Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
Per Sanjay Garg, Judicial Member:
The present appeal is preferred by the assessee against the order of the learned Commissioner of Income Tax (Appeals)-10, Mumbai [hereinafter referred to as “the CIT (A)] dated 19-02-2014 for assessment year 2007-08 agitating levy of penalty u/s 271C of the Income Tax Act, 1961 [hereinafter referred to as “the Act”].
At the outset, the learned AR of the assessee has stated that the penalty order passed by the AO u/s 271C of the Act was barred by limitation and hence, the same is bad in law. The learned AR of the assessee has further invited our attention to the fact that the penalty order in this case has not been initiated in the course of any proceedings but, the same was initiated due to non-deduction of TDS and because of the subsequent proceedings u/s 201 (1) and 201(1A) of the Act. He has further invited our attention to the penalty order passed u/s 271C of the Act wherein it has been specifically
2 mentioned that the penalty proceedings in this case were initiated on 29-09- 2010 and concluded vide order dated 28-03-2012. As per the provisions of Section 275(1) (c) of the Act, no order imposing penalty under the Chapter shall be passed after expiry of the financial year in which the proceedings in the course of which action of 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 learned AR of the assessee further stated that in the case in hand the penalty proceedings were not initiated in the course of any proceedings. Hence, the later period prescribed under the Section providing the limitation period of six months from the end of the month in which the penalty proceedings were initiated will be applicable. Admittedly, the penalty proceedings as noted hereinabove were initiated in the month of September, 2010, whereas the penalty order in question has been passed on 28th March, 2012 i.e. after two years. The penalty order thus is barred by limitation as prescribed u/s 275 (1) (c) of the Act. The learned AR of the assessee has also invited our attention to the decision of the Hon’ble Delhi High Court in the case of CIT (TDS) Vs. IKEA Trading Hong Kong Ltd. [333 ITR 565 (Delhi) wherein under similar circumstances, the Hon’ble Delhi High Court has observed that Sub-clauses (a) and (b) of Section 275 (1) of the Act relate to the cases where assessments, to which the proceedings for imposition of penalty relate, was the subject matter of an appeal before the higher authorities or was the subject matter of a revision u/s 263 of the Act respectively. However, sub-clause (c) of Section 275 (1) of the Act refers to other cases not falling within the sub-clauses (a) and (b) of Section 275 (1) of the Act and in that sense Section 275(1) (c) of the Act is a residuary provision. Further, that there are two period of limitation prescribed under sub-clause (c) of Section 275 (1); the first period relates to those cases where action for imposition of penalty has been initiated in the course of some proceedings, the second period prescribed under sub-clause (c) of Section 275(1) of the Act pertains to other cases falling under clause (c).
The Hon’ble High Court under similar circumstances held that where initiation of action for imposition of penalty is not in the course of any proceedings, the first period prescribed u/s 275 (1) (c) of the Act would have no application and only the period of limitation prescribed in the second part would apply which is six months from the end of the month in which the penalty proceeding was initiated by issuance of show-cause notice. The case of the assessee is squarely covered by the above decision of the Hon’ble Delhi High Court. The penalty Order being barred by limitation has no legal sanctity and the same is accordingly set aside.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 15 July, 2016