TaxTMI 
TaxTMI 
2025 (12) TMI 1358
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....(c) of the Income-tax Act, 1961 (for short "the IT Act") for the Assessment Year 2016-17. The Petitioner contends that the impugned order imposing penalty was passed contrary to the well settled law as laid down by this Court, and in this regard, various grounds have been raised. The relevant facts are noted below. 5. The Petitioner is a public sector undertaking of the Government of Maharashtra and is engaged in the business of transmission of electricity in the State of Maharashtra. Being a public sector undertaking, the financial statements of the Petitioner are subjected to audit by the Comptroller and Auditor General of India (for short "the C&AG"). For the previous year 2015-16 relevant to Assessment Year 2016-17, the Petitioner had filed a Return of Income on 29th November 2016 declaring a total income of Rs. 66,70,90,360/-. The case of the Petitioner was selected for scrutiny assessment, which led to the passing of an Assessment Order dated 28th December 2019 under Section 143(3) of the IT Act by assessing the Petitioner at a total income of Rs. 401,74,97,239/-. The additions made in the assessment order are as under:- Sr. No. Particulars Amount 1. Disallo....
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....ation of delay in filing the Appeal. The period of delay for which condonation is prayed is computed at 8 days in the affidavit for condonation filed before the ITAT. The said Appeal is registered with the ITAT (ITA No. 2552/M/2025), and the same is pending. Considering the fact that it may be held that two Appeals have been lodged challenging the same order passed by the CIT(A) dated 31st January 2025, the Petitioner withdrew the first Appeal (ITA No. 2188/M/2025) as being a duplicate Appeal. The Tribunal accordingly passed an order dated 7th July 2025 dismissing the Appeal as withdrawn. As on the date of passing of the impugned penalty order dated 26th September 2025, the Appeals of both the Petitioner and the Revenue are pending adjudication before the Tribunal. 9. In respect of the penalty proceedings, Respondent No. 1 issued a notice dated 16th March 2021 asking the Petitioner to furnish its response in connection with the penalty proceedings, which were initiated by notice dated 27th December 2019. Respondent No. 1 also sought various details such as pendency of the Appeal, whether the issue was settled under the Vivad Se Vishwas Scheme, etc. In response, the Petitioner su....
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....s not imposed any penalty on the disallowance under Section 14A of the IT Act. In respect of the claim of prior period expenses claimed by the Petitioner, it is stated that the relief allowed to the Petitioner by the CIT(A) is not accepted, and an appeal has been filed before the ITAT. It is stated in paragraph 3.7 of the impugned order that Respondent No. 2 (jurisdictional assessing officer) will take a view on the imposition of penalty after the ITAT decides the Revenue's Appeal in view of provisions of Section 275(1A) of the IT Act. Accordingly, the imposition of a penalty on this issue is kept in abeyance till the disposal of the Appeal by the ITAT. 14. Aggrieved by the impugned order dated 26th September 2025, the Petitioner has challenged the same by the present Writ Petition. On 15th October 2025, this Petition was listed and after hearing the parties, the Court passed an order. The relevant paragraphs of the said order are reproduced below:- 1. The above Writ Petition challenges the impugned order dated 26th September 2025 passed under Section 271(1)(c) of the Income Tax Act, 1961. By the impugned order, a penalty of approximately Rs.101 Crores was levied on the....
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....his Court inter alia held that the language of Section 275(1)(a) clearly shows that the order imposing penalty cannot be passed if the Appeal against the basic order of assessment is pending before the Competent superior Authority. The relevant portion of this decision read thus:- "9. The provisions of Section 275(1)(a) of the Act need to be looked into for considering the answer to second question. It is provided that no order imposing a penalty shall be passed where the assessment order is subject to appeal to the Commissioner (Appeals) or to further appeal to the Appellate Tribunal, after the expiry of period of two years from the end of financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed or six months from the end of the month in which the order of the Appellate Assistant Commissioner or the Appellate Tribunal is received by the Commissioner, whichever period expires later. In the present facts, it is not in dispute that against the assessment order dated 18.3.1970, the assessee had filed an appeal and the Appellate Assistant Commissioner of Income Tax has decided that appeal on 2nd March 19....
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....ed. 13. The language of Section 275(1)(a) noted supra clearly shows that the order imposing penalty cannot be passed if the appeal against basic order of assessment is pending before the Competent superior Authority. Here, on 24.2.1972 though 1st Appellate Authority had disposed of the appeal, further appeal of assessee before the ITAT was very much pending. The order imposing penalty, therefore, appears to be premature and, therefore, illegal and without jurisdiction. The notices for initiation of those proceedings are, dated 12.1.1972, 3.2.1972 and 27.9.1972 i.e. during the pendency of appeal before the ITAT. Essential ingredients of Section 275(1) are clearly not in contemplation of notice issuing authority on these dates. The form or language of these notices shows clear non-application of mind in this respect. It is obvious that such notices initiating the penalty proceedings could not have been issued before 26.3.1974." 7. In view of the aforesaid discussion, we are of the view that the Petitioner has made out a strong prima facie case for grant of ad-interim relief. Further, we are also of the view that the balance of convenience lies in favour of the Petit....
