2025 (7) TMI 36 - AT - Income Tax

Penalty order u/s 271B - period of limitation - Scope of Section 275(1) - HELD THAT - We observe that the penalty notice was issued on 25.12.2019 and in accordance with Section 275(1)(c) of the Act and the penalty order should have been passed on or before 30.06.2020. However in this case the penalty order was passed on 30.07.2021 which is beyond the time limit prescribed under the Act. Therefore we hold that the penalty order passed by the AO is barred by limitation and void ab initio and having been passed without jurisdiction and beyond the time limit prescribed under the provisions of the I. T. Act. We find that the procedural requirements and statutory condition to the imposition of penalty was not duly complied with by the AO. Consequently the penalty order suffers from legal infirmity and cannot be sustained in the eyes of law. In view of the foregoing the impugned penalty order is hereby set aside and appeal filed by the assessee stands allowed. Appeal of the assessee is allowed.

Summary

The Appellate Tribunal (ITAT Cochin) heard an appeal by the assessee against the penalty order dated 30.07.2021 under Section 271B of the Income-tax Act for AY 2017-18, relating to failure to furnish the tax audit report within the prescribed due date under Section 44AB. The Assessing Officer (AO) had initiated penalty proceedings and levied a penalty of Rs. 1,50,000/-. The CIT(A) dismissed the assessee's appeal.The Tribunal noted that the penalty notice was issued on 25.12.2019, and under Section 275(1)(c), the penalty order should have been passed on or before 30.06.2020. However, the penalty order was passed on 30.07.2021, beyond the statutory time limit. The Tribunal held that the penalty order is "barred by limitation and void ab initio," having been passed "without jurisdiction and beyond the time limit prescribed under the provisions of the I.T. Act." Consequently, the penalty order suffers from a "legal infirmity and cannot be sustained in the eyes of law."The appeal was allowed, and the impugned penalty order was set aside.