2019 (3) TMI 164 - AT - Income Tax

Penalty Orders Deemed Time-Barred Under Income-tax Act

The Appellate Tribunal ITAT Pune consolidated seven appeals by connected assesses regarding a penalty order passed by the Assessing Officer under section ... Penalty u/s.271(1)(c) - time limit prescribed u/s.275 - limitation period - HELD THAT:- The internal transfer of documents including the Tribunal order from the office of CIT, Kolhapur to CIT-IV, Pune, cannot have any bearing on the determination of the date on which the order of Tribunal was served on the competent Commissioner having jurisdiction over the case at the material time. As further brought to our notice that the ITO Ward 1(1), Solapur issued notice for penalty u/s 271(1)(c) on 4.4.2003 fixing the date of hearing on 17.4.2003, which is prior to 13.05.2003, being the date of the alleged service of the order of the Tribunal on the competent CIT. As the CIT, Kolhapur had the jurisdiction over the AO and the order of Tribunal was served on CIT, Kolhapur, on 13.12.2002, in our considered opinion, the limitation period has to be reckoned from the date of such service. Going by this date of service of order of Tribunal on CIT, Kolhapur, we hold that the penalty order passed by the AO on 30-09-2003 is time-barred. Both the sides are in agreement that the facts and circumstances of other six appeals are similar to that of Ekata P. Raka. We hold that the penalty orders passed on these six persons were also time-barred. - Decided in favour of assessee. Issues:Common issue involving multiple connected assessees - Whether penalty order passed by the Assessing Officer was time-barred under section 275(1)(a) of the Income-tax Act, 1961.Analysis:The Appellate Tribunal ITAT Pune dealt with seven appeals by connected assesses concerning the assessment year 1992-93, all revolving around a common issue. The Tribunal consolidated these appeals for convenience due to their interconnected nature. The matter was a recalled one as the earlier order was recalled to address the issue of the legality of the penalty order passed by the Assessing Officer under section 271(1)(c) of the Act and the time limit prescribed under section 275 of the Income-tax Act, 1961. The specific appeal in question involved the quantum order passed by the Tribunal on 13-11-2002, the penalty order by the AO on 30-09-2003, and the contention of the assessee regarding the time-barred nature of the penalty order based on the receipt of the Tribunal order by the Commissioner. The primary contention was whether the penalty order was within the time limit prescribed under section 275(1)(a) of the Act.The crux of the issue lay in interpreting section 275(1)(a) of the Income-tax Act, which sets the time limit for passing a penalty order in cases where the assessment year is under appeal before the Tribunal. The provision mandates that no penalty order shall be passed after the expiry of the financial year in which the proceedings are completed, or six months from the receipt of the Tribunal's order by the Commissioner. The dispute centered on the date of receipt of the Tribunal order by the competent Commissioner, determining the commencement of the limitation period for passing the penalty order. The assessee argued that the order was received by the jurisdictional CIT on 13-12-2002, making the penalty order passed on 30-09-2003 time-barred. Conversely, the AO contended that the order was received by the office of CIT-IV, Pune on 13-05-2003, falling within the prescribed six-month period.The Tribunal analyzed the evidence presented, including a letter from the Assistant Registrar, ITAT Pune, confirming the service of the Tribunal order on the jurisdictional CIT on 13-12-2002. The Tribunal emphasized that internal transfers of documents between tax offices did not affect the date of service on the competent Commissioner. Considering the jurisdictional aspect and the date of service on the CIT, Kolhapur, who had authority over the AO, the Tribunal held that the penalty order passed on 30-09-2003 was indeed time-barred. The Tribunal extended this decision to the remaining six connected appeals, concluding that the penalty orders in those cases were also time-barred. Consequently, all seven appeals were allowed on the legal issue of the time-barred penalty orders, as per the provisions of section 275(1)(a) of the Income-tax Act, 1961.