DCIT, CENTRAL CIRCLE-1(4), KOLKATA, KOLKATA V. KAILASH KUMAR TIBREWAL, KOLKATA

ITA 626/KOL/2025

AI Insights

The case involves appeals by the Revenue against the orders of the CIT(A) which quashed penalty orders imposed on Kailash Kumar Tibrewal for the assessment years 2015-16 and 2016-17. The penalties were initially imposed for concealment of income based on additions made during the assessment following a search operation. However, the CIT(A) found the penalties to be time-barred, as the orders were issued beyond the permissible period stipulated under section 275(1)(c) of the Income-tax Act, 1961. The Tribunal's decision affirmed the CIT(A)'s ruling, emphasizing the importance of adhering to statutory timelines in the imposition of penalties.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713040 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2015-2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALTAF HUSSAIN
• Assessee Lawyers: S. K. TULSIYAN
• Keywords: Peak credit; Search and seizure; Wrong claim
• Section: 271(1)(c)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA Nos.626& 627/KOL/2025 (Assessment Years: 2015-16& 2016-17) DCIT, Central Circle-1(4), Kolkata Aaykar Bhavan Poorva, 110 Shanti Pally, Kolkata-700107 Vs. Kailash Kumar Tibrewal 230, Lower Circular Road, Kolkata-700020 (Appellant) (Respondent) PAN No. ABVPT9325R Assessee by : Shri S.K. Tulsiyan, AR Revenue by : Shri Altaf Hussain, DR Date of hearing: 15.07.2025 Date of pronouncement: 30.07.2025 O R D E R Per Rajesh Kumar, AM: These are appeals preferred by the Revenue against the orders of the Commissioner of Income-tax (Appeals), Kolkata (hereinafter referred to as the “Ld. CIT(A)”] even dated 02.01.2025 for the AY 2015-16 & 2016-17. 02. The only issue raised by the Revenue in both the appeals is against the orders of ld. CIT (A) quashing the penalty orders passed u/s 271(1)(c) of the Income-tax Act, 1961 (the Act) for both assessment years on the ground of being barred by limitation u/s 275(1)(c) of the Act, without considering the observations of the ld. AO in the remand report. For the sake of convenience, we will take the facts for A.Y. 2015-16. Printed from counselvise.com Page | 2 ITA Nos.626 & 627/KOL/2025 Kailash Kumar Tibrewal; A.Y. 2015-16 03. The assessee filed the return of income on 25.08.2015, declaring total income at ₹27,23,620/- and the same was processed u/s 143(1) of the Act. Thereafter, a search u/s 132(1) of the Act wasconducted on the assessee on 19.02.2020 and consequently, the assessment was framed vide order dated 30.09.2021, wherein the addition of ₹3,75,00,000/- was made on peak credit basis for loans advanced to various parties on the basis of material seized during the course of search. The ld. AO initiated penalty proceedings in the assessment and also issued notice u/s 271(1)(c) of the Act dated 05.10.2021 and recorded the finding that it is a fit case for imposing penalty and accordingly, imposed penalty u/s 271(1)(c) of the Act of ₹1,21,15,075/- being 100% of the tax sought to be evaded vide order dated 31.03.2022. 04. Aggrieved by the order assessee preferred the appeal before the ld. CIT (A), wherein the ld. CIT (A) quashed the penalty order as being barred by limitation u/s 275(1)(c) of the Act after calling for a remand report from the AO and also after taking into account the submission and contention of the assessee by observing and holding as under: - “5.0 Decisions: 5.1 All the Grounds relate to action of A.O in imposing penalty u/s 271(1)(c) of the Act for concealment of income. I have gone through the fact of the case, penalty order and the submissions filed by the appellant. During the course of assessment proceedings, Assessing Officer noticed that the name of the concerns namely Bhagawati Capital, Bhagawati Sportex etc. were mentioned under the head “KT” in seized material. Since, the above-mentioned entities were group concern of Kailash Tibrewal, he assumed that the appellant Shri Kailash Kumar Tibrewal is the lender of cash loan. Hence, the A.O added Rs.3,75,00,000/- to the total income of the assessee and initiated penalty u/s 271(1)(c) of the Act for concealment of income on 30.09.2021 along with assessment order. 5.2 Here, I would like to re-produced section 275 of the Act which deal with ‘Bar of limitation for imposing penalties’: Section 275: Printed from counselvise.com Page | 3 ITA Nos.626 & 627/KOL/2025 Kailash Kumar Tibrewal; A.Y. 2015-16 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 imposition of penalty has been initiated, are completed, or six months from the end of the months in which action for imposition of penalty is initiated is initiated, whichever period expires later. 