JCIT Vs Ganesh Agarwal (Karnataka High Court)
Karnataka High Court Clarifies Limitation under Section 271DA: Six-Month Period Begins from JCIT’s Notice, Not AO’s Reference
The Karnataka High Court, in a batch of writ appeals, examined the limitation for imposing penalty under Section 271DA for violation of Section 269ST. The Court held that a proposal/reference made by the Assessing Officer (AO) to the Joint Commissioner (JCIT) is not the initiation of penalty proceedings. Penalty proceedings commence only when the JCIT issues a notice under Section 274.
The Court interpreted Section 275(1)(c) to mean that the six-month limitation for passing the penalty order starts from the end of the month in which the JCIT issues the notice under Section 274, since the JCIT alone is the competent authority to initiate and levy penalty under Section 271DA.
At the same time, to prevent indefinite delay by the Department, the Court held that the JCIT must issue the Section 274 notice within six months from the end of the month in which the AO’s proposal/reference is received. If the notice itself is issued beyond this period, the entire penalty proceedings are time-barred. If the notice is issued within this period, the penalty order must thereafter be passed within six months from the end of the month of such notice.
