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2019 (8) TMI 853 - HC - Income TaxPenalty u/s 158BFA(2) - period of limitation - relevant date - on the issue of additions, ITAT and HC decided the matter in favor of assessee whereas Supreme Court has finally decided the matter in favor of Revenue - HELD THAT:- While it is clear that relevant provision relied on by learned counsel for writ petitioner talks only about first appeal to the first appellate authority, the order of ITAT and stops with the same, there is another provision which deals with a scenario which does not fall in such a factual setting. That provision is Section 158BFA(3)(e). A careful analysis of this provision makes it clear that this provision itself provides for two periods of limitation qua penalty under section 158BFA(2). One period is the end of assessment year in which assessment proceedings came to be passed. In this case, assessment order came to be passed on 31.8.2004 and therefore, that financial year ended on 31.3.2005. In the considered view of this court, this limb of time frame does not apply to instant case on hand as two successive appeals, namely statutory appeal to CIT(A) and statutory appeal to ITAT u/s 253 did not get completed in less than a year. From the date on which penalty proceedings are initiated? - In the instant case, if it is construed that penalty proceedings were initiated on 31.8.2004, as already alluded to supra, the same could not be continued owing to writ petitioner assessee's appeal before first appellate authority. To be noted, first appellate authority confirmed the tax levy, but reduced the interest component, resulting in both assessee and Revenue carrying the matter in appeal to ITAT. Obviously, Revenue had to wait for the outcome of appeals before ITAT. As already mentioned supra, the outcome of appeals before ITAT was in favour of writ petitioner assessee. Absent assessment order, the question of penalty proceedings does not arise and therefore, penalty proceedings initiated on 31.8.2004 continued to lie dormant. Further notice dated 12.9.2018 continuing penalty proceedings which was involuntarily lying dormant was issued. This 12.9.2018 notice is well within six months from the date of the order of Hon'ble Supreme Court and therefore, it cannot be gainsaid that impugned order is barred by limitation. For the purpose of enhanced clarity and specificity, this Court deems it appropriate to mention that limitation qua penalty proceedings under IT Act is prescribed under two provisions with regard to two different types of penalties. With regard to penalty u/s 271(1)(c), limitation is statutorily prescribed in section 275, with regard to penalty u/s 158BFA(2) as in the instant case, limitation is statutorily prescribed u/s 158BFA(3)(c). With regard to both these provisions, namely Sections 275 and 158BFA(3)(c) which prescribe different periods of limitation for two different types of penalties, both these provisions were brought into statute books in their present form before section 260A was brought into statute books. To be noted, section 260A provides for a statutory appeal to High Court and this was brought into statute books only on 01.10.1998. To put it differently, when two different periods of limitation for two different kinds of penalties were statutorily prescribed under IT Act, ITAT was the last forum qua statutory appeals. The discussion and dispositive reasoning leads us to an inevitable conclusion that the impugned order is not barred by limitation and the same is not liable to be set aside as time barred.
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