ADVERTISEMENT
Karnataka High Court
The Joint Commissioner Of Income Tax vs Ganesh Agarwal on 7 July, 2026
Author: S.G.Pandit
Bench: S.G.Pandit
-1-
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
Reserved on : 13.03.2026
Pronounced on : 07.07.2026
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 07TH DAY OF JULY, 2026
PRESENT
THE HON'BLE MR. JUSTICE S.G.PANDIT
AND
THE HON'BLE MR. JUSTICE K. V. ARAVIND
WRIT APPEAL No. 1991 OF 2025 (T-IT)
C/W
WRIT APPEAL No. 1977 OF 2025 (T-IT)
WRIT APPEAL No. 1980 OF 2025 (T-IT)
WRIT APPEAL No. 1982 OF 2025 (T-IT)
WRIT APPEAL No. 1994 OF 2025 (T-IT)
WRIT APPEAL No. 1995 OF 2025 (T-IT)
WRIT APPEAL No. 1996 OF 2025 (T-IT)
Digitally WRIT APPEAL No. 2003 OF 2025 (T-IT)
signed by
VINUTHA B S WRIT APPEAL No. 2021 OF 2025 (T-IT)
Location: High
Court of WRIT APPEAL No. 2023 OF 2025 (T-IT)
Karnataka
IN WA No. 1991/2025
BETWEEN:
1. THE JOINT COMMISSIONER OF INCOME TAX
CENTRAL RANGE, MANGALURU
ALBUQUERQUE HOUSE,
OPP. FORUM MALL,
PANDESHWARA,
MANGALURU - 575 001.
-2-
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
2. THE ASST. COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE, HASSAN
THE ASSESSING OFFICER
UNDER INCOME TAX ACT 1961,
AAYKAR BHAVAN, 2ND STAGE,
BELUR ROAD,
HASSAN - 573 201.
...APPELLANTS
(BY SRI. RAVI RAJ Y. V., SENIOR STANDING COUNSEL)
AND:
1. GANESH AGARWAL
PROPRIETOR OF VP TRADERS
S/O. LATE SRI VISHNU BHAGVAN AGARWAL,
AGED ABOUT 57 YEARS,
RESIDING AT NO.01,
OM SAI RAM, 4TH MAIN,
2ND CROSS, SHIVANANJAPPA LAYOUT
KR EXTENSION, TIPTUR
TUMKUR - 572 201.
ALSO AT RMC YARD TIPTUR,
...RESPONDENT
(BY SRI. SHREEHARI KUTSA, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED
BY THE LEARNED SINGLE JUDGE IN WP NO.22008/2025 DATED
18/09/2025 AND ETC.,
IN WA No. 1977/2025
BETWEEN:
1. THE JOINT COMMISSIONER OF INCOME TAX
CENTRAL RANGE, MANGALURU
ALBUQUERQUE HOUSE
OPP FORUM MALL
PANDESHWARA MANGALURU - 575 001
-3-
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
2. THE ASST. COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE HASSAN
THE ASSESSING OFFICER
UNDER INCOME TAX ACT 1961
AAYKAR BHAVAN, 2ND STAGE,
BELUR ROAD,
HASSAN 573 201
...APPELLANTS
(BY SRI. RAVI RAJ Y. V., SENIOR STANDING COUNSEL)
AND:
1. BASAVANNA NANJAMARI VIJAYKUMAR
S/O SRI BELAGARAHALLI NANJAMARI
AGED ABOUT 48 YEARS
NO.138, BELAGARAHALLI
TIPTUR TUMKUR 572 201
...RESPONDENT
(BY SRI. SHREEHARI KUTSA, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED BY THE LEARNED SINGLE JUDGE IN WP
NO.20219/2025 DATED 18/09/2025 AND ETC,.
IN WA NO. 1980/2025
BETWEEN:
1. THE JOINT COMMISSIONER OF INCOME TAX
CENTRAL RANGE MANGALURU
ALBUQUERQUE HOUSE
OPP FORUM MALL, PANDESHWARA
MANGALURU 575 001
2. THE ASST. COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE HASSAN
THE ASSESSING OFFICER
UNDER INCOME TAX ACT 1961
AAYKAR BHAVAN
2ND STAGE
-4-
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
BELUR ROAD
HASSAN 573 201
...APPELLANTS
(BY SRI. RAVI RAJ Y. V., SENIOR STANDING COUNSEL)
AND:
1. PRAMOD KUMAR PANDEY
PROPRIETOR OF SRI GANESH
SALES CORPORATION
S/O LATE SRI BABAN PANDEY
AGED ABOUT 58 YEARS
#597 OPP SHANKAR MATA
K R EXTENSION TIPTUR
TUMKURU 572 201
...RESPONDENT
(BY SRI. SHREEHARI KUTSA, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED BY THE LEARNED SINGLE JUDGE IN WP
NO.20242/2025 DATED 18/09/2025 AND ETC,.
