Penalty – Sections 269T, 271E and 275(1)(c) – A. Y. 2005-06 – Assessment order u/s. 143(3) with direction to initiate penalty proceedings u/s. 271E passed on 28/12/2007 – Penalty order u/s. 271E passed on 20/03/2012 is barred by limitation

For the A. Y. 2005-06, the assessment order u/s. 143(3) was passed on 28/12/2007 with a direction to initiate proceedings for penalty u/s. 271E of the Act. A show cause notice initiating penalty proceedings u/s. 271E was issued on 12/03/2012 and a penalty of Rs.17,90,000/- was imposed. The Commissioner (Appeals) deleted the penalty on the ground that, in terms of section 275(1) (c), the penalty order should have been passed on or before 30/06/2008 and therefore, penalty order passed on 20/03/2012, was barred by limitation. The Tribunal confirmed the order of the Commissioner (Appeals).

In appeal by the Revenue, the Delhi High Court upheld the decision of the Tribunal and held as under:

“i) There are two distinct periods of limitation for passing a penalty order, and one that expires later will apply. One is the end of the financial year in which the quantum proceedings are completed in the first instance. In the present case, at the level of the Assessing Officer, the quantum proceedings were completed on 28/12/2007. Going by this date, the penalty order could not have been passed later than 31/03/2008. The second possible date was the expiry of six months from the month in which the penalty proceedings were initiated. With the Assessing Officer having initiated the penalty proceedings in December 2007, the last date by which the penalty order could have been passed was 30/06/2008. The later of the two dates was 30/06/2008.

ii) The decision of the Tribunal did not suffer from any legal infirmity.”