2002 (10) TMI 235 - AT - Income Tax

Penalties overturned due to delay in initiation, emphasizing timely penalty proceedings.

Noble Pictures. Versus Joint Commissioner Of Income-tax.

The Tribunal set aside penalties imposed on the assessee for non-filing of Form No. 52A, citing the penalties were time-barred as they were initiated ... Penalty Issues Involved:1. Imposition of penalty u/s 272A(2)(c) for non-filing of Form No. 52A.2. Limitation period for initiating and completing penalty proceedings u/s 275(1)(c).Summary:Issue 1: Imposition of Penalty u/s 272A(2)(c) for Non-Filing of Form No. 52AThe assessee, engaged in film production, failed to file Form No. 52A within the prescribed time for the assessment years 1990-91 and 1991-92. The Assessing Officer (AO) imposed penalties of Rs. 3,68,800 and Rs. 3,14,800 respectively, citing gross negligence and disregard for statutory compliance. The first appellate authority upheld the penalties, noting the absence of evidence from the assessee to prove timely filing of Form No. 52A.Issue 2: Limitation Period for Initiating and Completing Penalty Proceedings u/s 275(1)(c)The Tribunal examined whether the penalty proceedings were initiated within the statutory time limit. The AO issued the penalty notice on 14-7-1999, almost 10 years after the alleged default. The Tribunal referred to section 275(1)(c), which mandates that penalty proceedings must be initiated within the financial year of the completion of the assessment proceedings or within six months from the end of the month in which action for imposition of penalty is initiated, whichever is later. The Tribunal cited the Delhi High Court's decision in Rajinder Kumar Somani, emphasizing that penalty proceedings must be initiated during the assessment proceedings.Findings:1. Circumstantial Evidence: The Tribunal considered circumstantial evidence, including letters and acknowledgments, suggesting that the assessee had filed Form No. 52A within the prescribed time. The Tribunal noted the possibility of the form being misplaced during the jurisdiction transfer from Aluva to Trichur.2. Limitation Period: The Tribunal held that the penalty proceedings were initiated beyond the permissible time limit, rendering them illegal. The proceedings should have been initiated during the assessment process or within a reasonable time thereafter, not after a gap of nearly 7 years.Conclusion:The Tribunal set aside the penalties for both assessment years, concluding that the penalty proceedings were time-barred and that the assessee had likely complied with the filing requirements. The appeals by the assessee were allowed.