MANDEEP KAUR,NEW DELHI V. JCIT RANGE-30, NEW DELHI

ITA 883/DEL/2023

AI Insights

The case involves Mandeep Kaur, the appellant, who contested a penalty of Rs. 67 lakhs imposed by the Assessing Officer (AO) and confirmed by the CIT(A). The penalty was related to the receipt of part of the sale consideration in cash for an immovable property transaction, which was not assessed but penalized under section 271D of the Income-tax Act, 1961. The primary contention was the timeliness of the penalty imposition. The Tribunal examined whether the penalty was imposed within the statutory time limits and considered precedents from the Delhi High Court and Supreme Court regarding the initiation and timing of penalty proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34035 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Other Referred Cases: Mahesh Wood Products Pvt Ltd 2017-TIOL-1121-HC-DEL-IT, PCIT v. JKD Capital & Finlease Ltd, Kalyan Kumar Ray 191 ITR 634
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH
• Assessee Lawyers: R.C. ROY
• Keywords: Initiation of penalty proceedings
• Section: 271D; 191

Judgement Text

"ITA No. 883/DEL/2023 [A.Y. 2017-18] Mandeep Kaur Vs.The J.C.I.T Page 1 of 7 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘E’ BENCH, NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 883/DEL/2023 [A.Y. 2017-18] Mandeep Kaur Vs. The J.C.I.T N-3, N-3, Chitranjan Park Range – 30 New Delhi New Delhi PAN – ASXPK 5387 P (Applicant) (Respondent) Assessee By : Shri R.C. Roy, CA Department By : Shri Amit Katoch, Sr. DR Date of Hearing : 10.03.2025 Date of Pronouncement : 19.03.2025 ORDER PER NAVEEN CHANDRA, A.M:- This appeal by the assessee is preferred against the order of the NFAC, Delhi dated 14.02.2023 for A.Y 2017-18. ITA No. 883/DEL/2023 [A.Y. 2017-18] Mandeep Kaur Page 2 of 7 2. The sum and substance of the grievance of the assessee is that the impugned penalty of Rs. 67 lakhs imposed by the Assessing Officer and confirmed by the ld. CIT(A) is void ab initio and barred by limitations. 3. Briefly stated, the facts of the case are that the assessee had sold immovable property for which the assessee received consideration which was partly received in cash amounting to Rs. 67 lakhs out of total consideration of Rs. 82 lakhs. No assessment was made. However, penalty u/s 271D of the Income-tax Act, 1961 [the Act, for short] was initiated by the Assessing Officer who issued a reference to the JCIT vide letter dated 31.07.2019 and on subsequent plea, the JCIT issued show cause notice to the assessee on 01.08.2019 and ultimately passed penalty order on 28.02.2020. Notice of demand u/s 156 in consequence to the penalty order was issued on 16.07.2020. Imposition of penalty is in dispute. 4. Aggrieved, the assessee went in appeal before the NFAC who confirmed the decision of the JCIT. 5. Now the further aggrieved assessee is in appeal before us and at the very outset, the ld. counsel for the assessee submitted that the penalty is time barred. ITA No. 883/DEL/2023 [A.Y. 2017-18] Mandeep Kaur Page 3 of 7 6. The ld. counsel for the assessee submitted that there were no assessment proceedings pending in the case and under the provisions of section 275(1)(c) of the Act, penalty order has to be made six months from the date of initiation of penalty proceedings. The ld. counsel for the assessee stated that the Assessing Officer referred the matter to the JCIT as the date of initiation and six months is to be calculated from that date of initiation which ends on 31.01.2020. However, in the case of the assessee, penalty u/s 271D was imposed by the JCIT vide order dated 28.02.2020. The ld. counsel for the assessee relied upon the decision of the Hon'ble Delhi High Court in the case of Mahesh Wood Products Pvt Ltd 2017-TIOL-1121-HC-DEL-IT order dated 05.05.2017. 7. Another argument of the ld. counsel for the assessee is that since the demand notice was required to be submitted alongwith penalty order, which was not done in the present case, therefore, penalty is time barred on that count also. For this proposition, the ld. counsel for the assessee relied upon the decision of the Hon'ble Supreme Court in the case of Kalyan Kumar Ray 191 ITR 634. ITA No. 883/DEL/2023 [A.Y. 2017-18] Mandeep Kaur Page 4 of 7 8. On the other hand, the ld. DR vehemently argued that the provisions of section 275(1)(c) of the Act provides for one year from the end of the F.Y. in which penalty is initiated. Therefore, in the instant case, as the penalty order has been passed within the end of that year, the same cannot be considered as time barred. 9. We have heard the rival submissions and have perused the relevant material on record. We find that the Hon'ble Delhi High Court in the case of Mahesh Wood Products [supra] has held as under: “9. However, this question came up for consideration in PCIT v. JKD Capital & Finlease Ltd.(supra). The date on which the AO recommended the initiation of penalty proceedings was taken to be the relevant date as far as Section 275(1)(c) was concerned. There was no explanation for the delay of nearly five years in the ACIT acting on the said recommendation. The Court held that the starting point would be the 'initiation' of penalty proceedings. Given the scheme of Section 275(1)(c) it would be the date on which the AO wrote a letter to the ACIT recommending the issuance of the SCN. While it is true that the ACIT had the discretion whether or not to issue the SCN, if he did decide to issue a SCN, the limitation would begin to run from the date of letter of the AO recommending 'initiation' of the penalty proceedings. ITA No. 883/DEL/2023 [A.Y. 2017-18] Mandeep Kaur Page 5 of 7 10. In the present case, the limitation in terms of Section 275 (1) (iii) of the Act began to run on 23rd July, 2012 and the last date for passing the penalty orders was 31st January, 2013. Therefore, the penalty orders issued on 26th February 2013 were clearly barred by limitation.” 10. In the instant case, the Assessing Officer has issued reference to the JCIT on 31.07.2019, and therefore, following the decision of hon’ble Delhi High Court in Mahesh Wood Products above, the penalty order should have been passed within six months i.e. 31.01.2020. As the JCIT has passed order u/s 271D of the Act on 28.2.2020, we are of the considered opinion that the same is outside the prescribed limit u/s 275(1)(c) of the Act and therefore, time barred. 11. Regarding the second proposition that penalty is time barred as the demand notice was required to be submitted alongwith penalty order, which was not done in the present case, the same is rendered academic as the penalty order itself has been held as time barred and the assessee has succeeded on first ground itself. ITA No. 883/DEL/2023 [A.Y. 2017-18] Mandeep Kaur Page 6 of 7 12. In that view of the matter, the penalty order u/s 271D of the Act is time barred and requires to be deleted. We order accordingly. 13. In the result, the appeal of the assessee in ITA No. 883/DEL/2023 is allowed. The order is pronounced in the open court on 19.03.2025. Sd/- Sd/- [MADHUMITA ROY] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 19th MARCH, 2024. VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi ITA No. 883/DEL/2023 [A.Y. 2017-18] Mandeep Kaur Page 7 of 7 Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order… 2. Date on which the typed draft Tribunal Order is placed before the Dictation Member 3. Date on which the fair Tribunal Order is placed before the other Member 4. Date on which the approved draft Tribunal Order comes to the Sr. P.S./P.S. 5. Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr. P.S./P.S 7. Date on which the final Tribunal Order is uploaded by the Sr. P.S./P.S. on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal Order 9. Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial 11. The date on which the file goes to the Assistant Registrar for endorsement of the order 12. Date of Despatch of the Order "