5.3 As apparent from record, it is clear that the time limit to impose the penalty order should be 31.03.2022 as per clause ‘c’ of section p275(1).In this case, the penalty order passed by the A.O, gives impression that it was imposed on 31.03.2022. However, the said penalty order was passed without having Document Identification Number (DIN). In general practice, the Penalty Order along with DIN was supposed to be passed and served to the appellant on or before 31.03.2022. Also, the said penalty order should be passed in Penalty Module of ITBA after taking prior approval of Range Head, so that penalty order is passed with DIN in system. However, as per record, the manual penalty order was passed on 31.03.2022 along with DIN dated 25.04.2022. So, from the above, discussion, it is clear that the penalty order was passed after due date. 5.4 During the course of appellate proceedings, the appellant had claimed that the penalty order was passed after due date. The appellant had also submitted all documentary proof to substantiate his claim. In this regard, all the documents were forwarded to the Assessing Officer dated 07.08.2024 calling for Remand Report. The A.O. vide para 7 of the remand report sent on 12-12- 2024, stated on this matter as under:- “7. The assessee finally contended that on the facts of this case, time limit on the basis of financial year i.e. on the basis of date of order (30.09.2021) expired on 31.03.2022. As per second criteria, time limit was six months from the date of initiation of penalty, which was dated 30.09.2021 in the assessee’s case, and six months from the 30.09.2021 expired on 31.03.2022. The present order imposing penalty was passed on 25.04.2022 which is clearly beyond the statutory time limit as prescribed in section 275(1)(c) of the Act and hence liable to be quashed. In addition to the above, The assessee also stated that Ld. AO had issued the notice u/s. 271(1)(c) of the I.T. Act dated 13.04.2022 re- fixing the hearing in respect of the penalty proceedings for the AY 2015- 16 which is well beyond the time barring date of 31.03.2022 being the last date on which the penalty proceedings was getting time barred. Therefore, the assessee argued that argued that the said penalty order for the AY 2015-16 is void-ab-initiosince no DIN was generated on 31.03.2022 and was only generated on 25.04.2022 which is well beyond the due date of passing of the penalty order. Printed from counselvise.com Page | 4 ITA Nos.626 & 627/KOL/2025 Kailash Kumar Tibrewal; A.Y. 2015-16 In this connection, regarding the objection raised by the assessee, it is stated that the contention of assessee is not-correct that the present order imposing penalty was passed on 25.04.2022 which is clearly beyond the statutory time limit as prescribed in section 275(1)(c) of the Act. In this regard, it is state that in the case of the assessee penalty order u/s. 271(1)(c) of the act for the AY 2015-16 was passed on 31.03.2022 imposing penalty of Rs. 1,21,15,075/- having DIN No. ITBA/COM/M/17/2022-23/ 1042842838(1) and the same was served upon assessee on that day itself. The same was evident from the screen- shot of ITBA system which is appended below: The screenshot of order-sheet showing that relevant penalty order u/s. 271(1)(c) of the act in the case of the assessee was passed on 31.03.2022 and the intimation letter was generated by the ITBA system on 25.04.2022. The relevant portion is as under: Printed from counselvise.com Page | 5 ITA Nos.626 & 627/KOL/2025 Kailash Kumar Tibrewal; A.Y. 2015-16 It is also mentioned that in the instant case of the assessee, the penalty u/s. 271(1)(c ) of the act for the AY 2015-16 was passed on 31.03.2022 imposing an penalty of Rs. 1,21,15,075/- after obtaining necessary prior approval u/s. 274(2) of the act on 31.03.2022from the specified authority. The same is hereby enclosed for ready reference. It is further communicated that above penalty order passed on 31.03.2022 vide DIN No. ITBA/COM/M/17/2022-23/1042842838(1) and the intimation letter has been generated by the ITBA System on 25.04.20222 having DIN No. ITBA/COM/S/91/2022- 23/1042842875(1). It is apparent that the DIN No. of penalty order and the DIN No. of the related intimation letter are different and both are generated by ITBA System on different day. The relevant part the intimation letter showing different DIN Number is as under: Now, on the alleged issue of refixation of hearing notice u/s. 271(1)(c) was issued to the assessee on 13.04.2022 beyond the allowed timeframe of passing the penalty order i.e. within 31.03.2022. In this connection, it is stated that huge number of time barring assessment order and penalty order were uploaded on the ITBA system on the very last day at late hour of 31.03.2022. In many cases, penal provisions were initiated where the addition are being made in the assessment and refixed for hearing again in the mid of April 2022. With