Ganpati Industrial Spares Pvt. Ltd. Vs ACIT (ITAT Nagpur)
Penalty Passed 17 Days After Limitation Quashed: Date of Initiation in Assessment Order Is Decisive, Not Date of Communication
Summary: The Nagpur SMC Bench of the Income Tax Appellate Tribunal has quashed a penalty of ₹4,62,000 under Section 271(1)(c) as barred by limitation. The Tribunal held that penalty proceedings were initiated in the assessment order dated 19 September 2024. Therefore, under Section 275(1)(c), the penalty order ought to have been passed on or before 31 March 2025.
Since the penalty order was passed on 17 April 2025, it was beyond the statutory time limit and was liable to be annulled.
Facts of the case
The assessee was a private limited company. The Assessing Officer completed the assessment under Section 143(3) read with Section 263 on 19 September 2024.
In the assessment order, the Assessing Officer initiated penalty proceedings under Section 271(1)(c) in respect of alleged concealment of income of ₹14 lakh.
The assessment order was subsequently communicated to the assessee through a letter dated 1 October 2024.
After conducting the penalty proceedings, the Assessing Officer passed the penalty order on 17 April 2025, imposing a penalty of ₹4,62,000.
The CIT(A)/NFAC confirmed the penalty. The assessee carried the matter in appeal before the Tribunal.
Legal ground raised before the Tribunal
The assessee raised several grounds challenging the penalty on merits. However, it first raised a legal ground that the penalty order itself was barred by limitation under Section 275(1)(c).
The assessee contended that the penalty proceedings had been initiated in the assessment order dated 19 September 2024. Under Section 275(1)(c), the penalty order was required to be passed within:
- six months from the end of the month in which action for imposition of penalty was initiated; or
- the end of the financial year in which the proceedings during which penalty was initiated were completed,
whichever period expired later.
As the penalty was initiated in September 2024, six months from the end of that month expired on 31 March 2025. The financial year in which the assessment was completed also ended on 31 March 2025.
Therefore, under either computation, the final permissible date for passing the penalty order was 31 March 2025. The order dated 17 April 2025 was consequently time-barred.
The assessee relied upon, among other decisions:
- PCIT v. Rishikesh Buildcon (P.) Ltd. [2023] 147 taxmann.com 220 (Delhi);
- Hardik Dayanand Patil v. ITO, ITA No. 8661/Mum/2025, order dated 16 March 2026;
- Karia Builders v. ITO [2025] 176 taxmann.com 872 (Pune Tribunal);
- Mistry & Shah v. ITO, ITA No. 143/Ahd/2021; and
- C-DET Explosive Industries Pvt. Ltd. v. DCIT, ITA Nos. 310–312/Nag/2019.
Revenue’s objection
The Revenue argued that the limitation ground had not been raised before the lower authorities and was being taken for the first time before the Tribunal.
It was therefore contended that the additional legal ground should not be admitted.
Admission of the legal ground
The Tribunal rejected the Revenue’s objection.
The question whether the penalty order was passed within the period prescribed under Section 275 went to the very root of the validity of the penalty proceedings. The issue could be determined from dates already forming part of the assessment and penalty records and did not require investigation of new facts.
The Tribunal therefore entertained the legal ground even though it had been raised for the first time at the Tribunal stage.
Date of initiation was 19 September 2024
The Tribunal found that the penalty proceedings were expressly initiated in the assessment order dated 19 September 2024.
Although the assessee was informed about the assessment order through a letter dated 1 October 2024, the subsequent date of communication did not postpone the date on which the penalty proceedings were initiated.
The statutory clock began from the initiation recorded in the assessment order and not from the date on which the order was later communicated to the assessee.
Six months calculated from the end of September 2024 expired on 31 March 2025. The financial year in which the underlying assessment proceedings were completed also expired on the same date.
Accordingly, 31 March 2025 was the final date for passing the penalty order.
Decision of the Tribunal
Since the Assessing Officer passed the penalty order only on 17 April 2025, the order was clearly beyond the limitation prescribed under Section 275(1)(c).
Following the Delhi High Court’s judgment in Rishikesh Buildcon and the Mumbai Tribunal’s decision in Hardik Dayanand Patil, the Tribunal reversed the order of the CIT(A) and deleted the penalty of ₹4,62,000.
Having quashed the penalty on the legal ground of limitation, the Tribunal held that the remaining grounds concerning the merits of the penalty had become academic and required no adjudication.
The assessee’s appeal was accordingly allowed.
Author’s comments
The decision emphasises that limitation for passing a penalty order is a jurisdictional condition. Once the prescribed period expires, the Assessing Officer loses authority to impose the penalty. Even a delay of a few days is fatal because there is no power to condone or extend the statutory limitation.
The important factual point is the distinction between the date of initiation and the date of communication. Where the assessment order records satisfaction and initiates penalty, the date of that order ordinarily becomes relevant for computing the six-month period. A later letter communicating the assessment cannot extend the limitation.
The ruling also reiterates that a pure legal ground affecting jurisdiction may be raised for the first time before the Tribunal, particularly where all relevant facts are already available on record.
