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Income Tax Appellate Tribunal, DELHI BENCH “E” DELHI
Before: SHRI CHANDRA MOHAN GARG & SHRI PRADIP KUMAR KEDIA
PER PRADIP KUMAR KEDIA, A.M.:
The captioned appeal has been filed by the Assessee against the order of the Commissioner of Income Tax (Appeals)-XXXVII, New Delhi (‘CIT(A)’ in short) dated 18.11.2019 arising from the assessment order dated 20.03.2013 passed by the Assessing Officer (AO) under Section 143(3) r.w. Section 92CA of the Income Tax Act, 1961 (the Act) concerning AY 2009-10.
As per the grounds of appeal, the assessee has challenged the imposition of penalty under Section 271(1)(c) of Rs.1,54,369/- on disallowance of Rs.4,99,579/- claimed under
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Section 80G of the Act and another penalty under Section 271(1)(c) of Rs.1,85,400/- on disallowance of Rs.6 lakh claimed under Section 35AC of the Act.
When the matter was called for hearing, the ld. counsel for the assessee pointed out that the impugned order passed under Section 271(1)(c) of the Act dated 26.03.2019 concerning Assessment Year 2009-10 in question is barred by limitation and therefore, is nullity in law. To justify the allegation of bar of limitation as provided under Section 275 of the Act, the ld. counsel pointed out that assessment order in the instant case was framed vide order dated 23.03.2013. Against the aforesaid quantum assessment order, the CIT(A) passed the first appellate order on 27.02.2015. The matter was further carried before the Tribunal. However, in the interregnum, the Assessing Officer passed penalty order dated 26.03.2019 without waiting for the disposal of the quantum appeal by the ITAT. Consequently, the availability of limitation period has to be reckoned from the proceedings concluded upto the first appellate order. In the scenario, the ld. counsel referred to Section 275(1)(a) of the Act and submitted that the limitation period with reference to the first appellate order ended on six months from the end of the month in which the order of the CIT(A) has been received by the Pr.CIT having domain over the Assessing Officer. In the instant case, the order of the CIT(A) was passed in the month of February, 2015 and presumably received by the Pr.CIT in Feb-March, 2015 and therefore, the limitation to pass penalty
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order on the basis of first appellate order ended at best on 30th September, 2015 and not later, whereas the penalty order in the instant case has been passed in March, 2019 which is hopelessly time barred. On enquiry by Bench, the ld. counsel for the assessee pointed out that the order of the ITAT in the quantum proceedings were passed on 27.05.2021 which however is not the basis for imposition of penalty in question. The ld. counsel thus submitted that the impugned penalty order is not enforceable in law due to bar of limitation provided under Section 275(1)(a) of the Act.
Section 275 prescribes the period within which an order of penalty can be passed. There are three clauses viz., clause (a), (b) and (c) to sub section (1) of Section 275 which prescribes different periods of limitation. We are presently concerned with sub clause (a) of Section 275(1) of the Act. Clause (a) is triggered when the relevant assessment or other order is subject matter of appeal under Section 246A or Section 253 of the Act. It states that no order of penalty shall be passed after 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 six months from the end of the month in which the appellate order is received by the Commissioner / Pr.CIT.
As pointed out on behalf of the assessee, the quantum proceeding before the ITAT was pending at the time of passing the penalty order in question. The penalty order was
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thus ostensibly passed in pursuance of the first appellate order in an appeal under Section 246A of the Act vide order dated 27.02.2015. Hence, in terms of embargo of limitation placed under Section 275 of the Act, the permissible time limit available to the Assessing Officer was September, 2015 or their about, depending upon receipt of first appellate order by the CIT / Pr.CIT concerned. In the instant case, the penalty order has been passed in March, 2019 and therefore, there can be no two opinion on the point that the penalty order has been passed far beyond limitation period governed by Section 275 of the Act. Hence, the penalty order passed under Section 271(1)(c) dated 26.03.2019 is clearly time barred and thus unenforceable in law. This being so, the consequent penalty imposed has no force in law. The penalty order dated 26.03.2019 is thus quashed at the threshold.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 21/04/2023.
Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /04/2023 Prabhat