The CIT(A) order came two years ago but the appeal is still in the Tribunal. Is the penalty already time-barred?
No. The proviso to s.275(1)(a) does not take away the six months the officer gets from the end of the month in which the Tribunal's order is received. Where successive appeals are filed, the clock in the main limb runs from the final appellate order; the proviso's one-year period from the end of the financial year of receipt of the CIT(A)'s order is an exception for cases that stop at the CIT(A).
Decided by the High Court (Delhi High Court — A.K. Sikri and Siddharth Mridul JJ (judgment delivered by Siddharth Mridul J)) on 2011-09-30, reported as [2012] 18 taxmann.com 239 / 211 Taxman 197 (Mag.) / [2012] 345 ITR 51 / [2011] 245 CTR 312 (Delhi); IT Appeal No. 511 of 2011. It bears on section 275, section 275(1)(a), section 271(1)(c) of the Income Tax Act 1961, in Penalty and Appeals matters.
This is the decision that decides most s.271(1)(c) and s.270A limitation arguments, because most assessments that carry a penalty are appealed twice. The taxpayer's instinct is to measure from the CIT(A) order and declare the penalty stale; on this reading that is wrong wherever a Tribunal appeal was filed, and the officer's time only opens when the Tribunal's order reaches the Commissioner.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2001-02 the assessee, a company dealing in shares and securities, returned income of Rs 3.84 crore and had received dividend of Rs 3.11 crore. It claimed Rs 4.15 crore of interest on loans raised to acquire shares. By assessment order of 28 February 2003 the Assessing Officer disallowed Rs 3.07 crore under s.14A read with s.115-O(5) and initiated penalty proceedings under s.271(1)(c). The Commissioner (Appeals) confirmed the assessment on 23 December 2005 and the Tribunal dismissed the assessee's appeal on 11 August 2008. The Assessing Officer then levied penalty of Rs 1.49 crore under s.271(1)(c), which the Commissioner (Appeals) confirmed. The Tribunal, by order of 30 April 2010, quashed the penalty on the sole ground that it was imposed beyond the limitation in s.275(1)(a), treating the proviso as the only period available once the Commissioner (Appeals) had disposed of the appeal. The Revenue appealed.
The substantial question was decided in favour of the Revenue. The proviso to s.275(1)(a) does not nullify the availability to the Assessing Officer of the period of six months from the end of the month in which the order of the Tribunal is received. Where successive appeals have been filed, the six-month period under the main limb runs from the final appellate order, and the penalty of 26 February 2009 was within six months of the Tribunal's order of 11 August 2008. The Court did not, however, decide the penalty. It set aside the Tribunal's order and remitted the matter to the Tribunal for a decision on the merits of the assessee's appeal in accordance with law (para 12), so nothing in this judgment says the penalty was rightly imposed.
The Court read the main limb of s.275(1)(a) as fixing the later of the end of the financial year in which the proceedings were completed and six months from the end of the month in which the order of the Commissioner (Appeals) or of the Tribunal is received, so that where successive appeals are filed the period runs after those appeals are finally decided. The proviso, inserted for orders of the Commissioner (Appeals) made on or after 1 June 2003, has only the effect of extending the period from six months to one year in cases where no appeal is filed to the Tribunal; it carves an exception out of the main limb and does not displace it. Reading it as the assessee urged would obliterate the main provision. The Court applied the settled rule that a proviso is subsidiary to the main section, citing Ajax Products, which approved Indo-Mercantile Bank, and the Bombay statement in S.C. Cambatta that the carving out by a proviso is from the particular class dealt with by the main section and from no other. It found its conclusion fortified by the Madras decision in Rayala Corporation, noting the assessee's objection that Rayala had been decided on a concession by the Revenue. On s.275(1A) the Court held that the later provision does not dilute or render nugatory the main limb.
Thus we are of the view that the proviso to Section 275(1)(a) of the Act does not nullify the availability to the Assessing Officer of the period of limitation of six months from the end of the month when the order of the ITAT is received by the Assessing Officer.
