Chandrasekaran Joseph Vijay Vs DCIT (Madras High Court)
The Madras High Court examined the validity of a penalty order passed under Section 271AAB of the Income-tax Act, 1961, focusing exclusively on the issue of limitation under Section 275(1). The petitioner was subjected to a search under Section 132 during FY 2015–16, during which he admitted receipt of ₹15 crore in cash income. This amount was subsequently included in the return of income filed for AY 2016–17. An assessment order dated 30 December 2017 made certain additions and recorded initiation of penalty proceedings under Section 271AAB. The assessment order was appealed before the Commissioner (Appeals), partly allowed, and thereafter further appealed by the Revenue before the Income Tax Appellate Tribunal, which passed its final order on 22 December 2021.
Meanwhile, penalty proceedings under Section 271AAB culminated in an order dated 30 June 2022 imposing a penalty of 10% on the admitted undisclosed income. The petitioner challenged this penalty order before the High Court, confining the challenge solely to limitation. The principal contention was that Section 275(1)(c), and not Section 275(1)(a), governed the limitation period since the penalty related to undisclosed income admitted during search and was not the subject matter of appeal. On that basis, it was argued that the penalty order was time-barred.