IN WA NO. 1982/2025
BETWEEN:
1. THE JOINT COMMISSIONER OF INCOME TAX
CENTRAL RANGE MANGALURU
ALBUQUERQUE HOUSE
OPP FORUM MALL PANDESHWARA
MANGALURU 575 001
2. THE ASST. COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE HASSAN
THE ASSESSING OFFICER
UNDER INCOME TAX ACT 1961
AAYKAR BHAVAN 2ND STAGE
BELURU ROAD HASSAN 573 201
...APPELLANTS
(BY SRI. RAVI RAJ Y. V., SENIOR STANDING COUNSEL)
-5-
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
AND:
1. PRAMOD KUMAR PANDEY
PROPRIETOR OF SRI GANESH
SALES CORPORATION
S/O LATE SRI BABAN PANDEY
AGED ABOUT 58 YEARS
RMC YARD TIPTUR
TUMKURU 572 201
...RESPONDENT
(BY SRI. SHREEHARI KUTSA, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED BY THE LEARNED SINGLE JUDGE IN WP
NO.20220/2025 DATED 18/09/2025 AND ETC,.
IN WA NO. 1994/2025
BETWEEN:
1. THE JOINT COMMISSIONER OF INCOME TAX
CENTRAL RANGE MANGALURU
ALBUQUERQUE HOUSE
OPP FORUM MALL
PANDESHWARA
MANGALURU 575 001
2. THE ASST. COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE HASSAN
THE ASSESSING OFFICER
UNDER INCOME TAX ACT 1961
AAYKAR BHAVAN 2ND STAGE
BELURU ROAD
HASSAN 573 201
...APPELLANTS
(BY SRI. RAVI RAJ Y. V., SENIOR STANDING COUNSEL)
-6-
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
AND:
1. RAJANIKANTH SARAF
S/O SRI DEVARAJ SARAF
AGED ABOUT 68 YEARS
3189, ANJANI KUNJ B H ROAD
ARASIKERE HASSAN 573 103
...RESPONDENT
(BY SRI. SHREEHARI KUTSA, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED BY THE LEARNED SINGLE JUDGE IN WP
NO.20209/2025 DATED 18/09/2025 AND ETC,.
IN WA NO. 1995/2025
BETWEEN:
1. THE JOINT COMMISSIONER OF INCOME TAX
CENTRAL RANGE, MANGALURU
ALBUQUERQUE HOUSE,
OPP. FORUM MALL,
PANDESHWARA,
MANGALURU - 575 001.
2. THE ASST. COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE, HASSAN
THE ASSESSING OFFICER
UNDER INCOME TAX ACT 1961,
AAYKAR BHAVAN, 2ND STAGE,
BELUR ROAD,
HASSAN - 573 201.
...APPELLANTS
(BY SRI. RAVI RAJ Y. V., SENIOR STANDING COUNSEL)
AND:
1. BASAVANNA NANJAMARI SUNIL
S/O. SRI. BELAGARAHALLI NANJAMARI
AGED ABOUT 41 YEARS,
-7-
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
NO.138, BELAGARAHALLI,
TIPTUR, TUMKUR - 572 201.
...RESPONDENT
(BY SRI. SHREEHARI KUTSA, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED BY THE LEARNED SINGLE JUDGE IN WP No.
20235/2025 (T-IT) DATED 18.09.2025 AND ETC,.
IN WA NO. 1996/2025
BETWEEN:
1. THE JOINT COMMISSIONER OF INCOME TAX
CENTRAL RANGE MANGALURU
ALBUQUERQUE HOUSE
OPP FORUM MALL
PANDESHWARA
MANGALURU 575 001
2. THE ASST. COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE HASSAN
THE ASSESSING OFFICER
UNDER INCOME TAX ACT 1961
AAYKAR BHAVAN 2ND STAGE
BELUR ROAD
HASSAN - 573 201
...APPELLANTS
(BY SRI. RAVI RAJ Y. V., SENIOR STANDING COUNSEL)
AND:
1. RAJASTHAN COMMERCIAL CORPORATION
A PARTNERSHIP FIRM UNDER
THE INDIAN PARTNERSHIP ACT 1932
NO.1913 APMC YARD ARSIKERE
HASSAN 573 103
REPRESENTED BY ITS PARTNER
SRI NITHIN SARAF
-8-
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
AGED ABOUT 43 YEARS
S/O SRI RAJNIKANTH SARAF
...RESPONDENT
(BY SRI. SHREEHARI KUTSA, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED BY THE LEARNED SINGLE JUDGE IN WP
NO.20192/2025 DATED 18/09/2025 AND ETC,.
