Penalties u/s271D and s.271E on income tax assessments held time-barred; four penalties set aside.

Whether penalties under s.271D and s.271E were barred by limitation: applying ss.271D, 271E and s.275(1) and following Hissaria Brother (SC), the Tribunal held the Assessing Officer's penalty orders were passed beyond the prescribed limitation period; therefore the orders lacked legal validity. Outcome: all four penalties were set aside as time-barred and the appeal was decided against revenue.

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Issues: Whether the penalty orders under the provisions relating to transaction/payment in prescribed mode (penalties under Sections 271D and 271E) were barred by limitation and therefore liable to be set aside.

Analysis: The Tribunal examined the penalty provisions and the limitation provision governing penalty proceedings. The learned CIT(A) set aside four penalty orders on the ground that they were passed beyond the prescribed period. The CIT(A) relied on the ratio in Hissaria Brothers, holding that the relevant date for determining the limitation period is the date of passing of the assessment order and that limitation under the applicable provision governs penalty proceedings which are independent of the assessment. The Tribunal noted that the assessment orders in the present matters were passed on 29.03.2024, and that penalty orders passed on 23.12.2024 were therefore outside the limitation period prescribed by the applicable limitation provision. The revenue did not advance contrary authority distinguishing the precedent relied upon by the CIT(A).

Conclusion: The penalty orders under the impugned provisions were time-barred and the CIT(A)'s deletion of the penalties is sustained; the appeals filed by the department are dismissed (decision in favour of the assessee).

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