Penalty u/s 271D cannot be Imposed after the Expiry of larger Period of Limitation: ITAT [Read Order]

The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) has held that the penalty under Section 271D of the Income Tax Act, 1961 could not be imposed after the expiry of a larger period of limitation.

The assessee, Jagdish Chandra Suwalka, filed his return on 29.10.2015 through E-filing which was processed under Section 143(1) of the Income Tax Act at the returned income. The case of the assessee was selected for limited scrutiny through CASS and hence notice issued on different dates.

 During the relevant period the assessee was engaged in trading of Tudi i.e. wastage of Sarson plant which is used as a fuel by the bio bricks manufacturing units. The assessee had shown sales of Tudi on which net profit of a few sum only was declared.

The AO held that by applying provisions of Section 44AD of the Income Tax Act the net profit should have been declared at 8%. Thus, there is a difference which the AO added to the income of the assessee and assessment was completed vide order dated 28.12.2017 under Section 143(3) of the Income Tax Act at total income.

After completion of the assessment proceeding, Joint Commissioner of Income Tax  (JCIT) issued a show cause notice dated 06.11.2018 under Section 271D of the Income Tax Act . In response to which, the assessee filed detailed submission on 4.01.2019. From the perusal of the assessment order, it doesn’t appear that the AO has initiated the penalty proceedings under Section 271D of the Income Tax Act nor there was any reference in the impugned order of getting any reference or request from concerned jurisdictional offices.

Mahendra Gargieya on behalf of the assessee submitted that, imposition of penalty vide the impugned order under Section 271D of the Income Tax Act, 1961 was clearly barred by the limitation.

Monisha Choudhary, on behalf of the revenue, relied upon the order of the lower authorities.

A Single Bench of Sandeep Gosain, (Judicial Member) allowed the appeal and quashed the penalty imposed holding that the penalty under Section 271D of the Income Tax Act could not be imposed after the expiry of the larger period of limitation.

“At the very beginning it is observed that the provisions contained u/s 275(1)(a)are not applicable on the facts of present case for the reason that undisputedly no appeal has been filed against the assessment order passed on 28.12.2017. Therefore, it cannot be said that the relevant assessment or other order was subjected to some appellate proceeding. Consequently, the extended period of limitation of 6 months from the availability of the appellate order, will not be available to the revenue,” the Bench further observed.

To Read the full text of the Order CLICK HERE

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