Facts of the Case

The Respondent Assessee filed its return of income for Assessment Year 2009–10 on 30 September 2009. The assessment was completed under Section 143(3) of the Income Tax Act, 1961 on 1 December 2011. Subsequently, a penalty order under Section 271(1)(c) was passed on 27 November 2015 concerning interest on delayed payment of TDS.

The Assessee obtained information under the Right to Information Act revealing that the Income Tax Appellate Tribunal (ITAT) order in the quantum proceedings dated 25 March 2013 was served on the Commissioner of Income Tax (Judicial) on 9 April 2015. Based on this, the Assessee contended that the penalty order was passed beyond the limitation period prescribed under Section 275(1)(a).

The ITAT accepted the Assessee’s contention and deleted the penalty. Aggrieved, the Revenue filed an appeal before the Delhi High Court.

Issues Involved

  1. Whether the limitation period for passing a penalty order under Section 271(1)(c) read with Section 275(1)(a) begins from the date the ITAT order is received by any Commissioner of Income Tax, including CIT (Judicial)?
  2. Whether the penalty order passed was barred by limitation?

Petitioner’s (Revenue) Arguments

  • The Revenue contended that limitation should commence only when the order of the ITAT is received by the concerned jurisdictional CIT, not merely any CIT.
  • It was argued that the decision in Odeon Builders Pvt. Ltd. was rendered in the context of Section 260A and should not automatically apply to penalty proceedings.
  • The Revenue further argued that the said decision should be applied prospectively.

Respondent’s (Assessee) Arguments

  • The Assessee argued that limitation begins from the date the ITAT order is received by any CIT, including CIT (Judicial).
  • It relied on the Delhi High Court’s decision in Odeon Builders Pvt. Ltd. v. PCIT (2017) 393 ITR 27, which clarified the interpretation of “CIT” under the Act.
  • The Assessee submitted that since the ITAT order was received on 9 April 2015, the penalty order passed on 27 November 2015 was beyond the permissible limitation period.

Court’s Findings / Order

  • The Delhi High Court upheld the ITAT’s order and dismissed the Revenue’s appeal.
  • It held that the limitation period begins from the date the ITAT order is received by any Commissioner of Income Tax, including CIT (Judicial).
  • The Court relied on its earlier judgment in Odeon Builders Pvt. Ltd., which had been affirmed by the Supreme Court.
  • It further held that the same interpretation applies uniformly across Sections 260A, 158BFA(3)(c), and 275(1)(a), as the language used is identical.
  • Consequently, the penalty order was held to be barred by limitation, and no substantial question of law arose.

Important Clarifications

  • The expression “Commissioner” includes any CIT, not just the jurisdictional CIT.
  • Limitation under Section 275(1)(a) begins when the ITAT order is received by CIT (Judicial).
  • Judicial interpretations clarifying statutory provisions are declaratory in nature and apply retrospectively to pending matters.
  • The ruling reinforces uniform interpretation across different provisions containing similar language.

Sections Involved

  • Section 271(1)(c) – Penalty for concealment of income
  • Section 275(1)(a) – Time limit for imposing penalty
  • Section 143(3) – Assessment
  • Section 260A – Appeal to High Court
  • Section 158BFA(3)(c) – Penalty in block assessment cases

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2019:DHC:3515-DB/SMD22072019ITA14432018.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.