Penalty Passed Beyond Extended Limitation Under Section 275 Quashed: ITAT Mumbai

Hardik Dayanand Patil Vs ITO (ITAT Mumbai)

Summary: ITAT Mumbai allowed the assessee’s appeal and quashed the penalty order dated 23.11.2021 passed under section 271(1)(c) of the Income Tax Act, 1961 as barred by limitation under section 275. The assessee, an individual, had filed his return declaring income of Rs.14,31,583 and was originally assessed under section 143(3). Reassessment proceedings were subsequently initiated under sections 147 and 148 and reassessment was completed on 30.12.2019 at Rs.24,00,830. During reassessment, income relating to capital gains arising from a development agreement was found not to have been reflected in the original return. According to the assessee, the relevant documents had been furnished to his Chartered Accountant and the omission was inadvertent; on becoming aware of it, he furnished a revised computation and discharged the resulting tax liability.

Nevertheless, penalty proceedings under section 271(1)(c) were initiated in the reassessment order dated 30.12.2019 and the penalty order was eventually passed on 23.11.2021. Since the assessee had not appealed against the reassessment order, the Tribunal held that limitation was governed by section 275(1)(c). Under the normal statutory period, limitation expired on 30.06.2020. The Tribunal then considered the pandemic-related extensions under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and the CBDT circulars referred to in the order.