PCIT Vs Thapar Homes Pvt. Ltd. (Delhi High Court)
Limitation period under Section 275(1)(c) starts from the AO’s initiation of proceedings in the assessment order, not from the JCIT/Addl. CIT notice.
Assessee, Thapar Homes Pvt. Ltd., was subjected to scrutiny for AY 2009-10. AO completed assessment u/s 143(3) on 31.12.2010, recording that penalty proceedings u/s 271E would be initiated separately for violation of Sec 269T. Subsequently, AO made a reference to the Addl CIT on 07.06.2011 & Addl CIT passed penalty order on 30.12.2011, imposing penalty of ₹3.44 crore, equivalent to the amount alleged to have been repaid in contravention of s.269T.
Assessee challenged the order before CIT(A), contending that the penalty order was barred by limitation u/s 275(1)(c). CIT(A) agreed & deleted the penalty, holding that limitation runs from the AO’s satisfaction in the assessment order (Dec 2010), not from Addl. CIT subsequent notice. CIT(A) relied on Delhi HC in PCIT v. JKD Capital & Finlease Ltd., which categorically held that limitation starts from AO’s initiation. CIT(A) referred to CBDT Circular No. 9/2016 (26.04.2016), which clarified that though AO is not competent to levy penalty, his initiation in the assessment order is relevant for limitation. Since AO initiated penalty in Dec 2010, the order had to be passed latest by 30.06.2011 (six months from initiation). Penalty order dated 30.12.2011 was therefore held to be null & void.