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Handle my notice → Ask a CA on WhatsAppNo. The proviso to s.275(1)(a) does not take away the six months the officer gets from the end of the month in which the Tribunal's order is received. Where successive appeals are filed, the clock in the main limb runs from the final appellate order; the proviso's one-year period from the end of the financial year of receipt of the CIT(A)'s order is an exception for cases that stop at the CIT(A). This was decided by the High Court (Delhi High Court — A.K. Sikri and Siddharth Mridul JJ (judgment delivered by Siddharth Mridul J)) and bears on section 275, section 275(1)(a), section 271(1)(c) of the Income Tax Act 1961. It is reported as [2012] 18 taxmann.com 239 / 211 Taxman 197 (Mag.) / [2012] 345 ITR 51 / [2011] 245 CTR 312 (Delhi); IT Appeal No. 511 of 2011. This is the decision that decides most s.271(1)(c) and s.270A limitation arguments, because most assessments that carry a penalty are appealed twice. The taxpayer's instinct is to measure from the CIT(A) order and declare the penalty stale; on this reading that is wrong wherever a Tribunal appeal was filed, and the officer's time only opens when the Tribunal's order reaches the Commissioner. If it applies to you, the first step is this: Before pleading limitation, check whether a further appeal to the Tribunal was filed by either side — if it was, measure from the Tribunal order, not the CIT(A) order.
For assessment year 2001-02 the assessee, a company dealing in shares and securities, returned income of Rs 3.84 crore and had received dividend of Rs 3.11 crore. It claimed Rs 4.15 crore of interest on loans raised to acquire shares. By assessment order of 28 February 2003 the Assessing Officer disallowed Rs 3.07 crore under s.14A read with s.115-O(5) and initiated penalty proceedings under s.271(1)(c). The Commissioner (Appeals) confirmed the assessment on 23 December 2005 and the Tribunal dismissed the assessee's appeal on 11 August 2008. The Assessing Officer then levied penalty of Rs 1.49 crore under s.271(1)(c), which the Commissioner (Appeals) confirmed. The Tribunal, by order of 30 April 2010, quashed the penalty on the sole ground that it was imposed beyond the limitation in s.275(1)(a), treating the proviso as the only period available once the Commissioner (Appeals) had disposed of the appeal. The Revenue appealed. The matter was decided on 2011-09-30 by the High Court (Delhi High Court — A.K. Sikri and Siddharth Mridul JJ (judgment delivered by Siddharth Mridul J)). On those facts the High Court held as follows. The substantial question was decided in favour of the Revenue. The proviso to s.275(1)(a) does not nullify the availability to the Assessing Officer of the period of six months from the end of the month in which the order of the Tribunal is received. Where successive appeals have been filed, the six-month period under the main limb runs from the final appellate order, and the penalty of 26 February 2009 was within six months of the Tribunal's order of 11 August 2008. The Court did not, however, decide the penalty. It set aside the Tribunal's order and remitted the matter to the Tribunal for a decision on the merits of the assessee's appeal in accordance with law (para 12), so nothing in this judgment says the penalty was rightly imposed.
The Court read the main limb of s.275(1)(a) as fixing the later of the end of the financial year in which the proceedings were completed and six months from the end of the month in which the order of the Commissioner (Appeals) or of the Tribunal is received, so that where successive appeals are filed the period runs after those appeals are finally decided. The proviso, inserted for orders of the Commissioner (Appeals) made on or after 1 June 2003, has only the effect of extending the period from six months to one year in cases where no appeal is filed to the Tribunal; it carves an exception out of the main limb and does not displace it. Reading it as the assessee urged would obliterate the main provision. The Court applied the settled rule that a proviso is subsidiary to the main section, citing Ajax Products, which approved Indo-Mercantile Bank, and the Bombay statement in S.C. Cambatta that the carving out by a proviso is from the particular class dealt with by the main section and from no other. It found its conclusion fortified by the Madras decision in Rayala Corporation, noting the assessee's objection that Rayala had been decided on a concession by the Revenue. On s.275(1A) the Court held that the later provision does not dilute or render nugatory the main limb. In the words reproduced by the source cited on this page: "Thus we are of the view that the proviso to Section 275(1)(a) of the Act does not nullify the availability to the Assessing Officer of the period of limitation of six months from the end of the month when the order of the ITAT is received by the Assessing Officer."
