TMI Blog2019 (8) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs could be initiated. In other words, the initiation of penalty proceedings did not hinge on the completion of the appellate quantum proceedings. Therefore, it is futile to contend that the date of initiation of proceedings is the date on which the JCIT receives intimation from the AO or the date on which the JCIT issues show cause notice to the Assessee u/s.271-E . In that view of the matter, we hold that the AO having initiated the penalty proceedings on 24.3.2016, the last date by which the penalty order could have been passed is 30th September 2016. Thus, later of the two dates is 30th September, 2016 in the present case. With the AO having initiated the penalty proceedings in his order of assessment dated 24.3.2016, the last date by which the penalty order could have been passed is 30th September, 2016. The penalty order was passed only on 27.1.2017. Therefore the same is barred by time. The order imposing penalty is therefore held to be bad in law and is hereby cancelled. Since the order is held to be bad and cancelled on the ground of limitation, we are not going into the existence of reasonable cause which will exonerate the Assessee from imposition of penalty u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) that in terms of Section 275 (1) (c) of the Act, the penalty order could have only been passed on or before 30th September, 2016 and since the order imposing penalty u/s.271E was passed on 27.1.2017, the penalty order passed on 27.1.2017 was barred by limitation. Section 275(1)(c) of the Act reads thus:- 275. (1) No order imposing a penalty under this Chapter shall be passed (a).... (b)..... (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. 5. It was the submission of the Assessee before CIT(A) that In terms of the above provision, there are two distinct periods of limitation for passing a penalty order, and one that expires later will apply. One is the end of the financial year in which the quantum proceedings are completed in the first instance. In the present case, at the level of the AO, the quantu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed was well within time. The following were the observations of the CIT(A):- 5.1 On perusal of the above two decisions, it is observed that in the case of CIT vs Hissaria Bros. (Supra), the penalty was initiated by the AO during the assessment proceeding itself. However, in the case under consideration no such initiation of penalty has been done by the AO. A mere observation regarding the default by the AO in the assessment order in the case under consideration, as reproduced supra in para 4.0, does not amount to initiation of penalty proceedings. No notice for initiation of penalty u/s 271E of the Act was sent by the AO to the appellant along with the assessment order. In fact, in the case under consideration the AO has not even used the words 'initiated', so the possibility of considering the observation of the AO in the order to be 'initiation of penalty' would not arise. Considering these facts, the decision of the Rajasthan High Court, as relied upon by the appellant, would not be applicable to the facts of case under consideration. 5.2 As regards, decision of Delhi High Court in the case of Mahesh Wood P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case where the proceedings stood initiated with the order passed by the Assessing Officer, by delaying the issuance of the notice under section 271E beyond June 30, 2008, the Additional Commissioner of Income-tax defeated the very object of section 275(1)(c) 8. The Hon'ble High Court has relied on the decision of the Rajasthan High court in CIT Vs Hissaria Brothers 291 ITR 244 . It is submitted that the decision of the Rajasthan High court in Hissaria Brothers has been approved by Supreme court on this issue in CIT Vs Hissaria Brothers 3S6 ITR 719. 9. He also relied on the following observations of the Hon'ble Rajasthan High court in paragraph 5 page 248 wherein it noted the fact that the penalty proceedings u/s 271D and 271E respectively were initiated during the assessment proceedings. On the basis of such facts the Tribunal held that the order of penalty should have been passed within six months from the end of the month in which the assessment was completed (paragraph 9 at page 249 of the report). This order of the Tribunal was upheld by the High Court in 291 ITR 244 and further upheld by the Hon'ble Supreme court in 386 ITR 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings to be disposed of before the penalty proceedings could be initiated. In other words, the initiation of penalty proceedings did not hinge on the completion of the appellate quantum proceedings. The Hon ble Rajasthan High Court in the case of Commissioner of Income- Tax v. Hissaria Bros. (2007) 291 ITR 244(Raj) took the view that default in not having transactions through the bank as required under sections 269SS and 269T are not related to the assessment proceeding but are independent of it, therefore, the completion of appellate proceedings arising out of the assessment proceedings or the other proceedings during which the penalty proceedings under sections 271D and 271E may have been initiated has no relevance. It was also held that if that were not so, clause (c) of s. 275(1) would be redundant because otherwise, as a matter of fact, every penalty proceeding is usually initiated when during some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default e.g. penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 271- E beyond 30th June 2008, the Additional CIT defeated the very object of Section 275 (1) (c). 15. Therefore, it is futile to contend that the date of initiation of proceedings is the date on which the JCIT receives intimation from the AO or the date on which the JCIT issues show cause notice to the Assessee u/s.271-E of the Act. In that view of the matter, we hold that the AO having initiated the penalty proceedings on 24.3.2016, the last date by which the penalty order could have been passed is 30th September 2016. 16. Thus, later of the two dates is 30th September, 2016 in the present case. With the AO having initiated the penalty proceedings in his order of assessment dated 24.3.2016, the last date by which the penalty order could have been passed is 30th September, 2016. The penalty order was passed only on 27.1.2017. Therefore the same is barred by time. The order imposing penalty is therefore held to be bad in law and is hereby cancelled. 17. Since the order is held to be bad and cancelled on the ground of limitation, we are not going into the existence of reasonable cause which will exonerate the Assessee from impo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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