In terms of Section 275(1)(c) of the Income Tax Act, no order imposing penalty could be passed after the expiry of six months from the end of the month in which the action for imposition of penalties was initiated. The relevant provision is as under -
275. Bar of limitation for imposing penalties
(1) No order imposing a penalty under this Chapter shall be passed-
(c) in any other case, 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."
Now the question is what is the "date of initiation of penalty proceedings".
Consider that the Assessing Officer made reference for penalty proceedings on 25.09.2023 to the JCIT range, but the JCIT issuing the show cause notice on 04.08.2024 and the Order on 15.11.2024. Whether the "date of initiation of penalty proceedings" is 25.09.2023 when the Assessing Officer's made reference for penalty proceedings to JCIT or 04.08.2024 when the JCIT issued the show cause notice.
Incase, the "date of initiation of penalty proceedings" is 25.09.2023 then the time barring period for issuance of Order is 31.2.2024.
Incase the "date of initiation of penalty proceedings" is 04.08.2024 then the time barring period for issuance of Order is 31.2.2025.
Hence, we go into an analysis of the meaning of the word 'initiate'
- The expression initiate is not defined under the Act and must be construed in its normal sense.
- The Shorter Oxford English Dictionary defines the word 'initiate' as "to begin, commence, enter upon, to introduce, set going, originate."
- In Webster's Third New International Dictionary, the word 'initiate' has, inter alia, been defined thus: "to begin or set going: make a beginning of: perform or facilitate the first actions, steps, or stages of:"
- The Words and Phrases (Permanent Edition) defines 'initiate' to mean: "an introductory step or action, a first move; beginning; start, and to initiate as meaning - to commence."
- In Om Prakash Jaiswal v. D.K. Mittal & Anr.: (2000) 3 SCC 171, the Supreme Court had considered the meaning of the expression 'initiate any proceedings for contempt' by referring to the dictionary meaning of the said word. It is relevant to refer to paragraph 10 of the said decision, which is set out below:
"10. The expression-"initiate any proceedings for contempt" is not defined in the Act. Words and Phrases (Permanent Edition) defines "initiate" to mean - an introductory step or action, a first move; beginning; start, and "to initiate" as meaning to commence. Black's Law Dictionary (6 th Edn.) defines "initiate" to mean commence; start; originate; introduce; inchoate. In section 20, the word "initiate" qualifies "any proceedings for contempt". It is not the initiation of just any proceedings; the proceedings initiated have to be proceedings for contempt."
The expression 'action for imposition of penalty is initiated' must, thus, clearly refers to the date on which the first introductory step for such action is taken, it must necessarily mean the start of such action. It must mean the commencement of action for imposition of penalty. As noted above, the AO had found that it was the admitted case that the assessee had defaulted and accordingly, made a reference to the learned JCIT on 25.09.2023. This was obviously for the purposes of imposition of penalty. The reference, thus, clearly marked the first step for initiation of action for imposition of penalty. The Show Cause Notice issued subsequently was to provide the assessee an opportunity to show cause why penalty not be imposed.
Hence, the beginning of the action for imposition of penalty had initiated with the AO determining that there was a cause for such imposition on 25.09.2023 as was held in COMMISSIONER OF INCOME TAX (TDS)-2 DELHI Vs TURNER GENERAL ENTERTAINMENT NETWORKS INDIA PVT LTD [2024-VIL-209-DEL-DT].
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