It was decided by the High Court on 2011-09-30 and is reported as [2012] 18 taxmann.com 239 / 211 Taxman 197 (Mag.) / [2012] 345 ITR 51 / [2011] 245 CTR 312 (Delhi); IT Appeal No. 511 of 2011. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 275, section 275(1)(a), section 271(1)(c), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The substantial question was decided in favour of the Revenue. The proviso to s.275(1)(a) does not nullify the availability to the Assessing Officer of the period of six months from the end of the month in which the order of the Tribunal is received. Where successive appeals have been filed, the six-month period under the main limb runs from the final appellate order, and the penalty of 26 February 2009 was within six months of the Tribunal's order of 11 August 2008. The Court did not, however, decide the penalty. It set aside the Tribunal's order and remitted the matter to the Tribunal for a decision on the merits of the assessee's appeal in accordance with law (para 12), so nothing in this judgment says the penalty was rightly imposed. It arises in Penalty and Appeals matters, on section 275, section 275(1)(a), section 271(1)(c) of the Income Tax Act 1961, and was decided by Delhi High Court — A.K. Sikri and Siddharth Mridul JJ (judgment delivered by Siddharth Mridul J). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where the matter genuinely stopped at the CIT(A), use the proviso: one year from the end of the financial year in which that order was received by the Principal Commissioner or Commissioner. Ask the department in writing for the date on which the appellate order was received by the jurisdictional Principal Commissioner, and put it to proof — that date, not the date of the order, starts the period. Read this decision alongside the substituted s.275 that operates from 1 April 2025, which recasts the whole computation on a quarterly basis.
Superseded by amendment. The construction remains the one applied to penalties governed by the pre-2025 text of s.275, and no decision doubting or overruling it was traced. The statutory footing has gone. Section 88 of the Finance Act 2025 substituted a new s.275 for the old one, and the corresponding provision in the Income-tax Act 2025 is s.472, which was read in an Acts module: it fixes a single period of six months from the end of the quarter in which the relevant event occurs, with four limbs — completion of the proceedings in which penalty was initiated where the order is not under appeal; the passing of a revision order; the receipt of the appellate order by the jurisdictional Principal Commissioner or Commissioner where the order is under appeal; and the issue of the penalty notice in any other case. There is no proviso of the kind construed here in the substituted text, so the question this judgment answers no longer arises for orders governed by it. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Two things the digests obscured. The date is 30 September 2011, not 6 October 2011, and the judges are A.K. Sikri and Siddharth Mridul JJ, the judgment being delivered by Mridul J in IT Appeal No. 511 of 2011. And the Court did not uphold the penalty: it decided the limitation question for the Revenue, set the Tribunal's order aside and sent the appeal back to the Tribunal to be decided on its merits, so the case is authority on limitation only. There is an internal inconsistency in the report: the narrative at para 2(i) gives the date of the penalty order as 26 September 2009, while the headnote and the Court's own computation at para 11 give 26 February 2009, which is the date that makes the six-month reckoning from the Tribunal's order of 11 August 2008 work. Nothing here tells you how the substituted section applies to a penalty proceeding already on foot when it came into force. The judgment has now been read. It decides limitation and nothing else: the merits of the s.271(1)(c) penalty went back to the Tribunal. It does not address a case where the assessment appeal ends at the Commissioner (Appeals) and the penalty appeal alone goes further, and it says nothing about how the substituted section applies to a penalty proceeding already on foot when the substitution took effect. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The substantial question was decided in favour of the Revenue. The proviso to s.275(1)(a) does not nullify the availability to the Assessing Officer of the period of six months from the end of the month in which the order of the Tribunal is received. Where successive appeals have been filed, the six-month period under the main limb runs from the final appellate order, and the penalty of 26 February 2009 was within six months of the Tribunal's order of 11 August 2008. The Court did not, however, decide the penalty. It set aside the Tribunal's order and remitted the matter to the Tribunal for a decision on the merits of the assessee's appeal in accordance with law (para 12), so nothing in this judgment says the penalty was rightly imposed.
TaxSphere, “CIT v Mohair Investment & Trading Co”, https://taxnotice.vittsphere.com/caselaw/case/cit-v-mohair-investment-275-1-a-proviso/ (validity last checked 2026-08-20)
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