Section 275(1)(c)

Section 275(1)(c) — the law in short

What the courts have decided on section 275(1)(c), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• JCIT v Ganesh Agarwal High CourtCuts both ways
  The Assessing Officer sent a proposal to the Joint Commissioner for penalty on my cash receipts. Does the six month limitation run from that proposal or from the notice the Joint Commissioner later issued?
  From the notice. A Division Bench of the Karnataka High Court held that penalty proceedings under section 271DA begin only when the Joint Commissioner issues the notice under section 274, not when the Assessing Officer forwards a proposal, so the six months in section 275(1)(c) run from the end of the month of that notice. But the Court did not leave the Joint Commissioner free to sit on the proposal: it held he must issue the section 274 notice within six months of the end of the month in which he receives it, failing which the proceedings are time-barred. On that footing four of the ten penalty orders fell and six were restored.
• CIT (TDS) v Turner General Entertainment Networks India High CourtHelps taxpayerSuperseded by amendment
  The show-cause notice came a year after the AO referred the matter to the JCIT. Which date starts the s.275(1)(c) clock?
  The reference, not the show-cause notice. The expression 'action for the imposition of penalty is initiated' in s.275(1)(c) refers to the date on which the first introductory step for such action is taken. The Assessing Officer's reference to the Joint Commissioner was that step, so the penalty order passed on the footing of the later show-cause notice was out of time.
• PCIT v JKD Capital & Finlease Ltd High CourtHelps taxpayer
  The assessing officer directed penalty under section 271E in my assessment order, but the Additional Commissioner only issued the show cause notice years later. Is that penalty time barred?
  Yes. The Delhi High Court held that under section 275(1)(c) time runs from when the Assessing Officer initiated the action - here December 2007, in the assessment order - not from the Additional Commissioner's show cause notice issued five years later. The penalty order therefore had to be passed by 30 June 2008, the later of the two limits in the clause. An order of 20 March 2012 was out of time. The Court also held that penalty for breach of section 269T is independent of the quantum proceedings, so an appeal against the assessment does not extend time. Appeal dismissed.
• CIT v Worldwide Township Projects Ltd High CourtHelps taxpayer
  The liability was created by a journal entry and no money moved. Does 269SS still apply?
  No. Passing a journal entry does not involve the acceptance of any loan or deposit of money, so s.269SS is not engaged. The Court also held that limitation for a s.271D penalty runs under s.275(1)(c), not s.275(1)(a)(ii).
• DCIT, Central Circle-02, Jaipur v Ashwani Gupta ITATHelps taxpayerValidity unconfirmed
  The Joint Commissioner passed a penalty order months after the assessment was completed. From what date does the six-month limitation in section 275 actually run — the reference to him, or his own show-cause notice?
  For a penalty that is not integrally linked to the assessment — here section 271D — limitation is governed by clause (c) of section 275(1) and runs from the completion of the proceedings in the course of which the action for penalty was initiated, or six months from the end of the month in which that action was taken, whichever expires later; not from the date the competent officer issues his own notice. On that footing a penalty order passed on 28 December 2024, where the reference went to the Addl./Jt. CIT on 18 June 2023 and the assessment was completed on 23 March 2024, was out of time on either computation, and the Revenue's appeals were dismissed.
• DCIT v Jayapriya Company ITATHelps taxpayerValidity unconfirmed
  When does the s.275(1)(c) clock start for a s.271D penalty — the AO's satisfaction in the assessment order, or the Joint Commissioner's first notice?
  From the Assessing Officer's satisfaction. The Tribunal held that the imposition of a s.271D penalty is not a one-stroke process but a series of steps, that the recording of satisfaction by the Assessing Officer is a pre-requisite to the proceeding, and that the date of that satisfaction is the date on which action for imposition of penalty is initiated. Counting from an assessment order dated 30 December 2022, the two limbs of s.275(1)(c) expired on 31 March 2023 and 30 June 2023, the later being 30 June 2023, so the penalty order of 30 August 2023 was barred.
• Dr. Sanjiv Keshav Karande v ITO, Ward-11(1), Pune ITATHelps departmentValidity unconfirmed
  The penalty under s.271D came more than six months after it was initiated. Is it automatically time-barred?
  No. Section 275(1)(c) gives the Department the later of two periods, and where the proceedings in the course of which the penalty was initiated were completed in a financial year that ends after the six-month period, the financial-year limb governs. Here the penalty was initiated in April 2016, six months would have run out at the end of October 2016, but the relevant financial year was 2016-17, so a penalty order passed on 29 November 2016 was in time. The Tribunal also dismissed the reasonable-cause plea on the facts.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.