Income Tax - Limitation for Penalty Proceedings - CBDT takes a 'Departmental view'
IT seems there are conflicting interpretations of various High Courts on the issue whether the limitation for imposition of penalty under sections 271D and 271E of the Income Tax Act commences at the level of the Assessing Officer (below the rank of Joint Commissioner of Income Tax.) or at level of the Range authority i.e. the Joint Commissioner of Income Tax./Addl. Commissioner of Income Tax.
Some High Courts have held that the limitation commences at the level of the authority competent to impose the penalty i.e. Range Head while others have held that even though the Assessing Officer is not competent to impose the penalty, the limitation commences at the level of the Assessing Officer where the Assessing Officer has issued show cause notice or referred to the initiation of proceedings in assessment order.
Now, CBDT is of the view that for the sake of clarity and uniformity, the conflict needs to be resolved by way of a "Departmental View".
Kerala High Court in the case of Grihalaxmi Vision v. Addl. Commissioner of Income Tax- , observed that, "Question to be considered is whether proceedings for levy of penalty, are initiated, with the passing of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the notice issued by the Joint Commissioner. From statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner, therefore, only the Joint Commissioner can initiate proceedings for levy of penalty. The initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply."
Board states that the above judgment reflects the "Departmental View". Board fairly clarifies that if any High Court decides this issue contrary to the "Departmental View'', the ''Departmental View" thereon shall not be operative in the area falling in the jurisdiction of the relevant High Court.
CBDT Circular No. 09/2016., Dated: April 26, 2016