However, Section 275 contains different limitation provisions depending upon whether the underlying assessment is the subject matter of an appeal or revision. Section 275(1)(a) may apply where the relevant assessment is carried in appeal, whereas Section 275(1)(c) operates in other cases not covered by clauses (a) or (b). Therefore, before relying on this decision, it is essential to identify:
- the proceeding in which penalty was initiated;
- whether the quantum order was appealed against;
- the date of receipt of the appellate or revisional order, if any; and
- the clause of Section 275 actually applicable.
On the facts recorded in this case, the Tribunal applied Section 275(1)(c) and fixed 31 March 2025 as the terminal date. The penalty order dated 17 April 2025 crossed that deadline and was therefore void.
The decisive proposition is that limitation is not a procedural technicality. Once the statutory deadline under Section 275 expires, a subsequent penalty order is without jurisdiction and must be quashed, irrespective of the merits of the alleged concealment.
Cases Discussed
- PCIT v. Rishikesh Buildcon Pvt. Ltd. (Delhi High Court)
- Hardik Dayanand Patil v. ITO (ITAT Mumbai), ITA No. 8661/Mum/2025, order dated 16.03.2026
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, NAGPUR BENCH
1. This appeal by the assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi (for short, “CIT(A)”) dated 10.12.2025 passed u/sec. 250 of the Income Tax Act, 1961 (for short, “Act”) which is arising out of penalty order dated 17.04.2025 passed u/sec. 271(1)(c) of the Act for the Assessment Year (A.Y.) 2013-14.
2. Grievance of the assessee is against the levy of penalty u/sec. 271(1)(c) of the Act at Rs. 4,62,000/- for the alleged concealment of income of Rs. 14,00,000/-. Though, assessee has raised multiple grounds of appeal on merits of the case, I will first take up the legal ground raised by the assessee challenging the validity of assessment proceedings being time barred in the light of provisions of section 275(1)(c) of the Act.
3. I have heard rival submissions and perused the material placed before me. By raising a legal ground, learned counsel for the assessee submitted that as per section 275(1)(c) of the Act, the penalty order is required to be passed within six months from the end of the month in which the action for imposition of penalty is initiated, or before the expiry of the financial year in which the proceedings, in the course of which the action for imposition of penalty has been initiated, are completed, whichever period expires later. Learned counsel for the assessee submitted that in the light of the said provision, the last date for passing of penalty order is 31.03.2025 whereas penalty order has been passed on 17.04.2025 which is barred by limitation. In support, he placed reliance on the following case-laws:-
i. PCIT vs. Rishikesh Buildcon (P.) Ltd. [2023] 147 taxmann.com 220 (Delhi)
ii. Hardik Dayanand Patil vs. ITO in ITA No.8661/MUM/2025, dated 16.03.2026 (Mum.–Trib.)
iii. Karia Builders vs. ITO [2025] 176 taxmann.com 872 (Pune – Trib.)
iv. Mistry & Shah vs. ITO in ITA No. 143/AHD/2021, dated 13.09.2023 (Ahmedabad – Trib.)
v. C-DET Explosive Industries Pvt. Ltd. vs. DCIT in ITA Nos. 310-312/NAG/2019, dt. 30.10.2023 (Pune – Trib.)
5. On the other hand, Ld.DR supported the order Ld.CIT(A) and submitted that this ground has been take for the first time before this Tribunal and the same should not be admitted.
6. I have gone through the records and find that the ground raised by the assessee challenging the validity of penalty order u/sec. 271(1)(c) of the Act on the ground of limitation goes to the root cause of the proceedings. I find that in the instant case, assessment proceedings have been initiated in the assessment order framed u/sec. 143(3) r.w.s 263 of the Act dated 19.09.2024. Though, intimation of the said assessment order has been given to the assessee vide letter dated 01.10.2024, however, there is no dispute to the fact that penalty order u/sec. 271(1)(c) of the Act have been initiated in the assessment order dated 19.09.2024. Considering it to be the date of initiation of penalty proceedings, six months from the end of the month of September 2024 ends on 31.03.2025 and by this date, Ld. AO should have framed penalty order u/sec. 271(1)(c) of the Act. However, facts indicate that penalty order in the instant case has been framed on 17.04.2025 which is beyond the last date i.e. 31.03.2025 and is therefore barred by limitation. Therefore, I am of the considered view that having regard to the statutory scheme governing limitation for levy of penalty provided u/sec. 275 of the Act, I find that the impugned penalty order dated 17.04.2025 passed u/sec. 271(1)(c) of the Act is clearly barred by limitation as the last date for passing penalty order is 31.03.2025. I find support from the decision of Coordinate Bench of Mumbai Tribunal in the case of Hardik Dayanand Patil (supra) and also the judgment of Hon’ble Delhi High Court in the case of Rishikesh Buildcon (supra). Accordingly, finding the Ld.CIT(A) is reversed, penalty levied u/sec. 271(1)(c) of the Act at Rs. 4,62,000/- is deleted and the legal ground raised by the assessee is hereby allowed. So far as remaining grounds on merits are concerned, the same being academic in nature needs no adjudication.
7. In the result, appeal of the assessee is allowed.
Order pronounced on 11th September, 2026 under Rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1963
