TaxTMI 
TaxTMI 
2025 (8) TMI 1111
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....against an order dated 09.09.2016 passed by the Commissioner of Income Tax (Appeals) [CIT(A)] whereby the CIT(A) had set aside the penalty imposed on the respondent/Assessee. The same was on the ground that the penalty was imposed beyond the period of limitation. This is in the fact(s) situation that the Assessment Order under Section 143(3) of the Act was passed by the Assessing Officer (AO) on 31.12.2010 with an observation that the penalty proceeding shall be initiated separately. The reference was made by the AO to the concerned Additional Commissioner of Income Tax (ACIT) on 07.06.2011 and pursuant to the notice issued by the ACIT, the penalty order dated 30.12.2011 under Section 271E of the Act was passed. The penalty imposed was for Rs.3,44,15,000/-, which is equivalent to the amount paid contrary to Section 269T of the Act. 5. The case of the Revenue before the ITAT was that CIT(A) had erred in law in holding the order Section 271E was barred by limitation without appreciating that the order was passed within six months of initiating the proceedings by the ACIT who was competent to levy the penalty; whereas, the case of the respondent / Assessee was that the CIT (A) had ....
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....roceeding was completed on 28th December, 2007. Going by this date, the penalty order could not have been passed later than 31st March 2008. The second possible date is expiry of six months from the month in which the penalty proceedings were initiated. With the AO having initiated the penalty proceedings in December 2007, the last date by which the penalty order could have been passed is 30th June 2008. The later of the two dates is 30th June 2008. Considering that the subject matter of the quantum proceedings was the noncompliance with Section 269 T of the Act, there was no need for the appeal against the said order in the quantum proceedings to be disposed of before the penalty proceedings could be initiated. In other words, the initiation of penalty proceedings did not hinge on the completion of the appellate quantum proceedings. In fact, when the AO recommended the initiation of penalty proceedings the AO appeared to be conscious of the fact that he did not have the power to issue notice as far as the penalty proceedings under Section 271-E was concerned. He, therefore, referred the matter concerning penalty proceedings under Section 271-E to the Additional C....
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.... 4. The Hon'ble Kerala High Court in the case of Grihalakshmi Vision v. Addl. CIT, vide its order dated 7th August, 2015 in I.T.A. Nos. 83 and 86 of 2014, observed that, "Question to be considered is whether proceedings for levy of penalty, are initiated with the passing of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the notice issued by the Joint Commissioner. From the statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner. Therefore, only the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under section 271D and 271E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissione....
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....ssed by the Addl. CIT (Central) (Range-2) is beyond the period of limitation as specified u/s 275(1)(c). The same is therefore held to be null and void." 7. The ITAT noting aforesaid dates, was of the view that imposition of the penalty under Section 271E was to be made before 30.06.2011 and not 31.12.2011, as was the case. 8. Mr Bhatia, the learned counsel for the Revenue has drawn our attention to the decision of this Court in Pr Commissioner of Income Tax (Central-II), Delhi v. Thapar Homes Limited : 2023:DHC:7808-DB in respect of an appeal filed by the Revenue concerning the respondent/ Assessee in respect of AY 2008-09. In the said case also, though no date on which the AO made reference to the ACIT/JCIT can be seen from the order, but it is noted that JCIT had issued notice pursuant to the reference on 13.06.2011 and the penalty order was passed on 30.12.2011, hence it was contended that the penalty order was beyond the period of limitation of six months, as is contemplated under Section 275(1) (c) of the Act. In the aforesaid background, this Court in paragraph no.16 onwards has stated as under: "16. It is based on the language of sub-section 2 of section 271E....
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....he Act had expired on 30.06.2011. The observation of this Court that the appellant / Revenue cannot extend the period of limitation by deciding at his whims and fancies when the notice has to be issued. In the case at hand, the reference having been only on 07.06.2011, surely a notice pursuant to the said reference would have been issued after 07.06.2011, which resulted in the penalty order dated 30.12.2011, hence in that regard, the issue is covered by the decision as referred to by Mr Bhatia, fairly which is, in favour of the respondent/ Assessee and against the Revenue. 10. Mr Bhatia has also referred to another decision in Property Plus Realtors v. Union of India & Others : 2025:DHC:454-DB wherein this Court was concerned with the facts wherein an assessment order dated 28.03.2024 was passed and the AO made a reference to the ACIT on 08.04.2024 for initiation of the penalty proceedings under Section 269ST of the Act read with Section 271DA of the Act. On 17.10.2024, the penalty order was passed by the ACIT. The limited question which fell for consideration before the Court was - whether the penalty order was beyond the period of limitation as prescribed under Section 275(1)(....