Penalty u/s 271-D & 271-E of the Income Tax Act cannot be invoked after 6 months of Limitation: SC [Read Order]

Revised Return - Share Application Money - Supreme Court of India - Taxscan

The two-judge bench of the Supreme Court comprising of Justices A.K Sikri and R.F. Nariman, in a recent order observed that the provisions of sections 271-D and 271-E of the Income Tax Act, 1961 cannot be invoked after 6 months of limitation period.

The Apex Court was upholding the decision of the High Court in which it was found that the limitation period prescribed u/s 275(1)(c) applies to penalty proceedings u/ss 269SS & 269T of the Income Tax Act, 1961.

The Court was considering an appeal filed by the Revenue against the order of the Rajasthan High Court as per which the penalty imposed on the assessee was set aside by the Court on ground that the provisions of Section 271-D and 271-E of the Income Tax Act were invoked after six months of limitation and, therefore, such penalty could not have been imposed.

The High court took a view that the appellate proceedings arising out of the assessment or other proceedings has no relevance in sustaining the penalty proceedings parallelly initiated under sections 271D and 271Eof the Act . Accordingly, the penalty proceedings initiated against the assessee for violation of sections 269SS and 269T are independent from the assessment proceedings.

While confirming the above view of the High Court, the Supreme Court held that, “On perusing the judgment of the High Court, it is found that penalty imposed on the respondent herein was also set aside on the ground that the provisions of Section 271-D and 271-E of the Income Tax Act were invoked after six months of limitation and, therefore, such penalty could not have been imposed. Since the outcome of the judgment of the High Court can be sustained on this aspect alone, it is not even necessary to go into other aspects. Leaving the other questions of law open, the appeal is dismissed. There shall be no order as to costs.”

Read the full text of the order below.

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