Case Law Details
Brief of the case:
The ITAT ,Delhi in the case of. ITO vs. Pandit Vijay Kant Sharma concluded that The limitation period of six months and not one year is applicable in case the penalty order is passed by the AO pursuant to confirmation of penalty by the tribunal because the proviso to Sec 275(1)(a) does not cover the order passed by the tribunal.
Facts of the case:
The AO on the confirmation of disallowances and penalties by the ITAT, passed an order for levying penalty u/s 271(1)(c) . The CIT (A) deleted the penalty imposed by the AO u/s 271(1)(c) on the ground that the penalty order was time barred. Against such deletion AO filed an appeal before the tribunal.
Contention of the Revenue:
The learned counsel for the Revenue submitted that the penalty order passed by the AO was not time barred as the joint reading of Sec 275 with its proviso provides that the same is required to be passed within one year from the end of the month in which the order of tribunal is received by the Commissioner/Chief Commissioner.
In the present case the order was received by the CIT in May 2007 and penalty order was passed in Jan.2008, thus, the same was well within the limit.
Contention of the Assessee:
The learned counsel for the assessee contended that the time limits of passing penalty order by tribunal is provided in Sec 275(1) (a) , which provides that the penalty order to be passed before the expiry of the six months form the last day of the month in which the order of the tribunal is received by the CIT/CCIT. The proviso to Sec 275(1)(a) is applicable for orders passed after June 1,2003 but its applicability is only in respect of orders passed by CIT(A) and not applicable for the order passed by the tribunal.
Therefore, the order of tribunal is subject to the main section 275(1)(a) for which time period is six months which has expired and thus, the penalty order as passed is time barred not tenable in the law.
Decision of the Tribunal:
The tribunal observed that that the section 275(1)(a) and its proviso cannot be read jointly. The proviso is not applicable as the same does not refer to the order passed by the tribunal, as such the order passed by the tribunal even if passed after June 1,2003 continue to be governed by the six months tine limit provided in Sec 275(1)(a).The proviso specifically make reference only to the order of CIT(A) stating that “the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003”.
Thus, the proviso clearly intent to exclude the order passed by the tribunal leaving no room for any other interpretation.
In the present case CIT received order on or before May 11, 2207(as replied to RTI) in reaction of which the penalty order passed on Jan 1,2008 i.e. after six months from the end of the month in which the order of tribunal received by the CIT. Therefore, the penalty order is time barred. Appeal of the revenue was dismissed.
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