IN WA NO. 2003/2025
BETWEEN:
1. THE JOINT COMMISSIONER OF INCOME TAX
CENTRAL RANGE, MANGALURU
ALBUQUERQUE HOUSE,
OPP. FORUM MALL,
PANDESHWARA,
MANGALURU - 575 001.
2. THE ASST. COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE, HASSAN
THE ASSESSING OFFICER
UNDER INCOME TAX ACT 1961,
AAYKAR BHAVAN, 2ND STAGE,
BELUR ROAD,
HASSAN - 573 201.
...APPELLANTS
(BY SRI. RAVI RAJ Y. V., SENIOR STANDING COUNSEL)
AND:
1. SRI ANUP KUMAR
S/O. SRI PRAMOD KUMAR PANDEY,
AGED ABOUT 28 YEARS,
RESIDING AT 597, OPP. TO SHANKAR MATA,
K.R. EXTENSION, TIPTUR,
TUMKUR - 572 201.
...RESPONDENT
(BY SRI. SHREEHARI KUTSA, ADVOCATE)
-9-
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED BY THE LEARNED SINGLE JUDGE IN WP
NO.22032/2025 DATED 18/09/2025 AND ETC,.
IN WA NO. 2021/2025
BETWEEN:
1. THE JOINT COMMISSIONER OF INCOME TAX
CENTRAL RANGE, MANGALURU
ALBUQUERQUE HOUSE,
OPP. FORUM MALL,
PANDESHWARA,
MANGALURU - 575 001.
2. THE ASST. COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE, HASSAN
THE ASSESSING OFFICER
UNDER INCOME TAX ACT 1961,
AAYKAR BHAVAN, 2ND STAGE,
BELUR ROAD,
HASSAN - 573 201.
...APPELLANTS
(BY SRI. RAVI RAJ Y. V., SENIOR STANDING COUNSEL)
AND:
1. RAJANIKANTH SARAF
S/O. SRI DEVARAJ SARAF,
AGED ABOUT 71 YEARS
NO. 3189,
ANJANI KUNJ B H ROAD,
ARASIKERE, HASSAN-573 103.
...RESPONDENT
(BY SRI. SHREEHARI KUTSA, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED BY THE LEARNED SINGLE JUDGE IN WP No.
20188/2025 (T-IT) DATED 18.09.2025 AND ETC,.
- 10 -
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
IN WA NO. 2023/2025
BETWEEN:
1. THE JOINT COMMISSIONER OF INCOME TAX
CENTRAL RANGE MANGALURU,
ALBUQUERQUE HOUSE, OPP FORUM MALL,
PANDESHWARA,
MANGALURU - 575 001.
2. THE ASST. COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE, HASSAN,
THE ASSESSING OFFICER
UNDER INCOME TAX ACT 1961,
AAYKAR BHAVAN, 2ND STAGE,
BELUR ROAD,
HASSAN - 573 201.
...APPELLANTS
(BY SRI. RAVI RAJ Y. V., SENIOR STANDING COUNSEL)
AND:
1. PRAMOD KUMAR PANDEY
PROPRIETOR OF SRI. GANESH,
SALES CORPORATION,
S/O LATE SRI. BABAN PANDEY,
AGED ABOUT 58 YEARS,
RMC YARD,
TIPTUR, TUMKUR - 572 201.
...RESPONDENT
(BY SRI. SHREEHARI KUTSA, ADVOCATE)
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED BY THE LEARNED SINGLE JUDGE IN WP
NO.20212/2025 DATED 18/09/2025 AND ETC,.
THESE APPEALS HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT, COMING ON FOR PRONOUNCEMENT THIS
DAY, K.V. ARAVIND J., DELIVERED THE FOLLOWING:-
- 11 -
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
CORAM: HON'BLE MR. JUSTICE S.G.PANDIT
and
HON'BLE MR. JUSTICE K. V. ARAVIND
C.A.V. JUDGMENT
(PER: HON'BLE MR. JUSTICE K. V. ARAVIND)
Heard Sri Y. V. Ravi Raj, learned Senior Standing Counsel
for the appellants and Sri Shreehari Kutsa, learned Counsel for
the respondents.
