DCIT CIR 3(1), MUMBAI vs. ALL INDIA ASSOCIATION OF INDUSTRIES, MUMBAI

2.2 The operative part of the impugned order reads as under: ‘4.6 On the basis of aforesaid submission as well as taking note of different judicial pronouncements relied upon by the appellant’s AR in support of its contention, it find merits in the arguments of the appellant. It is seen that the appellant’s AR has drawn my attention to Ground No. 1.1 & 1.2, wherein the appellant contended that the penalty order was passed on 30.3.09, which was beyond time limit as stipulated u/s. 275(1) of the IT Act. The appellant contended that the CIT(A) passed the order u/s. 250 on 12.10.2007, where as the penalty order was passed on 30.3.09 but the time limit prescribed is available 6 months from the end of month in which the order of CIT(A) is received by the CCIT or CIT. In view of the same the appellant contended that the penalty order is time barred.

We have heard the parties, and perused the material on record. The relevant provision, and which has been rightly considered by the ld. CIT(A), reads as under: ‘Bar of limitation for imposing penalties. 275. (1) No order imposing a penalty under this Chapter shall be passed— (a) 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 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 completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Principal Chief Commissioner or Chief (A.Y.2003-04) Dy. CIT vs. All India Association of Industries Commissioner or Principal Commissioner or Commissioner, whichever period expires later : 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 Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whichever is later.’ The relevant date/s, on which we observe no dispute, are as under: a) The date of passing of the penalty order: 30.3.2009; b) Date of passing of the order by the first appellate authority in quantum proceedings: 12.10.2007. The date of service of the appellate order (in quantum proceedings) by the first appellate authority is not on record, and neither could either party before us provide us any assistance in the matter. We, accordingly, take it as having been served in the normal course of business, i.e., within 2 to 4 weeks. In fact, its’ receipt at any time up to the close of the relevant financial year, i.e., 31.3.2008, by which time it would in any case have been served – which (service) is not in dispute, would be of little moment in view of the time as prescribed vide proviso to section 275(1)(a). The ld. CIT(A) has, in our clear view, erred in being guided soley by the main clause ‘(a)’ of the said provision in-as-much as the first proviso thereto carries an exception for the appellate orders passed in respect of appeals preferred u/s. 246/246A on or after 01.6.2003. The order by the first appellate authority in the instant case having been passed on 12/10/2007, it is this clause, i.e., the first proviso to s. 275(1)(a), that would be relevant and applicable. The amendment by way of proviso is by Finance Act 2003, effective 01.6.2003. There is, accordingly, no question of it not operating