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Income Tax Appellate Tribunal, KOLKATA BENCH “A” KOLKATA
Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-VIII, Kolkata dated 21.05.2008. Assessment was framed by ITO Ward-7(3), Kolkata u/s 143(3)/147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 19.02.2004 for assessment year 1999-00. Penalty levied by ACIT, Range-7, Kolkata u/s 271D of the Act vide his order dated 29.03.2007.
A.Y. 1999-00 ITO Wd-7(3) Kol. v. M/s Kedia Power Ltd. Page 2 Shri S Jhajharia, Ld. Authorized Representative appeared on behalf of assessee and Shri Sallong Yaden, L’d Departmental Representative appeared on behalf of Revenue.
2. The issue before us is arising out of direction issued by Hon'ble Supreme Court in Special Leave Appeal No(s) 18759/2011 for adjudication of the following points, which are reproduced below:- “(a) Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal failed to appreciate that the period of limitation in the instant case is governed by the provisions of Section 275() as the penalty was initiated in the assessment order itself and the penalty order was issued within time in accordance with the provisions of Section 275(1)(a) of the Income Tax Act, 1961?
(b) Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified in coming to the conclusion that the order of penalty was barred under provisions of Section 275(1)(c) and failed to consider that penalty was initiated in the assessment order itself and the same was issued within time and in accordance with Section 275(1)(a) of the Income Tax Act, 1961?”
In compliance to the above direction of Hon'ble Supreme Court we have to adjudicate whether the penalty order passed by ACIT, Range-7 Kolkata u/s 271D of the Act is covered u/s 271)(1)(a) or 271(c) of the Act.
3. At the outset Ld. AR has brought the Circular No. 10 of 2016 dated 26.04.2016 issued by Central Board of Direct Taxes, which is reproduced below:- “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 vs. Worldwide Township Project Ltd, vide its order dated 21.5.14 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 A.Y. 1999-00 ITO Wd-7(3) Kol. v. M/s Kedia Power Ltd. Page 3 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 settled position that the period of limitation of penalty proceedings under section 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.
4. 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.”
Now from the above provision, it is clear that penalty order passed u/s 271D of the Act is duly covered u/s 275(1)(c) of the Act
Coming to the facts of the case, the assessment order was passed u/s. 143(3) r.w.s 147 of the Act on dated 19.02.2004. Now, it is clear that penalty u/s. 271D of the Act is governed by provision of Sec. 275(1)(c), which is reads as under:- “[Bar of limitation for imposing penalties. 275.[(1) No order imposing a penalty under this Chapter shall be passed- [(a)…. (b) …. (c) in any other case, after the expiry of the financial year in which the proceedings, in the curse 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,] From the provision of above Sec.275(1)(c) we find that penalty order can be passed after the expiry of financial year in which the proceedings for A.Y. 1999-00 ITO Wd-7(3) Kol. v. M/s Kedia Power Ltd. Page 4 imposition of penalty has been initiated are completed or six months from the end of the month in which action of imposition of penalty is initiated, whichever period of expires later. In the instant case, the proceedings for assessment was completed on 19.02.2004 and therefore the time available for making the penalty order is either upto 31.03.2004 or 31-8-2004 whichever expires later as the case may be. But in the present case penalty order has been passed by ACIT, Range-7, Kolkata on 29.03.2007 which is barred by limitation in terms of provision as stated above. Considering the facts and circumstances of the case, we dismiss the Revenue’s ground.