other cases, the assessee case was also inadvertently re-fixed again on 13.04.2022 by issuing the hearing notice. The aforesaid mistake is clerical in nature and inadvertently refixation of hearing notice was issued to the assessee on 13.04.2022. Printed from counselvise.com Page | 6 ITA Nos.626 & 627/KOL/2025 Kailash Kumar Tibrewal; A.Y. 2015-16 The crux of above discussion, during the appellate stage, the assessee wrongly representing the case before your kind honour that the above penalty order was passed on 25.04.2022which is clearly beyond the statutory prescribed time limit for passing the order. However, in the instant case, on the very last day of penalty proceeding, after seeking prior approval from specified authority, the penalty order u/s. 271(1)(c ) was passed on 31.03.2022. Further, it is very usual that there might be heavy traffic on the ITBA system. The penalty order was uploaded dully long before 12.00 P.M of 31.03.2022 and DIN was generated from the ITBA system on same day itself. It is due to some technical glitch /error ofthe system, the intimation letter could not be generated on the same day. Therefore, in view of above, it is patently clear that the above DIN No. and date of generation of DIN No. Clearly shows that penalty order imposing penalty on assessee was passed within given time frame as prescribed in section275(1)(c ) of the Act i.e. within 31.03.2022 and the same is not time barred, and thus, the contention of assessee found to be not correct and liable to be rejected on the grounds as discussed above. In the view of above foregoing paras, it is clear that above penalty order was passed with stipulated time frame as prescribed in the section 275(1)(c ) of the Act and additions and consequently penalty were made on the basis of findings of incriminating evidences i.e. based on the statement recorded during the search and seizure operation on assessee group and also based on the findings as reported by investigation directorate ( as discussed above).Hence, I may kindly request your honour to decide the case on the facts and merits.” 5.5 The copy of remand report was forwarded to the appellant for his perusal and comments. In response, the appellant filed rejoinder which is re-produced below: “Please refer to the above. In response to the remand report filed by the A.O. dated 12.12.2024, the following may kindly be considered: The Ld. A.O. in the penalty order passed u/s.271(1)(c ) of the IT Act, 1961 dated 31.03.202 which was served to the assessee on 25.04.2022 has stated that the assessee had concealed the particulars of income for the year under consideration and Rs.3,75,00,000/- being the peak credit which was not substantiated. In this regard, the assessee had submitted a detailed submission before your Goodself which contained detailed explanation of the peak credit of Rs. 3,75,00,000/- and the reasons thereof which was offered during the course of assessment proceedings. The assessee had also challenged the validity of the penalty order as being time barred. Subsequently, remand report dated 29.11.2024 was submitted before your goodself by the Ld. A.O. copy of which was served on the assessee on 12.12.2024. The issues i.e. (1 to 6) raised in the remand report is a repetition of the penalty order which was has already been explained by the assessee vide submission dated 22.06.2024 submitted before your Goodself. Now coming to the last issue dealt by the Ld. A.O. at point No. 7 which relates to the time barring of the penalty order u/s 271(1)(c ) of the IT Act, 1961. In this regard, the Ld. A.O. has commented the following: Printed from counselvise.com Page | 7 ITA Nos.626 & 627/KOL/2025 Kailash Kumar Tibrewal; A.Y. 2015-16 1. Comments In the case of assessee penalty order u/s 271(1)(c ) of the Act for AY 2015-16 was passed on 31.03.2022 imposing a penalty of Rs. 1,21,15,075/- having DIN NO. ITBA/COM/M/17/2022- 23/1042842838(1) and the same was served upon the assessee on that day itself. The Ld. A.O. hasshared a screenshot of ITBA system in the impugned remand report. The screen-shot of the order sheet shows that relevant penalty order u/s 271(1) (c ) of the Act in the case of the assessee was passed on 31.03.2022 and the intimation letter was generated by the ITBA system in 25.04.2022 having DIN No. ITBA/COM/S/91/2022-23/1042842875(1). It is apparent that the DIN No. of penalty order and the DIN No. of the related intimation letter are different and both are generated by ITBA system on different day. Reply: In this regard it is submitted that the penalty order dated 31.03.2022 was served upon the assessee on 25.04.2022 vide intimation letter dated 25.04.2022. In that intimation letter it was also communicated that the order dated 31.03.2022 is having Document No. (DIN) ITBA/COM/M/17/2022- 23/ 1042842838(1). In