2. These appeals are by the Revenue under Section 4 of the
Karnataka High Court Act, 1961, impugning the judgments
passed in the writ petitions by the learned Single Judge. For
convenience the Writ Appeals impugning the Writ Petitions are
tabulated below.
Sl. Writ Writ Order Date
No. Appeals Petitions
1. 1991/2025 22008/2025
2. 1977/2025 20219/2025
3. 1980/2025 20242/2025
4. 1982/2025 20220/2025
5. 1994/2025 20209/2025
6. 1995/2025 20235/2025 18.09.2025
7. 1996/2025 20192/2025
8. 2003/2025 22032/2025
9. 2021/2025 20188/2025
10. 2023/2025 20212/2025
- 12 -
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
FACTUAL BACKGROUND
3. The brief facts are that the return of income filed by the
assessee was selected for scrutiny. Upon completion of the
assessment, the Assessing Officer initiated penalty proceedings
under Section 270A of the Income Tax Act, 1961 (for short "the
Act"). The case also attracted initiation of penalty proceedings
under Section 271DA of the Act. Since, penalty under Section
270A of the Act can be initiated by the Assessing Officer, the
Assessing Officer issued notice under Section 274 read with
Section 270A of the Act. Insofar as the penalty under Section
271DA of the Act is concerned, the jurisdiction to impose the
penalty is vested with the Joint Commissioner of Income Tax.
Accordingly, a proposal was made by the Assessing Officer to
the Joint Commissioner for such purpose.
3.1 The Joint Commissioner, upon examination of the
proposal, issued notice under Section 274 read with Section
271DA of the Act. The notice issued under Section 271DA of
the Act came to be challenged in the writ petitions, contending
that the same had been issued beyond the period prescribed
under Section 275 of the Act. The learned Single Judge,
- 13 -
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
referring to the judgment of the Co-ordinate Bench in Principal
Commissioner of Income Tax v. K. Umesh Shetty (2025)
170 taxmann.com 748 (Karnataka), held that the limitation
has to be computed from the date of proposal/reference made
to the Joint Commissioner of Income Tax.
4. All these appeals involve a common question of law
concerning the interpretation of Section 275 of the Income Tax
Act, 1961, in the context of Section 271DA of the said Act.
Hence, all the appeals are disposed of by this common
judgment.
SUBMISSIONS
5. Sri Y. V. Raviraj, learned Senior Standing Counsel for the
Revenue, submits that the judgment in K. Umesh Shetty
(supra) is not applicable to the facts of the present case. It is
submitted that, in the said case, the conclusion of the
proceedings after proposal/reference had suffered inordinate
delay and, on that ground, the proceedings were held to be
barred by limitation. It is further submitted that Section 271DA
of the Act vests the jurisdiction to levy penalty with the Joint
Commissioner, whereas the assessment is completed by the
- 14 -
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
Assistant Commissioner/Deputy Commissioner. Hence, a
proposal/reference by the Assessing Officer is warranted.
5.1 It is submitted that where the penalty can be imposed by
the Assessing Officer himself, initiation of penalty proceedings
takes place while concluding the assessment proceedings. In
that context, the understanding of Section 275 of the Act would
be different. The same meaning and interpretation cannot be
applied to a case where the penalty is required to be initiated
and levied by another authority upon a proposal/reference
made by the Assessing Officer.
5.2 It is also submitted that the proposal/reference made by
the Assessing Officer to the Joint Commissioner is not final. It is
within the discretion of the Joint Commissioner to examine the
proposal/reference and decide whether initiation of penalty
proceedings is warranted. The learned Single Judge, without
noticing the context of Section 275 of the Act, has erroneously
interpreted the provision to mean that the period of limitation
commences from the date of reference, even when no initiation
of penalty proceedings has taken place. According to the
Revenue, the proposal/reference made by the Assessing Officer
- 15 -
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
to the Joint Commissioner cannot be construed as initiation of
penalty proceedings.
6. Sri Srihari Kutsa, learned counsel appearing for the
respondents-assessees, submits that the issue is no longer res
integra in view of the pronouncement of the Co-ordinate Bench
in the case of K.Umesh Shetty (supra). It is submitted that
when a proposal/reference is made by the Assessing Officer to
the Joint Commissioner in the course of assessment
proceedings, the limitation prescribed under Section 275 of the
Act is set in motion, and the Joint Commissioner is bound to
complete the penalty proceedings within the period so
prescribed.
