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 completed19, or six months from the end of the month in which the order of the 20[***] Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later : 21[Provided that in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the Chief Commissioner or Commissioner, whichever is later;] (b) in a case where the relevant assessment or other order is the subject-matter of revision under section 263 21[or section 264], after the expiry of six months from the end of the month in which such order of revision is passed; (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 end of the month in which action for imposition of penalty is initiated, whichever period expires later.] 4. The assessee‟s case herein falls u/s 275(1)(c) of the Act wherein penalty order should be passed on or before 30/09/2017 ie. 6 months from the end of the month in which penalty proceedings were initiated by the Ld. AO by recommending to Ld. JCIT. We find that the lower authorities had proceeded on the basis that the time limit had to be reckoned from the date of issuance of first notice by Ld. JCIT which was done on 11/08/2017. We find that the law is very clear that penalty proceedings u/s 271D and 271E of the Act are to be initiated by the Ld. AO by recommending the same to Ld. JCIT and, thereafter, the Ld. JCIT shall issue show cause notice to the assessee and pass penalty orders thereon u/s 271D and 271E of the Act. Hence, the due date had to be reckoned only from the date of triggering of the proceedings from the side of the Ld. AO to Ld. JCIT. Admittedly, the Ld. AO had made reference to Ld. JCIT on 25/03/2017 for initiating penalty proceedings in the instant appeals. Six months from the end of the month in which the action for imposition of penalty is initiated expired on 30/09/2017. Accordingly, the penalty order framed on 29/11/2017 would become barred by limitation as per provisions of section 275(1)(c) of the Act.

(d) Penalty order u/s 271D of the Act was passed by the Ld. JCIT on 29/09/2009. 5.1. The Hon‟ble Jurisdictional High Court held that due date for passing the penalty order would be 30/06/2009 and held that the penalty order passed on 29/09/2009 is barred by limitation by observing as under: 8. The contention of the learned senior standing counsel for the Revenue that the date of the issuance of the SCNs would be the relevant starting point i.e., 24th March, 2009, was specifically noted and rejected by this Court in the Mahesh Wood Products (P.) Ltd. (supra). The relevant portion of the said judgment reads as follows:— "7. Mr. Sanjay Kumar, learned counsel for the Revenue has sought to place reliance on the decision of this Court in Commissioner of Income- tax (TDS) v. IKEA Trading Hong Kong Ltd., [2011] 333 ITR 565 (Del) to urge that it is the date of issuance of the Show Cause Notice ('SCN') that would be the relevant starting point. Accordingly he submits that the date of issuance of the SCN by the ACIT being 28 August, 2012, limitation would expire on 28 February, 2013. Therefore, the penalty orders having been passed on 26 February, 2013 would not barred by limitation. He also sought to distinguish the decision of this Court in PCIT-5 v. JKD Capital & Finlease Ltd. (supra) by stating that in the said case, the gap between the intimation send by the AO recommending initiation of penalty proceedings and the action taken by the ACIT was nearly five years, whereas in the present case, it was slightly over one month. ** ** ** 9. However, this question came up for consideration in PCIT v. JKD Capital & Finlease Ltd. (supra). The date on which the AO recommended the initiation of penalty proceedings was taken to be the relevant date as far as section 275(1)(c) was concerned. There was no explanation for the delay of nearly five years in the ACIT acting on the said recommendation. The Court held that the starting point would be the 'initiation' of penalty proceedings. Given the scheme of section 275(1)(c) it would be the date on which the AO wrote a letter to the ACIT recommending the issuance of the SCN. While it is true that the ACIT had the discretion whether or not to issue the SCN, if he did decide to issue a SCN, the limitation would begin to run from the date of letter of the AO recommending 'initiation' of the penalty proceedings." (Emphasis Supplied) 9. The legal principle for determining the date of initiation of penalty proceedings has been settled by the predecessor bench of this Court in its decision of JKD Capital & Finlease Ltd. (supra) which reads as under: - "2…While finalising the assessment order dated December 28, 2007 the Assessing Officer ("the AO") in the concluding paragraph issued a direction to initiate proceedings against the assessee under sections 271(1)(c) and 271E of the Act. Admittedly, under section 271E(2) of the Act, any penalty under section 271E(1)can only be imposed by the Joint Page | 5 Commissioner of Income-tax ("the Joint CIT"). Consequently, the Assessing Officer referred the matter to the Additional Commissioner of Income-tax.

3. A perusal of the order dated March 20, 2012, of the Additional Commissioner of Income-tax shows that a show-cause notice initiating penalty proceedings under section 271E was issued to the assessee on March 12, 2012, requiring it to explain as to why penalty should not be levied on it under section 271E on account of violation or the provisions of section 269T of the Act. With the assessee having failed to furnish the required information, the Additional Commissioner of Income-tax proceeded to confirm the penalty in the sum of Rs. 17,90,000. ** ** ** 6. Mr. Kamal Sawhney, learned senior standing counsel appearing for the Revenue, submitted that the Assessing Officer has no power to initiate the penalty proceedings under section 271E of the Act and it was only the Joint Commissioner of Income-tax who could have done so. Therefore, for the purpose of limitation under section 275(1) (c), the relevant date should be the date on which notice in relation to the penalty proceedings were issued. In the present case, as the Additional Commissioner of Income-tax issued notice to the assessee on March 12, 2012, the order of the Additional Commissioner of Income-tax passed on March 20, 2012, was within limitation.

by the assessee are allowed.

7. In the result, both the appeals of the assessee are allowed.”

8. In view of the aforesaid observations and respectfully following the judicial precedent relied upon hereinabove, we hold that the penalty order passed on 27.5.2016 is barred by limitation and hence quashed. Even on merits, the issue is covered by the decision of Hon‟ble Jurisdictional High Court in the case of CIT vs Dhir Global Industries (P) Ltd reported in 176 Taxman 23 (Del) wherein it was held as under:-

“3. We have also examined Form 16-A, which is a form in which the TDS certificate is to be issued in terms of rule 31(1)(b) of the Income-tax Rules, 1962. It is apparent from an examination of the said form that the TDS certificate can only be issued after the TDS amount is deposited with the Central Government in the bank. The details of the challan through which the deposit has been made are also required to be filed in the said certificate. Therefore, it cannot be said that the issuance of the TDS certificate is independent to the making of the TDS deposit. Once the explanation of delay in making the deposit has been accepted, there is no reason as to why the same cannot be used for the purposes of delay in the issuance of the TDS certificate. The Income-tax Tribunal has committed no error. No substantial question of law arises. These appeals are dismissed.”