Section 275 of the Income Tax Act
The decision most relied on for Section 275 is CIT v. Reliance Petroproducts (P.) Ltd. (189 Taxmann 322), cited in 281 of the 74 judgments on BharatTax that turn on this section.
Leading authorities on Section 275
Penalty under section 271(1)(c) for furnishing inaccurate particulars of income is not attracted merely because an assessee's claim for expenditure is disallowed by the Assessing Officer. The provision requires actual furnishing of inaccurate particulars, and the assessee's mens rea is not the primary concern.
Penalty proceedings for defaults under Sections 269SS and 269T are independent of assessment proceedings; therefore, the limitation period under Section 275(1)(c) for imposing such penalties is not contingent on the completion of appellate quantum proceedings.
Journal entries for accepting or repaying loans and deposits, without any actual cash transaction, do not violate the provisions of Section 269SS or Section 269T of the Income Tax Act. Consequently, such transactions do not attract penalties under Section 271D or Section 271E.
A penalty levied under Section 271(1)(c) is not sustainable if the notice issued under Section 274 fails to specifically mention whether the charge relates to concealment of income or furnishing inaccurate particulars of income. The Assessing Officer must specify the exact charge for the penalty to be valid.
The date of initiation of penalty proceedings for the purpose of Section 275(1)(c) is when the Assessing Officer records a satisfaction or recommends penalty, not the later date when the Joint/Additional Commissioner of Income Tax issues the penalty notice.
The relevant date for determining the limitation period under Section 275(1)(c) for passing penalty orders under Sections 271D and 271E is the date of passing the assessment order.
Initiation of penalty proceedings under the Income-tax Act, including those for non-compliance with Section 269T, is not contingent upon the completion or disposal of appeals challenging the quantum assessment. The timeline for penalty initiation does not hinge on the finality of the quantum appeal.
Penalty proceedings under Section 271D or 271E are not justified if no regular assessment order has been framed; merely processing a return under Section 143(1)(a) is insufficient to initiate such penalty action.
Penalty orders under section 271D or 271E passed beyond six months from the end of the month in which assessments were completed are barred by limitation. Section 275(1)(c) is applicable to such penalty proceedings, and the limitation period is not reckoned from the issue of a show cause notice.
The Delhi High Court's decision in CIT v. Whirlpool of India Ltd. is distinguished from cases where the Bright Line Test (BLT) was used by the Transfer Pricing Officer (TPO) to establish that Advertising, Marketing, and Promotion (AMP) expenditure constituted an international transaction.
Judgments on Section 275
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