TaxTMI 
TaxTMI 
2026 (1) TMI 615
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.... case to adjudicate the issues under consideration. 3. Brief facts relating to the issues raised by the assessee arising out of penalty imposed u/s 271E of the Act brought to our notice by the ld. AR of the assessee are, the assessment order in which the proceedings were initiated u/s 269SS and 269T were initiated and completed on 29.12.2022. The relevant quantum appeals for AY 2015-16, 2017-18 and 2018-19 are pending before ld. CIT (A)-26 and no quantum appeal was pending before first appellate authority for AY 2016-17. The issue raised by the assessee in appeals before us are, the assessment was completed on 29.12.2022 and Addl. Commissioner of Income-tax, Central Range 04, Delhi passed the penalty order on 30.01.2024, therefore, the penalty order passed by the Assessing Officer is barred by limitation for imposition of the penalty. In this regard, he relied on the following case laws :- (i) ITAT, Jaipur Bench in Jagdish Chandra Suwalka vs. JCIT - IT Appeal No.376(JP) of 2022; (ii) Hon'ble High Court of Karnataka in Pr. CIT vs. K Umesh Shett in IT Appeal No.165 of 2020, January 17,2025; (iii) Hon'ble Delhi High Court in Pr. CIT vs. Rishikesh Buildcon....
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.... * Section 275(1)(c) of the Act provides that no order imposing a penalty shall be passed after expiry of six months from the end of the month in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed. * In the present case, since the AO is not the competent authority to initiate or impose penalty u/s 271D/271E, the "action for imposition of penalty" can be said to have been initiated only when the competent authority (Addl. CIT) issued the notice dated 12.10.2023. Consequently, limitation is to be reckoned from the end of October 2023, rendering the order dated 30.01.2024 well within time. 4. Distinguishing the cases cited by the Assessee The assessee's reliance on the following decisions is misplaced and distinguishable on both facts and law: * Jagdish Chandra Suwalka v.. JCIT (ITAT Jaipur 'SMC' - ITA No. 376/JP/2022, A.Y. 2015-16) * In the said case, the same Assessing Officer who completed the assessment had jurisdiction to initiate and impose penalty u/s 271D, and the penalty proceedings were considered a continuation of the assessment proceedings. * T....
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....n of India & Ors. (Delhi High Court, W.P.(C) 17371/2024, dated 20.01.2025) * The writ petition in Property Plus Realtors primarily examined the validity and timing of penalty initiation vis-a-vis satisfaction recorded in the assessment proceedings. * The decision pertained to direct initiation of penalty by the AO and did not involve the distinct statutory process applicable to penalties u/s 271D/271E, which must be initiated and imposed by the Joint/Additional Commissioner. * Distinction: * In the present case, since the AO' s role was limited to making a reference, the Addl. CIT's notice constitutes the first legal act of initiation. Therefore, the ratio in Property Plus Realtors - which turned on simultaneous initiation by the AO - cannot be imported here. 5. Principle of Harmonious Interpretation * A purposive reading of Sections 274(2) and 275(1)(c) reveals that the legislature intended to afford a reasonable statutory window to the competent authority after the AO's reference. * To construe the limitation period as commencing from the AO's completion of assessment - when he has no authority to impo....
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.... present case, it was slightly over one month. xxx xxx xxx 9. However, this question came up for consideration in PCIT v. JKD Capital & Finlease Ltd. (supra). The date on which the AO recommended the initiation of penalty proceedings was taken to be the relevant date as far as Section 275(1)(c) was concerned. There was no explanation for the delay of nearly five years in the ACIT acting on the said recommendation. The Court held that the starting point would be the 'initiation' of penalty proceedings. Given the scheme of Section 275(1)(c) it would be the date on which the AO wrote a letter to the ACIT recommending the issuance of the SCN. While it is true that the ACIT had the discretion whether or not to issue the SCN, if he did decide to issue a SCN, the limitation would begin to run from the date of letter of the AO recommending 'initiation' of the penalty proceedings." (Emphasis Supplied) 9. The legal principle for determining the date of initiation of penalty proceedings has been settled by the predecessor bench of this Court in its decision of JKD Capital and Finlease Ltd. (supra) which reads as under: - "2...While finalising t....
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.... expires later will apply. One is the end of the financial year in which the quantum proceedings are completed in the first instance. In the present case, at the level of the Assessing Officer, the quantum proceedings was completed on December 28, 2007. Going by this date, the penalty order could not have been passed later than March 31, 2008. The second possible date is the expiry of six months from the month in which the penalty proceedings were initiated. With the Assessing Officer having initiated the penalty proceedings in December 2007, the last date by which the penalty order could have been passed is June 30, 2008. The later of the two dates is June 30, 2008." (Emphasis Supplied) 10. The contentions urged by the learned counsel for the Revenue in the present appeals are therefore reiteration of pleas which have been categorically rejected by the predecessor bench of this Court in the aforesaid judgments. 11. In the present appeals, a perusal of the assessment order(s) shows that the penalty proceedings were initiated by the AO in the assessment order(s) itself. Illustratively, the direction contained in the assessment order dated 17th December, 2008, pe....