S Against The Assessmentorders, He Requested The Respondent To Keep The Penaltyproceedings In Abeyance. However, Such Request Made To Therespondent Was Not Acce v. Section 275 Of The Income Tax Act Deals Withbar Of Limitation For Imposing Penalties, And The Saidprovision Read As Follows

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM: THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM M/s.J.D.Automobiles and Allied Services Pvt. Ltd.,Represented by its Director J.DinakaranNo.90, Madhavaram High RoadPeramburChennai – 600 011.. Petitioner in all WP'sVs. The Assistant Commissioner of Income TaxCentral Circle – 3(2), Chennai46, Mahatma Gandhi RoadNungambakkam, Chennai – 600 034.. Respondent in all WP's Prayer : Writ Petition filed under Article 226 of theConstitution of India praying for the issuance of Writ ofCertiorari, calling for the records of the respondent in PANNo.AADCJ2101M and quash the impugned order u/s.271(1)(c) dated14.09.2017 for the Assessment years 2013-14, 2014-15 and 2015-16passed by the respondent . For Petitioner : Mr.S.S.Rajesh for Mr.R.C.Paul KanagarajFor Respondent : Mr.A.N.R.Jayaprathap Heard Mr.S.S.Rajesh, learned counsel for the petitioner andMr.A.N.R.Jayaprathap, learned standing counsel appearing for therespondent. 2. These writ petitions have been filed by the petitioner toquash the notice issued by the respondent under Section 271(1)(c) of the Income Tax Act, 1961 dated 14.09.2017. By theimpugned notice, the respondent has called upon the petitioner https://hcservices.ecourts.gov.in/hcservices/ to show-cause as to why the penalty under Section 271(1)(c) ofthe Act be not levied and if he does not respond to the penaltyorder, an order imposing penalty would be passed. 3. Since the petitioner has filed appeals before theCommissioner of Income Tax (Appeals) as against the AssessmentOrders, he requested the respondent to keep the penaltyproceedings in abeyance. However, such request made to therespondent was not accepted. Therefore, the petitioner hasmoved this Court. 4.The learned counsel for the petitioner referred to adecision of this court in W.P.Nos.31021 to 31027 of 2017 dated25.01.2018, where the penalty was kept in abeyance pendingappeals. Reliance was also placed on an interim order passed bythis Court on 28.04.2018. Since the petitioner has made out aprima facie case for grant of interim order, the Court videorder dated 28.04.2018, granted an order of interim stay. 5.Counter affidavit has been filed by the respondent inwhich apart from making brief averments as regards the merits ofthe assessment, which was made on the petitioner and theadditions made, reference has been made to Section 275 of theAct and by referring to Section 275 (1) (a) of the Act, it issubmitted that the last words “whichever is later”only sets outthe outer limit of time for levy of penalty and it does not barfrom levying penalty between the period of completion ofassessment and disposal of appeal by CIT (A). In the counteraffidavit, reliance has also been placed on the decision of thisCourt in W.P.Nos.1311 to 1313 of 2013 (Coromandel Oils Pvt.Ltd.,). The effect of said decision was considered by thisCourt in W.P.Nos.31021 to 31027 of 2017 (J.Srinivasan Vs. TheAssistant Commissioner of Income Tax) and the Court allowed thewrit petitions and directed the similar impugned notices be keptin abeyance and granting liberty to the respondent to initiatefresh proceedings after the disposal of the appeals by theCommissioner of Income Tax (Appeals). The operative portion ofthe order reads as follows: “7. After hearing the learned counselappearing for the parties and perusing the materialsplaced on record, the issue, which falls forconsideration, is as to whether the impugned noticesissued by the respondent are time barred and whetherthe respondent could have issued the impugned noticesat this juncture or not. 8.Section 275 of the Income Tax Act deals withbar of Limitation for imposing penalties, and the saidprovision read as follows :- "13[(1)] Bar of Limitation for imposingpenalties- No order imposing a penalty under this Chaptershall be passed “7. After hearing the learned counselappearing for the parties and perusing the materialsplaced on record, the issue, which falls forconsideration, is as to whether the impugned noticesissued by the respondent are time barred and whetherthe respondent could have issued the impugned noticesat this juncture or not. 8.Section 275 of the Income Tax Act deals withbar of Limitation for imposing penalties, and the saidprovision read as follows :- "13[(1)] Bar of Limitation for imposingpenalties- No order imposing a penalty under this Chaptershall be passed [(a) in a case where the relevant assessment orother order is the subject matter of an appeal to theCommissioner (Appeals) under section 246 16[or section246A] or an appeal to the Appellate Tribunal undersection 253, after the expiry of the financial year inwhich the proceedings, in the course of which actionfor the imposition of penalty has been initiated, arecompleted16a, or six months from the end of the monthin which the order of the Commissioner (Appeals) or,as the case may be, the Appellate Tribunal is receivedby the Chief Commissioner or Commissioner, whicheverperiod expires under; [Provided that in a case where the relevantassessment or other order is the subject-matter of anappeal to the Commissioner (Appeals) under section 246or section 246A, and the Commissioner (Appeals) passesthe order on or after the 1st day of June, 2003disposing of such appeal, an order imposing penaltyshall be passed before the expiry of the financialyear in which the proceedings, in the course of whichaction for imposition of penalty has been initiated,are completed, or within one year from the end of thefinancial year in which the order of the Commissioner(Appeals) is received by the Chief Commissioner orCommissioner, whichever is later;] (b) in a case where the relevant assessment orother order is the subject matter of revision undersection 263 18[or section 264], after the expiry ofsix months from the end of the month in which suchorder of revision is passed; (c) in any other case, after the expiry of thefinancial year in which the proceedings, in the courseof which action for the imposition of penalty has beeninitiated, are completed, or six months from the endof the month in which action for imposition of penaltyis initiated, whichever period expires later.] (1A) In a case where the relevant assessment orother order is the subject matter of an appeal to theCommissioner (Appeals) under section 246 or section246A or an appeal to the Appellate Tribunal undersection 253 or an appeal to the High Court undersection 260A or an appeal to the Supreme Court under section 261 or revision under section 263 or section264 and an order imposing or enhancing or reducing orcancelling penalty or dropping the proceedings for theimposition of penalty is passed before the order ofthe Commissioner (Appeals) or the Appellate Tribunalor the High Court or the Supreme Court is received bythe Chief Commissioner or the Commissioner or theorder of revision under section 263 or section 264 ispassed, an order imposing or enhancing or reducing orcancelling penalty or dropping the proceedings for theimposition of penalty may be passed on the basis ofassessment as revised by giving effect to such orderof the Commissioner (Appeals) or, the AppellateTribunal or the High Court, or the Supreme Court ororder of revision under section 263 or section 264." section 261 or revision under section 263 or section264 and an order imposing or enhancing or reducing orcancelling penalty or dropping the proceedings for theimposition of penalty is passed before the order ofthe Commissioner (Appeals) or the Appellate Tribunalor the High Court or the Supreme Court is received bythe Chief Commissioner or the Commissioner or theorder of revision under section 263 or section 264 ispassed, an order imposing or enhancing or reducing orcancelling penalty or dropping the proceedings for theimposition of penalty may be passed on the basis ofassessment as revised by giving effect to such orderof the Commissioner (Appeals) or, the AppellateTribunal or the High Court, or the Supreme Court ororder of revision under section 263 or section 264." 9. Sub Section (1) of Section 275 of the Actcommences with the word “no order imposing a penaltyunder the said chapter (chapter XXI) shall be passed”in a case, where, the relevant assessment or otherorder is the subject-matter of an appeal to theCommissioner (Appeals) under Section 246 or Section246A, after the expiry of the financial year, inwhich, the proceedings in the course of which, actionfor the imposition of penalty has been initiated arecompleted, or six months from the end of the month, inwhich, the order of the Commissioner (Appeals). 