Kodiambadi Subrahmanya Rai Vs ACIT (ITAT Bangalore)
Bengaluru ITAT Quashes Penalty U/s 271D as Time-Barred – Six-Month Limitation U/s 275(1)(c) Strictly Enforced
The Bengaluru ITAT allowed the assessee’s appeals for AYs 2016-17, 2017-18, 2018-19 and 2020-21 by quashing penalties imposed under Section 271D of the Income-tax Act, 1961 as barred by limitation under Section 275(1)(c). The penalties arose from alleged violation of Section 269SS based on statements recorded under Section 132(4) during scrutiny proceedings in the case of another person, leading to notices issued under Section 274 read with Section 271D on 14.08.2024. The Assessing Officer passed penalty orders on 19.03.2025, which were upheld by the CIT(A). The ITAT held that no assessment proceedings had been initiated for the relevant assessment years of the assessee and, therefore, the first limb of Section 275(1)(c) was inapplicable. It held that the second limb of Section 275(1)(c), prescribing six months from the end of the month in which penalty proceedings were initiated, governed the limitation period. Since the penalty proceedings commenced on 14.08.2024, the limitation expired on 28.02.2025, making the penalty orders dated 19.03.2025 time-barred. Having quashed the penalties on this jurisdictional ground, the ITAT kept the remaining grounds open as academic and allowed all the appeals.
