2025 (8) TMI 1368 - AT - Income Tax

Penalty under s.271E for breach of s.269T quashed as time-barred; limitation under s.275(1) exceeded, appeal allowed

ITAT DELHI - AT quashed a penalty under s.271E for contravention of s.269T as time-barred. The Tribunal found the limitation period computed from the ... Penalty u/s 271E - contravention of provisions of Section 269T - Period of limitation. HELD THAT:- In the present case, before initiating the penalty proceedings u/s 143(3) of the Act, an order u/s 143(3) of the Act has been passed on 02/05/2017. The financial year expires on 31/03/2018 and six months expires from the end of the month in which the penalty initiated (i.e. 02/05/2017) on 30/11/2017. Thus, the time limit for passing of order of penalty was on 31/03/2018. Even if we take order passed u/s 263 of the Act i.e. on 08/03/2021 for the purpose of calculating the period of limitation for passing the order of penalty, the Financial years expires on 31/03/2021 and the six months expires from the end of month in which penalty initiated (i.e. 08/03/2021) was on 30/09/2021. In the present case, the impugned penalty order passed on 31/08/2022, which is beyond the period prescribed u/s 275(1) of the Act. Therefore, order of penalty which has been confirmed by the Ld. CIT(A) vide order impugned is hereby quashed on the ground of limitation - Assessee appeal allowed. Assessee appealed against confirmation of penalty under section 271E for alleged contravention of section 269T. Penalty order dated 31/08/2022 (Rs. 62,41,185) was imposed by the Assessing Officer and confirmed by the Commissioner (Appeals). Assessee contended no satisfaction was recorded for initiation of penalty proceedings and that the penalty order is time-barred under section 275(1). Tribunal analyzed limitation based on initiation during proceedings under section 143(3) (order dated 02/05/2017) and under section 263 (order dated 08/03/2021). Calculated limitation windows: for the 143(3) route, limitation expired 31/03/2018; for the 263 route, limitation expired 30/09/2021. Impugned penalty order of 31/08/2022 falls beyond both limitation periods. Holding: the 'order of penalty ... is hereby quashed.' Since penalty was quashed on limitation grounds, other grounds were not adjudicated. Appeal was partly allowed.