Sanjeev Jai Narain Aeren Vs ACIT (ITAT Delhi)
Limitation Starts with AO’s Action, Not Addl. CIT’s Notice: ITAT Quashes 271D/271E Penalties as Time-Barred
The Delhi Bench of the Income Tax Appellate Tribunal allowed a batch of eight appeals filed by the assessee and deleted penalties imposed under sections 271D and 271E for AYs 2015-16 to 2018-19, holding that the penalty orders were barred by limitation under section 275(1)(c) of the Income-tax Act.
In this case, the assessment orders were completed on 29.12.2022, wherein the Assessing Officer recorded satisfaction and initiated penalty proceedings for alleged violations of sections 269SS and 269T, and thereafter made a reference to the Additional CIT, who is the competent authority under section 274(2). However, the show-cause notices were issued only on 12.10.2023, and the penalty orders were finally passed on 30.01.2024.
The Revenue argued that since the AO is not competent to impose penalties under sections 271D/271E, limitation should commence only from the date when the Addl. CIT issued the show-cause notice. The Tribunal rejected this contention, holding that for the purpose of section 275(1)(c), the “action for imposition of penalty” is initiated when the AO records satisfaction and makes a reference, not when the competent authority subsequently issues notice.
Relying heavily on binding precedents of the Delhi High Court in PCIT v. Rishikesh Buildcon (P) Ltd. and PCIT v. JKD Capital & Finlease Ltd., and noting that identical arguments of the Revenue had already been rejected, the Tribunal held that the six-month limitation must be reckoned from the end of the month in which the AO initiated penalty proceedings. Since the penalty orders were passed well beyond this period, they were held to be time-barred and unsustainable in law.
Accordingly, the Tribunal quashed all penalties under sections 271D and 271E, and allowed all the appeals of the assessee in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
