Penalty for late filling of return levied in 2012 for ay0405
This query is : Resolved
01 July 2013
Penalty of Rs100000/- each was levied in 2012 for cases AY 2004-05 & 2005-06 ... Actual balance sheet was filed in 01-10-2007 due to seizure of original documents by DRI.
05 July 2013
DOES THIS APPLY IN OUR CASE
Limitation period for levy of penalty:-
Though s. 275(1) (c) provides that the limitation for levy of penalty shall be “after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later”, in a case where the initiation of action for imposition of penalty is not in the course of some proceedings (e.g. penalty u/s 271B for failure to get accounts audited u/s 44AB and non-filing of audit report), the first part of s. 275(1)(c) would have no application and it is only the period of limitation prescribed in the second part which would apply. Since only one period of limitation would be applicable, the expression “whichever period expires later” would have to be read as that very period of limitation.
Limitation period for levy of penalty:-
Though s. 275(1) (c) provides that the limitation for levy of penalty shall be “after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later”, in a case where the initiation of action for imposition of penalty is not in the course of some proceedings (e.g. penalty u/s 271B for failure to get accounts audited u/s 44AB and non-filing of audit report), the first part of s. 275(1)(c) would have no application and it is only the period of limitation prescribed in the second part which would apply. Since only one period of limitation would be applicable, the expression “whichever period expires later” would have to be read as that very period of limitation.
10 August 2024
In the context of penalties for late filing of returns and the limitation period for the levy of penalties under the Income Tax Act, there are several key aspects to consider, especially given your situation where penalties were levied for the assessment years (AY) 2004-05 and 2005-06, and the original documents were seized by the Directorate of Revenue Intelligence (DRI).
### **1. **Applicability of Penalties and Limitation Period**
**a. **Penalty Imposed in 2012 for AY 2004-05 and 2005-06:**
- **Penalty Details:** Penalties of ₹100,000 each were imposed in 2012 for AY 2004-05 and 2005-06.
- **Delay in Filing Returns:** The returns were filed on October 1, 2007, after the original documents were seized.
**b. **Limitation Period for Penalty Imposition:**
- **Section 275(1)(c) of the Income Tax Act:** This section provides for the limitation period for the levy of penalties:
- **General Rule:** Penalty proceedings must be completed after the expiry of the financial year in which the proceedings were initiated or six months from the end of the month in which the penalty proceedings were initiated, whichever is later.
- **Specific Case:** If the penalty is not part of some proceedings (e.g., failure to get accounts audited or non-filing of audit report), the limitation would be the six-month period from the end of the month in which action was initiated.
### **2. **Key Considerations for Your Case**
**a. **Documents Seized by DRI:**
- **Impact on Penalty:** The seizure of documents by DRI does not directly affect the limitation period for the imposition of penalties under the Income Tax Act. However, it may impact the practical aspects of filing and compliance.
**b. **Applicability of Limitation:**
- **Six-Month Limitation:** In cases where the penalty is not connected to other proceedings, the six-month limitation period from the end of the month in which the penalty action was initiated would apply.
- **Limitation in Your Case:** Since the penalty was levied in 2012 and the returns were filed in 2007, you should check if the penalties were imposed within the six-month period from the end of the month in which the penalty action was initiated. If not, the penalties may be contested on the grounds of limitation.
### **3. **Steps to Address the Penalty**
**a. **Review Penalty Notices:**
- **Examine Notices:** Review the penalty notices to ensure that they were issued within the appropriate limitation period.
**b. **Consult a Tax Professional:**
- **Seek Advice:** Consult with a tax professional or legal advisor to assess the applicability of the limitation period and determine if there are grounds for challenging the penalties based on the limitation period.
**c. **File an Appeal:**
- **Challenge Penalty:** If the penalties were levied beyond the limitation period, you may have grounds to file an appeal or rectification request with the Income Tax authorities.
**d. **Documentation:**
- **Maintain Records:** Ensure that all relevant documentation related to the seizure and subsequent filing of returns is maintained to support your case.
### **4. **Summary**
- **Limitation for Penalty:** The limitation period for penalty imposition under Section 275(1)(c) is generally six months from the end of the month in which penalty action is initiated, if not related to other proceedings.
- **Penalties Imposed in 2012:** If the penalties were imposed beyond this period, there may be grounds for challenging them.
- **Consult a Professional:** Seek advice from a tax expert to review the specifics of your case and explore options for contesting or addressing the penalties.
By addressing these factors, you can better understand the applicability of the penalties and the appropriate course of action to take.
### **1. **Applicability of Penalties and Limitation Period**
**a. **Penalty Imposed in 2012 for AY 2004-05 and 2005-06:**
- **Penalty Details:** Penalties of ₹100,000 each were imposed in 2012 for AY 2004-05 and 2005-06.
- **Delay in Filing Returns:** The returns were filed on October 1, 2007, after the original documents were seized.
**b. **Limitation Period for Penalty Imposition:**
- **Section 275(1)(c) of the Income Tax Act:** This section provides for the limitation period for the levy of penalties:
- **General Rule:** Penalty proceedings must be completed after the expiry of the financial year in which the proceedings were initiated or six months from the end of the month in which the penalty proceedings were initiated, whichever is later.
- **Specific Case:** If the penalty is not part of some proceedings (e.g., failure to get accounts audited or non-filing of audit report), the limitation would be the six-month period from the end of the month in which action was initiated.
### **2. **Key Considerations for Your Case**
**a. **Documents Seized by DRI:**
- **Impact on Penalty:** The seizure of documents by DRI does not directly affect the limitation period for the imposition of penalties under the Income Tax Act. However, it may impact the practical aspects of filing and compliance.
**b. **Applicability of Limitation:**
- **Six-Month Limitation:** In cases where the penalty is not connected to other proceedings, the six-month limitation period from the end of the month in which the penalty action was initiated would apply.
- **Limitation in Your Case:** Since the penalty was levied in 2012 and the returns were filed in 2007, you should check if the penalties were imposed within the six-month period from the end of the month in which the penalty action was initiated. If not, the penalties may be contested on the grounds of limitation.
### **3. **Steps to Address the Penalty**
**a. **Review Penalty Notices:**
- **Examine Notices:** Review the penalty notices to ensure that they were issued within the appropriate limitation period.
**b. **Consult a Tax Professional:**
- **Seek Advice:** Consult with a tax professional or legal advisor to assess the applicability of the limitation period and determine if there are grounds for challenging the penalties based on the limitation period.
**c. **File an Appeal:**
- **Challenge Penalty:** If the penalties were levied beyond the limitation period, you may have grounds to file an appeal or rectification request with the Income Tax authorities.
**d. **Documentation:**
- **Maintain Records:** Ensure that all relevant documentation related to the seizure and subsequent filing of returns is maintained to support your case.
### **4. **Summary**
- **Limitation for Penalty:** The limitation period for penalty imposition under Section 275(1)(c) is generally six months from the end of the month in which penalty action is initiated, if not related to other proceedings.
- **Penalties Imposed in 2012:** If the penalties were imposed beyond this period, there may be grounds for challenging them.
- **Consult a Professional:** Seek advice from a tax expert to review the specifics of your case and explore options for contesting or addressing the penalties.
By addressing these factors, you can better understand the applicability of the penalties and the appropriate course of action to take.
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