6.1 It is further submitted that no satisfaction has been
recorded by the Joint Commissioner for initiation of proceedings
under Section 271DA of the Act and, therefore, the entire
proceedings are void ab initio for want of jurisdiction. It is also
contended that no such satisfaction has been recorded by the
Assessing Officer. Even assuming that satisfaction had been
recorded by the Assessing Officer, since the penalty
proceedings are required to be initiated by the Joint
- 16 -
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
Commissioner, the imposition of penalty cannot be founded on
borrowed satisfaction.
6.2 It is further submitted that even if Section 275(1)(c) of
the Act is liberally interpreted, the commencement of limitation
cannot extend beyond the date of the assessment order in the
course of which the necessity for initiation of proceedings under
Section 271DA of the Act was found to exist.
6.3 It is also submitted that the notice issued under Section
271DA of the Act is unsustainable in law, as the notice does not
contain any particulars and is merely a proforma notice.
According to the learned counsel for the respondents, in the
absence of the factual background being set out in the notice,
calling upon the assessee to furnish an explanation on the basis
of such incomplete particulars would remain an empty formality
and would not satisfy the requirements of the principles of
natural justice.
7. Having considered the submissions made by the learned
counsel appearing on both sides, before proceeding to examine
the rival contentions, this Court finds it necessary to analyse
the relevant statutory provisions.
- 17 -
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
STATUTORY PROVISIONS
8. Chapter XXI, dealing with penalties imposable, contains
Sections 270 to 275 of the Income-tax Act, 1961. The said
Chapter provides for imposition of penalties for various acts of
concealment, suppression and other statutory violations. The
power to impose penalty is vested in different authorities
depending upon the nature of the default. The necessity to
initiate penalty proceedings in almost all cases emanates from,
or is triggered by, the assessment proceedings before the
Assessing Officer.
8.1 The power to impose penalty, in certain cases, is vested
with the Assessing Officer, whereas in some cases it is vested
with the Joint Commissioner/Additional Commissioner of
Income Tax. Imposition of penalty is also vested with the
Commissioner (Appeals), the Principal Commissioner, or the
Commissioner in the course of proceedings under the Act. For
the present, this Court is not concerned with the powers vested
in authorities other than the Joint Commissioner/Additional
Commissioner. In the case on hand, this Court is concerned
only with the levy of penalty under Section 271DA of the Act,
- 18 -
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
which provides for imposition of penalty for failure to comply
with the provisions of Section 269ST of the Act.
8.2 For a complete analysis of the Chapter, the chart below
indicates the nature of the failures that attract levy of penalty
and the authority competent to impose such penalty.
Sl. Competent Authority to Impose
Section Nature of Penalty
No. Penalty
Penalty for under- Assessing Officer, JCIT (Appeals),
1 270A reporting and Commissioner(Appeals), CIT or
misreporting of income PCIT
Failure to furnish returns,
Assessing Officer, JCIT (Appeals),
comply with notices,
2 271 Commissioner(Appeals), CIT or
concealment of income,
PCIT
etc.
Failure to keep, maintain
Assessing Officer, JCIT (Appeals)
3 271A or retain books of
or Commissioner(Appeals)
account, documents, etc.
Failure to keep and
maintain information and
Assessing Officer or
4 271AA documents, etc. in
Commissioner(Appeals)
respect of certain
transactions
Penalty where search
initiated on or after
5 271AAA Assessing Officer
01.06.2007 but before
01.07.2012
Penalty where search
Assessing Officer or
6 271AAB initiated on or after
Commissioner(Appeals)
01.07.2012
Penalty in respect of
Assessing Officer, JCIT (Appeals)
7 271AAC income referred to in
or Commissioner(Appeals)
Sections 68 to 69D
Penalty for false entry Assessing Officer, JCIT (Appeals)
8 271AAD
etc. in books of account or Commissioner(Appeals)
Benefits to related
9 271AAE Assessing Officer
persons
Failure to get accounts
10 271B Assessing Officer
audited
- 19 -
WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
Sl. Competent Authority to Impose
Section Nature of Penalty
No. Penalty
Failure to furnish report
11 271BA Assessing Officer
under Section 92E
Failure to subscribe to the
12. 271BB Joint Commissioner
eligible issue of capital
Failure to deduct tax at
13 271C Joint Commissioner
source
Failure to collect tax at
14 271CA Joint Commissioner
source
Failure to comply with the
15 271D provisions of Section Joint Commissioner
269SS
Failure to comply with the
16 271DA provisions of Section Joint Commissioner
269ST
Failure to comply with the
17 271DB provisions of Section Joint Commissioner
269SU
Failure to comply with the
18 271E provisions of Section Joint Commissioner
269T
Failure to furnish return
19 271F Assessing Officer
of income
Failure to furnish
statement of financial
20 271FA Prescribed Authority
transaction or reportable
account
Furnishing inaccurate
statement of financial
21 271FAA Prescribed Authority
transaction or reportable
account
Failure to furnish
statement or information
22 271FAB Prescribed Authority
or document by an
eligible investment fund
Failure to furnish return
23 271FB Assessing Officer
of fringe benefits
Failure to furnish
Assessing Officer, Transfer Pricing
24 271G information or documents
Officer or Commissioner(Appeals)
under Section 92D
Failure to furnish
information or furnishing
25 271GA Prescribed Authority
inaccurate information
under Section 285A
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WA No. 1991 of 2025
C/W WA No. 1977 of 2025
WA No. 1980 of 2025
AND 7 OTHERS
Sl. Competent Authority to Impose
Section Nature of Penalty
No. Penalty
Failure to furnish report
26 271GB or furnishing inaccurate Prescribed Authority
report under Section 286
Failure to furnish
26 271H Assessing Officer
statements, etc.