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.... purposes of Section 275(1)(d) of the IT Act. Accordingly, since the order dated 31st January 2025 passed by the CIT(A) is the subject matter of an appeal, Respondent No. 1 could only assume jurisdiction to pass an order of penalty upon receipt of the order passed by the ITAT. (d) Assuming for the sake of argument that the provisions of Section 275 of the IT Act as they existed prior to 1st April 2025 shall apply, even then, it is contended that the ratio of this Court in case of R.B. Shreeram Durgaprasad (supra) and Kellogg India Private Limited (supra) would be applicable and thus, he contended that the impugned order is passed without jurisdiction. 16. On the other hand, Mr. Sharma learned Advocate appearing on behalf of Respondent No. 2, has relied on the affidavit-in-reply. Opposing the present Writ Petition, he has raised the following contentions. (a) The Petitioner ought to approach the appropriate authorities under the IT Act if it is aggrieved by the impugned order dated 26th September 2025, which would be an appropriate method of challenging the impugned order. (b) On the issue of the validity of jurisdiction to pass the impugned order dated....
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....n within which the Assessing Officer shall pass an order of penalty under Chapter XXI. The law providing for a period of limitation is generally procedural in nature (apart from an exceptional case set out below). 20. In the context of the provisions of Section 275 of the IT Act itself, the Hon'ble Gujarat High Court in the case of CIT vs. Royal Motor Car Co. (1977) 107 ITR 753 (Gujarat) was concerned with a situation which is somewhat similar to the present case. The question in that case was also whether the unamended provisions would apply or whether the amended provisions of Section 275 (as it then stood) would be applicable. In that case, the penalty order applying the unamended provisions was required to be passed before 3rd October 1971 whereas the order was passed on 12th October 1971, and the same could only be considered to be within the period of limitation by applying the amended provisions which came into force with effect from 1st April 1971 whereby the limitation under the amended provisions would expire on 31st March 1972. The Hon'ble Gujarat High Court held that the penalty order passed on 12th October 1971 was passed within the period of limitation and the amen....
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....ion came up before the Supreme Court. At page 55, Hidayatullah J. (as he then was) has pointed out: "On the expiry of the period the assessments, if any, may also become final and conclusive but only so long as the law is not altered retrospectively. Under the scheme of the Income-tax Act a liability to pay tax is incurred when according to the Finance Act in force the amount of income, profits or gains is above the exempted limit. That liability to the State is independent of any consideration of time and, in the absence of any provision restricting action by a time-limit, it can be enforced at any time. What the law does is to prevent harassment of assessees to the end of time by prescribing a limit of time for its own officers to take action. This limit of time is binding upon the officers, but the liability under the charging section can only be said to be unenforceable after the expiry of the period under the law as it stands. In other words, though the liability to pay tax remains, it cannot be enforced by the officers administering the tax laws. If the disability is removed or according to a new law a new timelimit is created retrospectively, there is no re....
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....ith in the present case is the application of the well-settled rule of law that limitation is a matter of procedure and unless there is something in the context or by express words the legislature has expressed it, new period of limitation would always apply to pending proceedings as well." We agree with these observations of the Division Bench of the Gujarat High Court. It may be pointed out that in Commissioner of Income-tax v. Bhikari Charan Panda [1976] 104 ITR 73 (Orissa) a Division Bench of the Orissa High Court has also come to the same conclusion. The facts of the case before the Orissa High Court were that the assessment order was passed on December 31, 1970, and the penalty proceedings were initiated on the same day. The order of penalty came to be passed on February 20, 1973. If the unamended provisions of section 275 were to be applied, the order of penalty would be barred by limitation since it was passed two years after the date on which the proceedings for penalty were initiated. But; on the other hand, if the amended section were to be applied, then the order of penalty would be within time because it was passed before March 31, 1973, that being the end of ....
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....e period provided by the amended provision. This would be the position notwithstanding the fact that there has been no determinable period of time between the expiry of the time provided under the old Act and the commencement of the amending Act. The legislature had given Section 18 of the Finance Act, 1956, only a limited retrospective operation, i.e. up to April 1, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorise the Income-tax Officer to commence proceedings, which before the new Act came into force, had by the expiry of the period provided become barred. 24. In the case of C. B. Richards Ellis Mauritius Ltd vs. Assistant Director of Income-tax (2012) 208 Taxmann 322 (Delhi), the Hon'ble Delhi High Court was considering whether the notice issued under Section 148 of the IT Act for Assessment Year 1998-99 issued on 30th March 2009 was within the period of limitation prescribed under Section 149 of the IT Act. The Assessee contended that by the Finance Act, 2001....