Limitation for penalty orders under section 275(1)(a) can render an order time-barred when passed beyond the statutory period.

A jurisdictional plea challenging the limitation of a penalty order under section 271(1)(c) can be entertained under Rule 27 of the Income-tax (Appellate Tribunal) Rules even if the cross-objection is delayed, where the issue goes to the root of the matter. The proviso to section 275(1)(a) applies when the relevant first appellate order is passed on or after 1 June 2003, so penalty must be imposed within the statutory period computed from receipt of that appellate order. On the facts stated, the last permissible date was 31 March 2007, but the penalty order was passed on 20 April 2007 and was therefore time-barred.

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Issues: Whether the penalty order under section 271(1)(c) was barred by limitation under the proviso to section 275(1)(a), and whether the assessee could raise the jurisdictional plea in cross-objection notwithstanding delay.

Analysis: The cross-objection raised a legal issue going to the root of the matter. Such a plea could be entertained under Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963 even though the cross-objection was belated. On merits, the proviso to section 275(1)(a) applied because the relevant appellate order of the first appellate authority had been passed on or after 1 June 2003. The limitation for passing the penalty order therefore expired at the end of the financial year in which the appellate order was received, or within one year from the end of that financial year, whichever was later. On the facts found, the last permissible date was 31 March 2007, while the penalty order was passed on 20 April 2007.

Conclusion: The jurisdictional and limitation plea was admissible and the penalty order was time-barred.

Final Conclusion: The penalty could not be sustained in law, and the assessee succeeded on the limitation objection.

Ratio Decidendi: Where penalty proceedings are governed by the proviso to section 275(1)(a), the order imposing penalty must be passed within the statutory period computed from receipt of the appellate order, and any order passed beyond that period is barred by limitation and void.

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