Failure to furnish
information or furnishing
27 271-I Assessing Officer
inaccurate information
under Section 195
Furnishing incorrect Assessing Officer, Joint
28 271J information in reports or Commissioner (Appeals) or
certificates Commissioner(Appeals)
Failure to furnish
29 271K Assessing Officer
statements, etc.
Failure to answer
questions, sign
statements, furnish JDIT, JCIT, PCCIT, CCIT,PCIT or
30 272A
information, returns or CIT
statements, allow
inspections, etc.
Failure to comply with the Joint Commissioner, Assistant
31 272AA provisions of Section Director, Deputy Director or
133B Assessing Officer
Failure to comply with the
32 272B provisions of Section Assessing Officer
139A
Failure to comply with the
33 272BB provisions of Section Assessing Officer
203A
Failure to comply with the
34 272BBB provisions of Section Assessing Officer
206CA
False estimate of, failure
35 273 Assessing Officer
to pay, advance tax
Power to reduce or waive
Principal
36 273A penalty, etc., in certain
Commissioner/Commissioner
cases
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8.2.1 Section 269ST of the Act is attracted when a person
receives an amount exceeding Rupees Two Lakhs otherwise
than by way of an account payee cheque, an account payee
bank draft, use of an electronic clearing system through a bank
account, or through such other electronic modes as may be
prescribed. The Section also provides for certain exceptions.
8.2.2 The limitation for imposition of penalties under the entire
Chapter XXI is prescribed under Section 275 of the Act. For
convenience of reference, Sections 269ST, 271DA, 274 and 275
of the Income-tax Act, 1961 are extracted below.
"1[269-ST. Mode of undertaking transactions.--
No person shall receive an amount of two lakh rupees
or more--
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event
or occasion from a person,
otherwise than by an account payee cheque or an
account payee bank draft or use of electronic clearing
system through a bank account:
Provided that the provisions of this section shall not
apply to--
(i) any receipt by--
(a) Government;
(b) any banking company, post office savings
bank or co-operative bank;
(ii) transactions of the nature referred to in Section
269-SS;
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(iii) such other persons or class of persons or receipts,
which the Central Government may, by notification in
the Official Gazette, specify.
Explanation.-- For the purposes of this section,--
(a) "banking company" shall have the same
meaning as assigned to it in clause (i) of
the Explanation to Section 269-SS;
(b) "co-operative bank" shall have the same
meaning as assigned to it in clause (ii) of
the Explanation to Section 269-SS.]
1
[271-DA. Penalty for failiure to comply with
provisions of Section 269-ST.-- (1) If a person
receives any sum in contravention of the provisions of
Section 269-ST, he shall be liable to pay, by way of
penalty, a sum equal to the amount of such receipt:
Provided that no penalty shall be imposable if such
person proves that there were good and sufficient
reasons for the contravention.
(2) Any penalty imposable under sub-section (1) shall
be imposed by the Joint Commissioner.]
274. Procedure. - (1)No order imposing a penalty
under this Chapter shall be made unless the assessee
has been heard, or has been given a reasonable
opportunity of being heard.