this connection it needs to be noted that the said impugned penalty order although dated 31.03.2022 was served on the assessee only on 25.04.2022 along with the impugned intimation letter dated 25.04.2022. The DIN No stated in the said intimation letter was never communicated before to the assessee. It was for the first time vide letter dated 25.04.2022 that the penalty order was served on the assessee and the DIN No. of the penalty order dated 31.03.2022 was communicated to the assessee. It is submitted that any order passed has to be accompanied by a DIN generated on the same date and the DIN cannot be provided 25 days after the date of the order. Any such order which is passed without a DIN on the same date, is an invalid order by itself. The penalty order also does not mention the DIN which itself makes the order invalid. Therefore, even if it is presumed for the sake of argument without admitting the same that the penalty order was actually passed on 31.03.2022, then also the said penalty order is void ab initio since no DIN was mentioned and or even sent on 31.03.2022 and was only provided on 25.04.2022, which is well beyond the due date of passing of the penalty order. However, as apparent from the sequence of events enumerated earlier, it is clear that the penalty order was not actually passed on 31.03.2022 but was passed much later and most likely on 25.04.2022 and was antedated to comply with the time barring provisions. Thus the Ld. A.O has tried to mislead on record in the remand report by making a false claim that the penalty order was passed on 31.03.2022 having DIN No. ITBA/COM/M/17/2022-23/ 1042842838(1) and the same was served upon the assessee on that day itself. In this regard it is to be noted that if the assessment order was ready on 31.03.2022 and DIN was generated on the same day then why was the same not issued to the assessee with a proper DIN on that date and why it needed to be served with a DIN on 25.4.2022 on the assessee once again. Even if we accept that the order was issued on 31.03.2022, then there was no reason for the Ld. A.O. to serve the order a second time again on 25.04.2022 vide intimation dated 25.04.2022. The fact that the order was again sent on 25.4.2022 along with a sheet mentioning the Printed from counselvise.com Page | 8 ITA Nos.626 & 627/KOL/2025 Kailash Kumar Tibrewal; A.Y. 2015-16 DIN in itself shows that the order dated 31.03.2022 was neither issued on 31.03.2022 nor served to the assessee on 31.03.2022 and therefore the AO felt the need to serve it on the assessee on 25.4.2022. The Ld. A.O. is playing with the facts of the case and trying to prove somehow that the penalty order was passed and served on the assessee on 31.03.2022 which is totally unjustified and wrong. 1. Comments Alleged issue of refixation of hearing notice u/s 271(1)(c ) of the IT Act, 1961 was issued to the assessee on 13.04.2022 beyond the time frame of passing the penalty order i.e. within 31.03.2022. In this connection, it is stated that huge number of time barring assessment order and penalty order were uploaded on the ITBA system on the very last day at late hour of 31.03.2022. In many cases, penal provisions were initiated where the addition are being made in the assessment and refixed for hearing again in the mid of April 2022. With other cases the assessee’s case was also inadvertently refixed again on 13.04.2022 by issuing the hearing notice. The aforesaid mistake is clerical in nature and inadvertently refixation of hearing notice was issued to the assessee on 13.04.2022. Reply: In this regard it is submitted that the Ld. A.O. had issued a notice u/s 271(1)(c) of the IT Act, 1961 dated 13.04.2022 refixing the hearing in respect of the penalty proceeding. Therefore, it is apparent that till 13.04.2022, no penalty order had been passed by the Ld. A.O. and that the penalty order dated 31.03.2022 is antedated to comply with the provisions of section 275(1)(c ) of the IT Act, 1961. There would have no occasion to issue notice dated 13.04.2022 refixing the hearing if the penalty order had already been passed on 31.03.2022. Now it also needs to be noted that the Assessing Officer who served the impugned notice dated 13.04.2022 was different from the present A.O. who has given the impugned remand report and therefore it is surprising that he has contended that this was a clerical mistake when he was not even present at the time. He was not the assessing officer when the notices were issued and therefore cannot assert with authority that the said refutation was due to a clerical error and it is at best either his assumption or guesswork or his attempt to somehow uphold the validity of the ante dated orders. He has no proof that the impugned notice dated 13.04.2022 was issued inadvertently. It is simply a claim