Court dismisses writ petition challenging penalty imposition under Income Tax Act, finding no limitation bar.

The court dismissed the writ petition, ruling that the impugned order imposing a penalty of Rs. 60.57 lakhs was not barred by limitation under Section 158BFA(3)(c) of the Income Tax Act. The court held that the penalty proceedings initiated on 31.08.2004 were validly continued with the notice dated 12.09.2018, within the permissible period post the Supreme Court's order. The parties were directed to bear their respective costs, and the connected miscellaneous petition was closed.

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Issues Involved:
1. Whether the impugned order dated 12.03.2019 is barred by limitation under Section 158BFA(3)(c) of the Income Tax Act, 1961.

Detailed Analysis:

Factual Matrix in a Nutshell:
- Income Tax Act, 1961: The subject matter of the writ petition arises under this Act.
- Search and Evidence Collection: Search by Income Tax Officials commenced on 17.07.2002 and lasted till 21.08.2002, leading to the collection of evidence indicating understatement of real income for the block period from 01.04.1996 to 17.07.2002.
- Assessment Order: An assessment order dated 31.08.2004 was passed, quantifying undisclosed investments and cash payments, resulting in a tax liability of over Rs. 60.57 lakhs and interest of over Rs. 4.54 lakhs.
- Appeals: The petitioner appealed the assessment order, which was confirmed by the Commissioner of Income Tax (Appeals) on 15.02.2005. Both the petitioner and the Revenue appealed to the ITAT, which ruled in favor of the petitioner on 28.04.2006. The Revenue's further appeals to the High Court and Supreme Court were ultimately resolved by the Supreme Court on 02.05.2018, resuscitating the original assessment order.
- Penalty Proceedings: Initiated on 31.08.2004 but lay dormant due to ongoing appeals. A notice dated 12.09.2018 was issued post the Supreme Court's decision, leading to the impugned order imposing a penalty of Rs. 60.57 lakhs.

Discussion and Dispositive Reasoning:
- Primary Contention: The petitioner argued that the impugned order is barred by limitation under Section 158BFA(3)(c) of the IT Act, which prescribes a six-month period from the date of receipt of the ITAT order (28.04.2006), expiring on 27.10.2006.
- Revenue's Argument: The Revenue contended that the ITAT order did not attain finality due to subsequent appeals, and the limitation should be reckoned from the Supreme Court's order dated 02.05.2018. The penalty proceedings were thus continued with the notice dated 12.09.2018, well within six months of the Supreme Court's decision.
- Court's Analysis:
- Section 158BFA(3)(e): The court noted that this provision allows for two periods of limitation. The first is the end of the assessment year in which the assessment order was passed (31.03.2005), which does not apply here due to ongoing appeals. The second is from the date penalty proceedings are initiated, which in this case was 31.08.2004 but lay dormant due to appeals.
- Continuation of Proceedings: The notice dated 12.09.2018 was deemed a continuation of the penalty proceedings initiated on 31.08.2004, and thus within the permissible period post the Supreme Court's order.
- Section 275 of IT Act: The court distinguished between penalties under Section 271(1)(c) and Section 158BFA(2), noting that the latter's limitation is governed by Section 158BFA(3)(c), which predates Section 260A appeals to the High Court.
- Doctrine of Merger: The court applied this doctrine, indicating that the Supreme Court's order merges with the ITAT's order, thus validating the continuation of penalty proceedings.

Conclusion:
The court concluded that the impugned order is not barred by limitation and is not liable to be set aside as time-barred.

Decision:
The writ petition is dismissed, and parties are left to bear their respective costs. Consequently, the connected miscellaneous petition is closed.

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