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2023 (3) TMI 369 - HC - Income TaxPenalty imposed u/s 271C - Bar of limitation for imposing penalties - Delay in issuing the impugned SCN - fixation of period of limitation when penalty is sought to be imposed as fallout of action taken in another proceeding - HELD THAT:- We are inclined to agree with the submission made on behalf of the petitioner i.e., the assessee, and the reason for that is quite simple. If we were to accept the respondent/revenue’s stand, then it could end up [as it has in this case] in a situation, where the revenue could decide the date when it could trigger a SCN to fulfil, as a mere formality, the principles of natural justice, which are engrafted under Section 274 of the Act. Section 274 of the Act, inter alia, mandates that no order imposing a penalty under the Chapter i.e., Chapter XXI shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. In this case,the initial return qua the AY in issue i.e., AY 2007-08 was filed on 31.03.2007, and the revised return was filed on 31.03.2009. The scrutiny assessment under Section 143(3), concerning AY 2007-08, was framed on 28.10.2011. Despite the fact that the issue concerning limitation got flagged as far back as on 09.09.2013, and then again in an internal communication dated 11.07.2014, no steps were taken for the issuance of a SCN. The SCN was issued only on 09.11.2017. Delay in issuing the impugned SCN dated 09.11.2017 was inexcusable. There is no explanation, whatsoever, available on the record, as to why the SCN under Section 274 of the Act was not issued in 2013-14, if not earlier. As a matter of fact, there is no explanation, even with regard to the period falling between the time when the scrutiny assessment was framed [i.e., on 28.10.2011] and the communication dated 09.09.2013. Period for commencement of limitation prescribed in terms of the second limb of clause (c) of sub-section (1) of Section 275 of the Act would commence either from 2013 or 2014, there is a period of unexplained substantial delay, as the SCN, concededly, was issued only on 09.11.2017. We are inclined to agree with the petitioner i.e., the assessee, that the SCN dated 09.11.2017 is woefully delayed, and hence deserves to be quashed. Consequentially, the impugned order dated 14.06.2018 would collapse, which would also be the fate of the second SCN dated 27.06.2018.
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