(2)[ No order imposing a penalty under this Chapter
shall be made-
(a)by the Income-tax Officer, where the penalty
exceeds ten thousand rupees;
(b)by the Assistant Commissioner [or Deputy
Commissioner], where the penalty exceeds twenty
thousand rupees,
except with the prior approval of the [Joint]
Commissioner]
[(2A) The Central Government may make a scheme,
by notification in the Official Gazette, for the purposes
of imposing penalty under this Chapter so as to impart
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greater efficiency, transparency and accountability
by--
(a) eliminating the interface between the [income-
tax authority and the assessee or any other
person] to the extent technologically feasible;
(b) optimising utilisation of the resources through
economies of scale and functional specialisation;
(c) introducing a mechanism for imposing of
penalty with dynamic jurisdiction in which penalty
shall be imposed by one or more income-tax
authorities.
(2B) The Central Government may, for the purposes of
giving effect to the scheme made under sub-section
(2A), by notification in the Official Gazette, direct that
any of the provisions of this Act relating to jurisdiction
and procedure for imposing penalty shall not apply or
shall apply with such exceptions, modifications and
adaptations as may be specified in the notification:
Provided that no direction shall be issued after the
31st day of March, 2022.
(2C) Every notification issued under sub-section (2A)
and sub-section (2B) shall, as soon as may be after
the notification is issued, be laid before each House of
Parliament.]
(3) An income-tax authority on making an order under
this Chapter imposing a penalty, unless he is himself
the Assessing Officer, shall forthwith send a copy of
such order to the Assessing Officer.]
275. Bar of limitation for imposing penalties.--
(1) No order imposing a penalty under this Chapter
shall be passed--
(a) in a case where the relevant assessment or
other order is the subject-matter of an appeal to
the 1[* * *] 12[Principal Commissioner or
2
Commissioner] (Appeals) under Section 246 [or
Section 246-A] or an appeal to the Appellate
Tribunal under Section 253, after the expiry of the
financial year in which the proceedings, in the
course of which action for the imposition of
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penalty has been initiated, are completed, or six
months from the end of the month in which the
order of the 3[* * *] 12[Principal Commissioner or
Commissioner] (Appeals) or, as the case may be,
the Appellate Tribunal is received by
the 13[Principal Chief Commissioner or Chief
Commissioner] or 12[Principal Commissioner or
Commissioner] whichever period expires later:
4
[Provided that in a case where the relevant
assessment or other order is the subject-matter of an
appeal to the 12[Principal Commissioner or
Commissioner] (Appeals) under Section 246 or Section
246-A, and the 12[Principal Commissioner or
Commissioner] (Appeals) passes the order on or after
the 1st day of June, 2003 disposing of such appeal, an
order imposing penalty shall be passed before the
expiry of the financial year in which the
proceedings, in the course of which action for
imposition of penalty has been initiated, are
completed, or within one year from the end of the
financial year in which the order of the 12[Principal
Commissioner or Commissioner] (Appeals) is received
by the 13[Principal Chief Commissioner or Chief
Commissioner] or 12[Principal Commissioner or
Commissioner], whichever is later;]
(b) in a case, where the relevant assessment or other
order is the subject-matter of revision under Section
263 5[or Section 264], after the expiry of six months
from the end of the month in which such order of
revision is 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.
6
[(1-A) In a case where the relevant assessment or
other order is the subject matter of an appeal to
the 12[Principal Commissioner or Commissioner]
(Appeals) under Section 246 or Section 246-A or an
appeal to the Appellate Tribunal under Section 253 or
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an appeal to the High Court under Section 260-A or an
appeal to the Supreme Court under Section 261 or
revision under Section 263 or Section 264 and an
order imposing or enhancing or reducing or cancelling
penalty or dropping the proceedings for the imposition
of penalty is passed before the order of the 12[Principal
Commissioner or Commissioner] (Appeals) or the
Appellate Tribunal or the High Court of the Supreme
Court is received by the 13[Principal Chief
Commissioner or Chief Commissioner] or
12
the [Principal Commissioner or Commissioner] or the
order of revision under Section 263 or Section 264 is
passed, an order imposing or enhancing or reducing or
cancelling penalty or dropping the proceedings for the
imposition of penalty may be passed on the basis of
assessment as revised by giving effect to such order of
the 12[Principal Commissioner or Commissioner]
(Appeals) or, the Appellate Tribunal or the High Court,
or the Supreme Court or order of revision under
Section 263 or Section 264:
Provided that no order of imposing or enhancing or
reducing or cancelling penalty or dropping the
proceedings for the imposition of penalty shall be
passed--
(a) unless the assessee has been heard, or had
been given a reasonable opportunity of being
heard;
(b) after the expiry of six months from the end of
the month in which the order of the 12[Principal
Commissioner or Commissioner] (Appeals) or the
Appellate Tribunal or the High Court or the
Supreme Court is received by the 13[Principal
Chief Commissioner or Chief Commissioner] or
the 12[Principal Commissioner or Commissioner]
or the order of revision under Section 263 or
Section 264 is passed:
Provided further that the provisions of sub-section (2)
of Section 274 shall apply in respect of the order
imposing or enhancing or reducing penalty under this
sub-section.]
