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Delhi High CourtIndian Cases

Syam & Company vs Ito on 28 October 2003

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Delhi High Court
Syam & Company vs Ito on 28 October, 2003
Equivalent citations: (2004)91TTJ(DEL)852
S.K. Yadav, J.M.:

This appeal by the assessed is directed against the order of the Commissioner (Appeals) confirming the penalty levied under section 272A(2)(c) of the Income Tax Act. I have heard the rival submissions and carefully perused the orders of the authorities below and documents placed on record. The facts borne out from the record are that assessed had not deducted TDS from interest paid to various creditors on the basis of the Form No. 15A received from them. Since no TDS was deducted, the assessed was obliged to avail Form No. 27A as per provisions of section 206A on or before 30-4-1991. However the said Form No. 27A was filed late by 77 days on 16-7-1991. The assessing officer, therefore, initiated the penalty proceedings under section 272A(2)(c). In response to assessing officer’s show-cause notice, it was submitted by the assessed that the accountant of the assessed was only part-time accountant and he was out of station during the relevant time and as such, the Form No. 27A could not be filed in time. Being not satisfied with the explanations of the assessed, the assessing officer imposed minimum penalty of Rs. 7,700.
2. Against the penalty order, the assessed preferred an appeal before the Commissioner (Appeals) raising the preliminary objection that the penalty order is time-barred as the penalty proceedings were initiated after lapse of more than 5 years of the default under section 206A. He has also reiterated his earlier stand that his accountant was part-time accountant and during the relevant period, he was out of station. Finding no force in the contentions of the assessed, the Commissioner (Appeals) confirmed the penalty.

3. Now, the assessed has carried the matter before the Tribunal and during the course of hearing, the learned counsel for the assessed invited our attention to the provisions of section 275(1)(c) of the Income Tax Act with the submission that the penalty cannot be imposed after the expiry of the financial year in which the proceedings in the course of which action for imposition of penalty has been initiated or completed or six months from the end of the month in which action for imposition of the penalty initiated The learned counsel for the assessed further submits that the assessed has filed the Form No. 27A on 16-10-1991, as such, the default was brought to the notice of the assessing officer on 16-10-1991, and the penalty under section 272A(2,(c) could have been levied latest by 31-3-1992, but the penalty in the instant case was levied on 30-6-1997, after a lapse of 6 years. Since the penalty order is passed beyond the period of limitation, it deserved to be annulled at the outset. The learned Departmental Representative, on the other hand, has simply placed reliance upon the order of the lower authorities.

4. Having considered rival submissions and from careful perusal of record, I find force in the contention of the assessed that the penalty order was passed after the period of limitation. It is amply clear from the clause (c) of section 275(l) of the Act that the penalty should have been levied under section 272A(2)(c) which does not have a direct link with the quantum within the period of 6 months from the end of the financial year in which action for imposition of penalty was initiated. Since the default was committed in 1991 and it was brought to the notice of the assessing officer by filing Form No. 27A on 16-7-1991, the penalty should have been levied up to the end of the financial year 31-3-1992, but it was not done so. In these circumstances, I am of the considered opinion that the penalty is barred by limitation. I, therefore, annul the penalty order and set aside the order of the Commissioner (Appeals). Accordingly, penalty is deleted.

5. In the result, appeal of the assessed is allowed.