TaxTMI 
TaxTMI 
2026 (5) TMI 411
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....mpleteness, Section 275(1)(c) of the Act is extracted as follows: "275. (1) No order imposing a penalty under this chapter shall be passed___ xxxxx (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.]" 4. It is evident from the penalty order that the said penalty u/s. 271C of the Act was imposed on 30th June, 2019 but as per the provisions of Section 275(1)(c) of the Act, time ends on 31.12.2017. Therefore, imposition of penalty through penalty order dated 30th June, 2019 is time barred and violative of Section 275(1)(c) of the Act. 5. The issue is no more "Res-Integra" for the fact that interpretation of the fiscal statutes has to be adhered to in its strictest form and there cannot be liberty provided to either of the parties for interpreting the provisions as per their own sweet will. The aforesaid provisions is clear that no order of imposition of penalty could be passed after expiry of six m....
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....ingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if cl. (a) was to be invoked, no necessity of cl. (c) would arise." (emphasis supplied) 11. 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 CIT. For some reason, the Additional CIT did not issue a show cause notice to the Assessee under Section 271-E (1) till 20th March 2012. There is no explanation whatsoever for the delay of nearly five years after the assessment order in the Additional CIT issuing notice under Section 271-E of the Act. The Additional CIT ought to have been conscious of the limitation under Section 275 (1) (c), i.e., that no order of penalty could have been passed under Section 271-E after the expiry of the financial year in which the quantum proceedings were completed or beyond six months after the month in which they were initiated, whichever was later. In a case ....
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....gs arising out of the assessment proceedings or the other proceedings during which the penalty proceedings under ss. 271D and 271E may have been initiated has no relevance for sustaining or not sustaining the penalty proceedings and, therefore, cl. (a) of sub-s. (1) of s. 275 cannot be attracted to such proceedings. If that were not so cl. (c) of s. 275(1) would be redundant because otherwise as a matter of fact every penalty proceeding is usually initiated when during some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default e.g. penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter not making payment through cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if cl. (a) was to be invoked, no necessity of cl. (c) would arise." (emphasis supplied) 11. In fact, when the AO recommended the initiation of penalty proceedings the AO appeared to be conscious of the fact that he did no....
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.... must be construed in its normal sense. 15. The word 'initiated' is a past tense of the word 'initiate'. The Shorter Oxford English Dictionary defines the word 'initiate' as under: "to begin, commence, enter upon, to introduce, set going, originate." 16. In Webster's Third New International Dictionary, the word 'initiate' has, inter alia, been defined thus: "to begin or set going: make a beginning of: perform or facilitate the first actions, steps, or stages of:" 17. The Words and Phrases (Permanent Edition) defines 'initiate' to mean: "an introductory step or action, a first move; beginning; start, and to initiate as meaning - to commence." 18. In Om Prakash Jaiswal v. D.K. Mittal & Anr.: (2000) 3 SCC 171, the Supreme Court had considered the meaning of the expression 'initiate any proceedings for contempt' by referring to the dictionary meaning of the said word. It is relevant to refer to paragraph 10 of the said decision, which is set out below: "10. The expression-"initiate any proceedings for contempt" is not defined in the Act. Words and Phrases (Permanent Edition) defines "initiate" to mean - an introduc....
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....f the Ld. Brother in the draft order in case of Jagdish Prasad Singhania Vs. Additional Commissioner of Income Tax(TDS), Raipur in ITA No. 81/RPR/2023, while allowing the appeal of the assessee by treating the penalty levied under section 271C of the Income Tax Act, 1961 ('Act') by the Additional Commissioner of Income Tax (TDS), Raipur, barred by limitation. 2. This appeal was earlier dismissed as the delay in filing appeal was not condoned by the Tribunal. The assessee got it restored by the Hon'ble High Court who also condoned the delay. 3. Here, the relevant facts are that the assessee's assessment of relevant year was completed vide order dated 29.12.2016 under section 143(3) of the Act by the ITO, Ward-1(2), Raipur [hereinafter the Assessing Officer ('AO')]. During the course of assessment proceedings, the Ld. AO, based on the details in 3CD report wherein it had been mentioned that the assessee had not deducted tax on interest payment of Rs. 77,01,366/-, show-caused the assessee for disallowance of Rs. 77,01,366/- under section 40(a)(ia) of the Act. However, the Ld. AO did not make any disallowance under section 40(a)(ia) of the Act. 4. During the course of assessme....
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.... the Assessing Officer who completed the assessment has issued the direction to initiate the penalty proceedings under sections 271(1)(c) and 271E of the Act in the assessment order. However, later the Assessing Officer referred the penalty proceedings under section 271E of the Act to his Range Head. Here, in this case, the Hon'ble Delhi High Court, in para 11 of its order, had held that the Range Head issued show-cause after the delay of 5 years from the reference of the Assessing Officer though the Assessing Officer vide assessment order initiated the penalty proceedings under section 271E of the Act. The inordinate delay of 5 years by the Range Head, in absence of any valid explanation for the same, has been held to have defeated the object of section 275(1)(c) of the Act by the Hon'ble Delhi High Court. Here, in the present case the Ld. AO has not given any reference of the penalty under section 271C of the Act in the assessment order; therefore, even the deemed initiation of penalty proceedings did get triggered by the assessment order. Thus, I am of the considered view that the decision of the Hon'ble Delhi High Court in the case of JKD Capital & Finlease Ltd. (supra) is dist....
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....etter dated 27.06.2017. Such inordinate delay of 18 months by the Ld. Additional Commissioner of Income Tax (TDS), Raipur, for issuing show-cause notice of penalty under section 271C of the Act, in absence of any explanation, seems unjustified in limitation matter. Such inordinate delay defeat the object of 275(1)(c) of the Act. I have also taken note of the fact that the Ld. AO, in the assessment order, made disallowance of Rs. 14,11,167/- out of interest under section 69C of the Act. Thus, the sum of Rs. 14,11,167/- is beyond the scope of TDS. Consequentially, the penalty of Rs. 1,41,117/- on the disallowance of Rs. 14,11,167/- is not valid in the eyes of law as the sum of Rs. 14,11,167/- losses its nature as interest. I have also taken note of the fact that the Ld. AO' instead of taxing the sum of Rs. 62,90,199/- (Rs.77,01,366/- minus Rs. 14,11,167/-) under section 40(a)(ia) of the Act, referred the failure to deduct tax to the Additional Commissioner of Income Tax (TDS), Raipur for penalty under section 271C of the Act. Such action of the Ld. AO does not seem justified. Now, the next point of consideration is that what will be the trigger point of initiation of penalty under se....