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2009 (6) TMI 985 - ITAT LUCKNOWPenalty u/s 271(1)(c) - validity of order passed beyond the period of limitation - the assessee was engaged in agricultural activities in the name and style of M/s Bloosom Floriculture eligible to exemption u/s. 10(1) - failed to produce any bills/vouchers for agricultural income/activities - Condonation of delay filing appeal - HELD THAT:- We are of the view that although the explanation given by the assessee may not be sufficient to condone the delay but the assessee may raise the legal issue as per r. 27 of the ITAT Rules, 1963. The question of jurisdiction raised by the assessee goes to the root of the matter and does not require further investigation into the facts, so we are of the view that the same is required to be entertained and decided. We are also fortified by the decision of the Tribunal, Lucknow Bench ‘B’ in the case of U.P. State Bridge Corpn. Ltd. v. Dy. CIT [2008 (2) TMI 900 - ITAT LUCKNOW]. We are of the confirmed view that plea taken by the assessee, vide which jurisdiction of the AO in levying the penalty u/s. 271(1)(c) has been challenged, deserves to be admitted. From the provisions contained in the proviso to sec 275(1)(a) it is crystal clear that if an order is passed by the CIT(A) on or after the 1st day of June, 2003 then an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings in the course of which action for imposition of penalty has been initiated, are completed or within one year from the end of the financial year in which the order of the CIT(A) is received whichever is later. Here, CIT(A) passed the order on 11th March, 2005, the penalty proceedings were initiated by the AO in March, 2004 when the assessment order was passed on 23rd March, 2004. The learned CIT(A) had passed the order dt. 11th March, 2005 so the penalty order was to be passed within one year from the end of the financial year in which the order of the CIT(A) was received by the AO. the appeal was filed by the Department in Tribunal in the month of May, 2005, therefore the order must have been received before the said date, hence the relevant financial year ended on 31st March, 2006, as such the penalty order was to be passed upto 31st March, 2007. However, the AO has passed the penalty order levying the penalty u/s. 271(1)(c) on 20th April, 2007 therefore, the penalty order passed was barred by limitation and does not survive. Accordingly, the plea taken by the assessee is allowed. We have quashed the penalty order for another reason i.e., by considering the limitation period as provided in proviso to s. 275(1)(a), in that view of the matter, we do not see any merit in the appeal of the Department.
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