The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty on cash receipt of loans, citing the imposition of the penalty beyond the time period prescribed by under section 275(1)(c) of the Income Tax Act 1961. The issue to be decided was whether involved in the appeals challenging the levy of penalty under Section 271D of the Income Tax Act, 1961
The counsel for the Assesse Salil Kapoor contented that assessee’s case herein fell under section 275(1)(c) of the Act, wherein the penalty order should have been passed on or before 30/09/2017, i.e., six months from the end of the month in which penalty proceedings were initiated by the AO The counsel for the Respondent Anuj Garg contended that the penalty order framed on 29/11/2017 became barred by limitation as per the provisions of section 275(1)(c) of the Income Tax Act 1961.Hence, the due date had to be reckoned only from the date of triggering of the proceedings from the side of the AO . Admittedly, the AO had made a reference to the Joint Commissioner of Income Tax ( JCIT ) (on 25/03/2017 for initiating penalty proceedings in the instant appeals.
The six-month period from the end of the month in which the action for imposition of the penalty was initiated expired on 30/09/2017. Consequently, the penalty order framed on 29/11/2017 became barred by limitation as per the provisions of section 275(1)(c) of the Income Tax Act 1961. The two member bench of the Tribunal comprising Astha Chandra ( Judicial member ) and M. Bala Ganesh ( Account member) aforementioned judgments held that when the AO initiated the penalty proceedings in the assessment order, that date should be considered as the relevant date for section 275(1)(c) of the Income Tax Act 1961.
In these cases, the quantum proceedings were completed by the AO on 17th/18th December 2008, and the AO initiated the penalty proceedings in December 2008. Thus, the last date for passing the penalty order was 30th June 2009. Consequently, the bench rightly concluded that the orders were barred by limitation. Thus, the bench answered the question of law against the Revenue and in favor of the Assessee by holding that, in the facts and circumstances of the present appeals, the bench was correct in law in deleting the penalty imposed by the Additional Commissioner of Income Tax, under section 271D of the Income Tax Act 1961. Accordingly, grounds raised by the assessee were allowed.