BT Global Communications India Private Ltd. vs. Assessment Unit, NFAC [TU-DT-15-HC-2026]
Background of the Case
The assessee, BT Global Communications India Private Ltd., was assessed for AY 2018-19 under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961, vide assessment order dated 28.07.2022. On the same day, the Assessing Officer recorded satisfaction for initiation of penalty proceedings and issued a notice under Section 270A of the Act. The assessee filed its reply to the penalty notice on 17.08.2022 and subsequently filed an appeal against the assessment order before the Income Tax Appellate Tribunal (ITAT) on 29.08.2022. The assessee also informed the Assessing Officer about the filing of the appeal. However, while the appeal was pending before the Tribunal, the Assessing Officer passed a penalty order dated 24.03.2023 under Section 270A.
Aggrieved by the penalty order, the assessee approached the Delhi High Court by filing a writ petition, challenging the validity of the penalty order on the ground that it was passed in violation of Section 275(1)(a) of the Income Tax Act, 1961.
Arguments by the Appellant (Assessee)
The assessee contended that the penalty order was without jurisdiction as it had been passed during the pendency of its appeal before the ITAT against the assessment order. It was submitted that the assessee had filed the appeal on 29.08.2022 and had duly informed the Assessing Officer about the same while the penalty proceedings were pending. The assessee argued that Section 275(1)(a) of the Income Tax Act, 1961, prescribes the limitation for passing penalty orders in cases where the relevant assessment order is the subject matter of an appeal before the Appellate Tribunal. Accordingly, the Assessing Officer could not proceed to pass the penalty order while the appeal against the assessment order remained pending before the ITAT.
Respondent’s Response (Revenue)
The Revenue submitted that paragraph 3 of the assessment order recorded that the assessee was in the process of filing an appeal against the assessment order. The department relied upon this recording to support its position regarding the status of the appeal as reflected in the assessment proceedings.
Court Findings and Decision
The Delhi High Court allowed the writ petition and held that the penalty order passed under Section 270A was contrary to the provisions of Section 275(1)(a) of the Income Tax Act, 1961. The Court noted that the assessee had filed an appeal before the ITAT on 29.08.2022 and that the appeal was pending on the date of passing of the impugned penalty order and continued to remain pending. The Court further observed that whether the assessee had intimated the Assessing Officer about the filing of the appeal was immaterial, as Section 275(1)(a) clearly provides for the limitation governing the passing of penalty orders where the relevant assessment order is the subject matter of an appeal before the Appellate Tribunal. Since the appeal was pending when the penalty order was passed, the impugned order could not be sustained.
Accordingly, the Delhi High Court quashed and set aside the penalty order dated 24.03.2023. However, the Court clarified that the Assessing Officer would be free to take up the penalty proceedings afresh if the Tribunal decided the appeal against the assessee and the law permitted such action.
Thus, the writ petition was allowed, and the penalty order passed during the pendency of the ITAT appeal was set aside.
To download official order, Click Here
“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”