Court affirms the application of Section 275(1)(a) for the limitation period in penalty proceedings following a search operation.
In a significant decision, the Madras High Court, presided over by Justice Senthilkumar Ramamoorthy, dismissed the writ petition filed by Chandrasekaran Joseph Vijay, challenging the penalty imposed by the Deputy Commissioner of Income Tax. The case revolved around penalty proceedings under Section 271AAB of the Income Tax Act, 1961, following a search operation conducted in the financial year 2015-16.
The search, initiated on September 30, 2015, led to the discovery of undisclosed income admitted by the petitioner. A return of income was filed, including the sum of Rs. 15 crore in cash income. The assessment order dated December 30, 2017, included additional income and initiated penalty proceedings.
The petitioner contested the penalty order issued on June 30, 2022, arguing it was barred by limitation under Section 275(1)(c). However, the court concluded that Section 275(1)(a), which links the limitation period for penalty imposition to the conclusion of appellate proceedings, was applicable. The court determined that the penalty order was issued within the permissible timeframe, as it was executed on the last day of the limitation period.
Justice Ramamoorthy highlighted the integral connection between the penalty proceedings and the assessment order, affirming that the appellate process had a direct impact on the penalty imposition. The ruling emphasized that when penalty proceedings originate in an assessment order carried in appeal, the limitation period should align with the conclusion of appellate proceedings.
The court's decision underscores the legal framework governing penalty imposition in tax matters, affirming the statutory provisions and judicial interpretations that guide such proceedings. This judgment is expected to influence future cases involving similar issues of penalty imposition and limitation periods.
Bottom Line:
Income Tax Act, 1961 - Clause (a) of Section 275(1) applies to cases where penalty proceedings originate in the assessment order which is carried in appeal, and the limitation for imposing penalty is linked to the date of conclusion of appellate proceedings.
Statutory provision(s): Income Tax Act, 1961 - Sections 271AAB, 275(1)(a), 275(1)(c)