10.Thus, it is seen that they are two limbs toClause (a) of Section 275 (1). The Section makes itclear that, no order imposing a penalty shall bepassed after the expiry of one of the two periods,which have been mentioned therein, which expire laterthan the other. The first time limit is until theexpiry of the financial year, in which, the assessmentproceedings during which, penalty proceedings wereinitiated are completed. The period stipulated in thesecond time limit is until the expiry of six monthsfrom the end of the month, in which, the order of theCIT (A), in respect of appeals received by theCommissioner of Income Tax or Principal Commissionerof Income Tax. 11.Thus, the time limit as per the second limbis six months from the end of the month, in which, theorder of Commissioner (Appeals) is received. So faras the petitioner in W.P.No.31217 of 2017 isconcerned, the relevant assessment year is 2011-12 andthe order of assessment under Section 143(3) waspassed on 30.12.2016. Therefore, the limitation forinitiation of penalty under Section 275 (1) (a) of the Act, is on or before 31.03.2017, as per the first limbof the said provision. According to the second limbof the provision, though it is six months from the endof the month, in which, the Commissioner (Appeals) hasreceived the Appeal, in the instant case, the provisoto Section 275 (1)(a) would be attracted and theperiod would be one year from the date on which, theorder is passed by the Commissioner (Appeals). 12.The petitioners have preferred the Appealsbefore the CIT (A) on 01.02.2017, and at that time,when the impugned penalty notices were issued, theAppeals were pending. Therefore, it is clear that therespondent has lost out on the limitation aspect withregard to first limb of Section 275 (1) (a), as theimpugned penalty notices have been issued on11.09.2017 and 14.09.2017, which are after 31.03.2017,which would be the period of limitation for initiatingpenalty proceedings under Section 275(1) (a) of theAct. 12.The petitioners have preferred the Appealsbefore the CIT (A) on 01.02.2017, and at that time,when the impugned penalty notices were issued, theAppeals were pending. Therefore, it is clear that therespondent has lost out on the limitation aspect withregard to first limb of Section 275 (1) (a), as theimpugned penalty notices have been issued on11.09.2017 and 14.09.2017, which are after 31.03.2017,which would be the period of limitation for initiatingpenalty proceedings under Section 275(1) (a) of theAct. 13.In Coromandel Oils Pvt., Ltd. (supra), theCourt though considered some what a similar plea, hasnot taken a decision, as to whether the penaltynotices were barred by limitation or in fact, in paraNo.7 of the order, the Court has made it clear thatthat, it it is not inclined to interfere with theorder, which has been challenged on merits, but,permitted that assessee therein to pursue the appealremedy and the CIT (A) was directed to dispose theappeals filed against the assessment orders as wellas against the imposition of penalty together, so asto bring a finality to the issue. Thus, the decisionin Coromandel Oils Pvt., Ltd. (supra), does not renderany support to the case of the respondent. 14.Thus, the impugned penalty notices havingissued well beyond the period of limitation fixed inthe first limb of Section 275(1) (a) of the Act, areheld to be barred by limitation. However, therespondent is at liberty to initiate penaltyproceedings after the order is passed by the CIT (A)before whom the matters are pending. 15. In the result, these Writ Petitions areallowed, the impugned notices are directed to be keptin abeyance with liberty to the respondent to initiate`fresh proceedings after the disposal of the Appealsby the Commissioner of Income Tax (Appeals), whichhave been preferred against the orders of assessment https://hcservices.ecourts.gov.in/hcservices/ passed by the respondent. No costs. Consequently,connected Writ Miscellaneous Petitions are closed.” 6. The above referred decision would squarely apply to thecase on hand. The learned standing counsel appearing for therevenue has not been able to point out any distinguishingfeatures as to why the above decision should not be applied tothe case on hand. 7. In the light of the above, these writ petitions areallowed and impugned notices are directed to be kept in abeyancewith liberty to the respondent to initiate fresh proceedingsafter the disposal of the appeals by the Commissioner of IncomeTax (Appeals), which have been preferred against the assessmentorders passed by the respondent. No costs. Consequently, theconnected miscellaneous petitions are closed. Sd/- Assistant Registrar(CS IV) gpa To //True Copy// Sub Assistant Registrar The Assistant Commissioner of Income TaxCentral Circle – 3(2), Chennai46, Mahatma Gandhi RoadNungambakkam, Chennai – 600 034