Time limit for issue of penalty proceeding on issues unrelated to income assessment

Delhi High Court rules in favour of the assessee- time limitation for “initiation” of penalty proceedings Under Section 275 on issues unrelated to assessment of income (such as for s. 269SS/ 269T & TDS defaults) runs from the date on which the AO wrote a letter recommending the issuance of the Show Cause Notice to the ACIT, and not from the date mentioned in the Show Cause Notice. Thus, orders are illegal, being barred by time limitation. ITA No. 786/2016 order dated 05.05.2017.

Full Text of the High Court Judgment / Order is as follows:-

1. These are two appeals filed by the Revenue under Section 260A of the Income Tax Act, 1961 (‘Act’) against the order dated 24th May, 2016 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA Nos. 6256/Del/2013 and 6257/Del/2013 for the Assessment Year (‘AY’) 2009-10.

2.  The short question urged by the Revenue is whether the ITAT erred in law by holding that the order imposing the penalty was not passed within the time limit laid down under Section 275(1)(c) of the Act.

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