Section 275(1)(c) of the Income Tax Act
The decision most relied on for Section 275(1)(c) is CIT v. Eli Lily & Co. (312 ITR 225), cited in 221 of the 85 judgments on BharatTax that turn on this section.
Leading authorities on Section 275(1)(c)
Withholding tax provisions, being machinery provisions, are not independent of the charging provisions determining an assessee's tax liability, and the taxability of foreign salary payments depends on specific facts. Additionally, penalty provisions under sections 271C and 271D are not automatic, and an assessee can be exonerated by a reasonable cause under section 273B, particularly if acting under a bona fide belief or in unsettled legal situations.
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.
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.
For initiating penalty proceedings under Section 271D or 271E, the Assessing Officer must record satisfaction in the assessment order; non-recording of such satisfaction is fatal to the penalty.
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 date of issuance of a Show Cause Notice (SCN) for penalty is the relevant starting point for calculating the limitation period for passing penalty orders.
Appeals related to statutory limitation periods for penalty proceedings are decided by considering relevant High Court judgments.
The satisfaction of the Assessing Officer is not a prerequisite for the initiation of penalty proceedings. Penalty proceedings initiated by the Joint Commissioner of Income Tax are valid. The date of the show cause notice by the penalty imposing authority is relevant for computing limitation for imposing penalty under Section 271DA.
Judgments on Section 275(1)(c)
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