2015 (4) TMI 1102 - HC - Income Tax

ITAT Upholds CIT (A) Decision on Penalty Limitation Period Dispute

The Income Tax Appellate Tribunal (ITAT) upheld the decision of the CIT (A) in a case concerning the interpretation of Section 271E on the limitation ... Penalty under Section 271E - power of initiation of proceedings by the AO - Held that:- In view of the express wording of Section 271D/271E which only mandated that the Joint Commissioner is authorised to issue the penalty order, the ITAT concluded that there was no power of initiation of proceedings by the AO. We find no infirmity with this finding. - Decided in favour of assessee. Issues:1. Interpretation of Section 271E regarding limitation period for penalty proceedings.Analysis:The case involved a dispute over the interpretation of Section 271E concerning the limitation period for penalty proceedings. The Revenue challenged the order of the Income Tax Appellate Tribunal (ITAT) dated 16.05.2014, arguing that the penalty proceedings under Section 271E were not barred. The Assessing Officer completed the assessment for AY 2009-10 on 5.12.2011 and issued a notice for initiating penalty proceedings under Section 271E. The penalty was imposed by the Joint Commissioner on 14.9.2012, leading to a contention by the assessee that the penalty order was beyond the prescribed limitation under Section 275(1)(c).The CIT (A) accepted the assessee's contention, holding that the penalty order exceeded the limitation period as the penalty proceedings were initiated on 5.12.2011 itself. This decision was upheld by the ITAT. The argument presented was that the limitation period should commence from the date when the competent officer authorized to impose penalty issues the notice, in this case, issued by the Joint Commissioner on 12.03.2012. The ITAT considered the relevance of Section 269SS and 269T in connection with Section 271D/271E and emphasized that the AO must be satisfied prima facie regarding the initiation of penalty proceedings.The ITAT's conclusion was supported by a decision of the Rajasthan High Court, which stated that the limitation period for penalty proceedings should be reckoned from the date of the first show cause notice for initiation of such penalty proceedings, not from the issue of the notice by the Joint Commissioner. Given the specific language of Section 271D/271E, which designates the Joint Commissioner as the authority to issue the penalty order, the ITAT found no authority for the AO to initiate proceedings. Consequently, the Court dismissed the appeal, stating that no substantial question of law arose in this matter.