Jagdish Prasad Singhania Vs Additional Commissioner of Income Tax (TDS) (ITAT Raipur)
Summary: The ITAT Raipur allowed the assessee’s appeal and deleted penalty imposed under Section 271C of the Income Tax Act on the ground that the penalty proceedings were barred by limitation under Section 275(1)(c). The case involved alleged failure to deduct TDS on interest payments, where the Assessing Officer completed assessment on 29.12.2016 and later referred the matter to the Additional Commissioner (TDS) on 27.06.2017 for initiating penalty proceedings. However, the show cause notice for penalty was issued only on 11.12.2018 and penalty was imposed on 30.06.2019. The Tribunal relied on Delhi High Court rulings in JKD Capital & Finlease Ltd. and Turner General Entertainment Networks India Pvt. Ltd. to hold that initiation of penalty proceedings commences from the first action or reference for penalty, and authorities cannot delay proceedings arbitrarily. The Tribunal observed that the unexplained delay defeated the object of Section 275(1)(c), rendering the penalty unsustainable and liable to be deleted.
Core Issue : The principal issue before the Tribunal was whether penalty imposed under section 271C of the Income-tax Act for failure to deduct tax at source was barred by limitation prescribed under section 275(1)(c), where the Assessing Officer had already made a reference for initiation of penalty proceedings but the competent authority issued show-cause notice and passed penalty order after substantial delay.
