Time Limit for Completion of Penalty Proceedings
Section 275 of the Income Tax Act specifies the time limits within which the tax authorities must pass penalty orders. The prescribed time limits vary depending on the appellate or revision status of the related assessment or other proceedings.
- Cases where assessment or other order is not subject to appeal– Where the relevant assessment or other order is not challenged before the Joint Commissioner (Appeals), Commissioner (Appeals), or Appellate Tribunal, the penalty order must be passed within 6 months from the end of the quarter in which such proceedings are completed.
- Cases where appeal is filed to JCIT(A) or CIT(A)– If the order is appealed before the Joint Commissioner (Appeals) or Commissioner (Appeals), and no further appeal is made to the Appellate Tribunal, the penalty order must be passed within 6 months from the end of the quarter in which the appellate order is received by the Jurisdictional Principal Commissioner or Commissioner.
- Cases where appeal is filed to the ITAT– If the order is appealed to the Appellate Tribunal, the penalty order must be passed within 6 months from the end of the quarter in which the order of the Tribunal is received by the Jurisdictional Principal Commissioner or Commissioner.
- Cases where assessment order is revised– Where the order is revised under Section 263 or 264, the penalty order must be passed within 6 months from the end of the quarter in which the revision order is passed by the Principal Commissioner or Commissioner.
- Giving effect to appellate or revision orders– Where the original penalty order is passed before the appellate or revision order, a revised penalty order (if necessary) may be passed within 6 months from the end of the quarter in which the appellate order is received or the revision order is passed. Such revised order shall not be made without giving the assessee a reasonable opportunity of being heard.
- Other cases– In any other case, the penalty order must be passed within 6 months from the end of the quarter in which the notice for imposition of penalty is issued.
- Exclusion of time periods– While computing the limitation period for passing the penalty order, the following periods shall be excluded:
The time taken to give the assessee an opportunity of being reheard under Section 129 due to a change in the Assessing Officer; and
The period commencing on the date on which the proceedings for levy of penalty were stayed by any court, and ending on the date the certified copy of the stay vacation order is received by the Jurisdictional Principal Commissioner or Commissioner.