MMTC Ltd., New Delhi V. DCIT Circle-17(2), New Delhi

ITA 491/DEL/2020

AI Insights

The case involves MMTC Limited appealing against a penalty imposed by the Deputy Commissioner of Income Tax, Circle-17(2), New Delhi, which was based on disallowances claimed under Sections 80G and 35AC of the Income Tax Act, 1961. The primary contention was the timeliness of the penalty order, which the assessee argued was barred by limitation as per Section 275(1)(a) of the Act. The Tribunal examined the timeline of the assessment and appellate orders to determine the validity of the penalty's imposition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121611 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 12-04-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 26-01-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 6; 271(1)(c); 143(3); 80G; 246A; 13; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A No.491/DEL/2020 Assessment Year 2009-10 MMTC Limited, Core-1, Scope Complex, Lodhi Road, New Delhi. v. The Deputy Commissioner of Income Tax Circle-17(2), New Delhi. TAN/PAN: AAACM1433E (Appellant) (Respondent) Appellant by: Shri Amit Sharma, Adv. Shri Ravi Sanguri, CA Respondent by: Shri Ram Dhan, Meena, Sr.DR Date of hearing: 13 04 2023 Date of pronouncement: 21 04 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed by the Assessee against the order o f the Co mmissioner o f In co me Tax (Appeals) -XX XVII, Ne w Delhi (‘C IT(A)’ in short) dated 18.11. 2019 arising fro m the assessment order dated 20.03. 2013 passed by the Assessing O ffice r (AO) under Section 143(3) r. w. Section 92CA o f the Inco me Tax Act, 1961 (the Act) concerning AY 2009-10. 2. As pe r the grounds o f appeal, the a ssessee has challe nged the i mposition of penalty under Section 271(1)(c) of Rs. 1, 54, 369/- on disallowance of Rs. 4,99, 579/- claimed under I.T.A No.491/Del/2020 2 Section 80G of the Act and another penalty under Section 271(1)(c) o f Rs. 1, 85, 400/- on disallowance of R s. 6 lakh clai med under Section 35AC of the Act. 3. When the matter was called for hearing, the ld. counsel fo r the assessee pointed out that the i mpugned order passed under Section 271(1)(c) o f the Act dated 26.03. 2019 concerning Assess ment Year 2009-10 in question is barred by li mitation and there fore, is nullity in law. To justify the allegation of bar of li mitation as provided under Section 275 of the Act, the ld. counsel pointed out that assessment order in the instant case was fra med vide order dated 23. 03.2013. Against the a fore said quantum assess ment order, th e CIT( A) passed the first appellate order on 27. 02. 2015. The matter was fu rther carried befo re the Tribunal. However, in the interregnu m, the Asse ssing O fficer passed penalty order dated 26.03. 2019 without waiting fo r the disposal of the quantum appeal by the ITAT. Consequently, the availability of li mitation period has to be reckoned fro m the p roceedings concluded upto the first appellate order. In the scenario, the ld. counsel referred to Section 275(1)(a) o f the Act and submitted that th e li mitation perio d with re ference to the first appellate order ended on six months fro m the end o f the month in which the order o f the CIT(A ) has been receiv ed by the Pr.CIT having domain over the Asse ssing Officer. In the instant case, the order o f the CIT(A) was passed in the month of February, 2015 and presu mably received by the Pr. CIT in Feb-March, 2015 and therefore, th e li mitation to pass penalty I.T.A No.491/Del/2020 3 order on the basis of fi rst appellate order ended at best on 30 t h Septe mber, 2015 and not later, whereas the penalty order in the instant case has been passed in March, 2019 which is hopelessly time barred. On enquiry by Bench, the ld. counsel fo r the assessee pointed out that the order o f the ITAT in the quantum procee dings were passed on 27.05. 2021 which however is not the basis for i mpo sition of penalty in question. The ld. counsel thus sub mitted that the impugned penalty order is not en forceable in law due to bar o f limitation provided under Section 275(1)(a) of the Act. 4. Section 275 prescribes the period within which an order of penalty can be passed. There are three clauses viz. , clause (a), (b) and (c) to sub section (1) o f Section 275 which prescribes di ffer ent periods of limitation. We are presently concerned with sub clause (a) o f Section 275(1) of the Act. Clause (a) is trig gered when the relevant assess ment or other order is subject matter o f appeal under Section 246A or Section 253 of the Act. It states that no order of penalty shall be passed after the expiry of the financial year in which the proceedings, in the course o f which action for i mposition of penalty has been initiated are co mpleted, or six months fro m the end of the month in which the appellate order is received by the Commi ssio ner / Pr. CIT. 5. As pointed out on behalf of the assessee, the quantu m proceeding before the ITAT was pending at the ti me o f passing the penalty order in question. The penalty order was I.T.A No.491/Del/2020 4 thus ostensibly passed in pursuance o f the fi rst appellate order in an appeal under Section 246A of the Act vide order dated 27.02. 2015. Hence, in terms o f embargo o f limitation placed under Section 275 of the Act, the permissible time li mit available to the Assessing O fficer was September, 2015 or their about, depending upon receipt of first appellate order by the CIT / Pr. CIT concerned. In the instant case, the penalty order has been passed in March, 2019 and therefo re, there can be no two opinion on the point that the penalty order has been passed far beyond li mitation period governed by Section 275 of the Act. Hence, the penalty order passed und er Section 271(1)(c) dated 26.03. 2019 is clearly time barre d and thus unenforceable in law. This being so, the consequent penalty imposed has no force in law. The penalty order dated 26.03. 2019 is thus quashed at the threshold. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 21/04/2023. Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /04/2023 Prabhat