which has been made by him on the basis of speculation. In the absence of proof, reliance has to be placed on actual evidence available on record which clearly shows that the case was refixed by issuing a notice on 13.04.2022 which was well beyond the time barring date. This clearly shows that the present Ld. A.O. is trying to cover up the mistake of the earlier Ld. A.O. who had issued the penalty notice dated 13.04.2022 i.e. after 31.03.2022. Thus, from the sequence of events, it is crystal clear that the penalty order was neither passed on 31.03.2022 nor issued to the assessee on 31.03.2022. The Ld. A.O. manufactured wrong facts and has tried to mislead your goodself. Thus, taking into consideration the above, it amply follows firstly that the penalty order is barred by limitation and secondly that there existed absolutely no scope in initiating Printed from counselvise.com Page | 9 ITA Nos.626 & 627/KOL/2025 Kailash Kumar Tibrewal; A.Y. 2015-16 and levying penalty in the case of the assessee and as such, the penalty order is required to be annulled. 5.6 I have perused the remand report of the A.O., rejoinder of the appellant vis-à-vis details furnished. The A.O. in its remand report has stated that although the penalty order was passed on 31-03-2022 and DIN No. ITBA/ COM/M/17/2022- 23/1042842838(1) was generated on 31-03-2022. But intimation letter to the assessee regarding penalty order passed on 31-03-2022 was generated on 25-04- 2022 vide DIN No. ITBA/COM/S/91/2022-23/ 1042842875(1). This report of the A.O. itself contradicts the statement of the A.O. that impugned penalty order was passed on 31-03-2022. Because, when the said penalty order was passed on 31-03-2022 and DIN was generated on the same day, then why the same was not served to the assessee on the same day? There is no trace in the ITBA system, which shows that the impugned penalty order was received by the assessee either on 31-03-2022 or 01-04- 2022. The A.O. in his remand report has given the vague argument that due to heavy traffic on ITBA system on 31-03-2022, the appellant would not have received the penalty order on 31-03-2022. However, it is far from imagination as to why the intimation to the penalty order was sent again on 25-04-2022 when the penalty order was sent to the assessee on 31-03-2022, that too with different DIN number. Further, it is also a fact that the A.O. had issued a show cause penalty notice on 13-04-2024 to the assessee, which clearly shows that the record of the A.O. was showing pendency of penalty as on 13-04-2024. That’s why he has sent show cause notice. Therefore, considering the merit in submission of appellant and all the circumstantial evidences produced by him, I am of the opinion that penalty order passed u/s.271(1)(c) of the Act is barred by limitation as it has been intimated to the appellant assessee on 25-04- 2022 vide DIN No.ITBA/COM/S/91/2022- 23/1042842875(1). Hence, the penalty order u/s.271(1)(c) of the Act is quashed. 6. In the result, the appeal filed by the appellant is Allowed.” 05. After hearing the rival contentions and perusing the materials available on record, we find that in this case, the ld. AO was supposed to pass the penalty order on or before the 31.03.2022 as the assessment was framed on 30.09.2021. We note that the ld. AO initiated the penalty proceedings in the assessment order and notice u/s 271(1)(c) of the Act dated 05.10.2021 and finally, the penalty order was passed on 31.03.2022, however the same was communicated to the assessee vide letter dated 25.04.2022, which is extracted as under:- Printed from counselvise.com Page | 10 ITA Nos.626 & 627/KOL/2025 Kailash Kumar Tibrewal; A.Y. 2015-16 06. We note that u/s 271(1)(c) of the Act, the penalty is barred by limitation on 31.03.2022 as per the record before us. The penalty order is dated 31.03.2022, however the communication was sent to the assessee on 25.04.2022 that the order/ notice/ letter dated 31.03.2022 having document number ITBA/COM/M/17/2022- 23/1042842838(1), which is dated 25.04.2022. Therefore, the penalty order is barred by limitation as DIN was generated on 25.04.2022 and not while passing the penalty order. Therefore, we do not find any reason to interfere with the finding of the ld. CIT (A), who has passed a very speaking and reasoned order. Accordingly, we are upholding the appellate order by dismissing the appeal of the Printed from counselvise.com Page | 11 ITA Nos.626 & 627/KOL/2025 Kailash Kumar Tibrewal; A.Y. 2015-16 Revenue. Consequently, both the appeals of the Revenue are dismissed. 07. In the result, the appeals of the Revenue are dismissed. Order pronounced in the open court on 30.07.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 30.07.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata Printed from counselvise.com "