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(2) The provisions of this section as they stood
immediately before their amendment by the Direct Tax
Laws (Amendment) Act, 1987 (4 of 1988), shall apply
to and in relation to any action initiated for the
imposition of penalty on or before the 31st day of
March, 1989.
Explanation.--In computing the period of limitation for
the purposes of this section,--
(i) the time taken in giving an opportunity to the
assessee to be reheard under the proviso to Section
129;
(ii) any period during which the immunity granted
under Section 245-H remained in force; and
(iii) any period during which a proceeding under this
Chapter for the levy of penalty is stayed by an order or
injunction of any court,
shall be excluded.
(Emphasis Supplied)"
ANALYSIS OF THE STATUTORY SCHEME
9. In the present batch of cases, this Court is concerned
with the interpretation of clause (c) of sub-section (1) of
Section 275 of the Act. The emphasis in clause (c) is on the
expression, "action for the imposition of penalty has been
initiated."
9.1 On a plain reading of clause (c), it appears to comprise of
two parts. The first part prescribes the expiry of the financial
year in which the proceedings, in the course of which action for
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imposition of penalty has been initiated, are completed. The
second part provides for a period of six months from the end of
the month in which the action for imposition of penalty is
initiated. The provision further stipulates that the period which
expires later shall apply.
9.2 There can hardly be any dispute regarding the
computation of the period of limitation of six months. The real
controversy centers around the meaning of the expression,
"action for the imposition of penalty is initiated." The next
question, therefore, is: when can such action be said to have
been initiated?
10. To answer the question, two issues arise for
consideration. First, whether initiation can be said to have
taken place from the date on which the Assessing Officer
makes a proposal/reference to the Joint Commissioner.
Secondly, whether the initiation takes place only when the Joint
Commissioner issues notice to the assessee.
11. There are fiscal statutes which enable initiation of
proceedings by one authority, while the power to conclude such
proceedings is vested in another authority. Therefore, it
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becomes necessary to examine whether Section 271DA of the
Act provides for such an enabling mechanism. In our
considered view, the answer is in the negative.
12. Before an order imposing penalty under Section 271DA of
the Act is passed, the mandate contained in Section 274 of the
Act has to be complied with. Section 274 of the Act requires
that the assessee shall be heard, or afforded a reasonable
opportunity of being heard, before any order imposing a
penalty is made. If Section 274 of the Act is read in conjunction
with Section 271DA and clause (c) of sub-section (1) of Section
275 of the Act, the only manner and mechanism by which
proceedings under Section 271DA of the Act can be initiated is
by issuance of a notice under Section 274 of the Act.
13. Any other interpretation would lead to anomalies and
unintended consequences. A proposal/reference made by the
Assessing Officer is only in the nature of forwarding the
material or information for appropriate action. The decision as
to whether proceedings for imposition of penalty under Section
271DA of the Act should at all be initiated remains within the
exclusive domain of the Joint Commissioner.
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14. If the proposal/reference itself is construed as initiation of
penalty proceedings, two anomalies would arise. Firstly, it
would amount to initiation of proceedings by the Assessing
Officer, who is admittedly not competent to impose penalty
under Section 271DA of the Act. Secondly, it would result in an
Assessing Officer, who lacks jurisdiction to impose such
penalty, compelling the Joint Commissioner, an officer of a
higher rank, to proceed with penalty proceedings, even in a
case where the Joint Commissioner, upon consideration of the
information or material forwarded, is not satisfied that the facts
warrant initiation of penalty proceedings.
15. On a plain reading of Section 275 of the Act, a period of
six months prescribed for passing an order imposing penalty is
made available to the authority competent to impose such
penalty. If the proposal/reference made by the Assessing
Officer is construed as the starting point for computation of the
said period of six months, it would again lead to an anomalous
situation by curtailing the statutory period of six months
available to the Joint Commissioner, who alone is competent to
initiate and impose penalty under Section 271DA of the Act.
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Such an interpretation would also result in the Assessing Officer
effectively controlling the period of limitation provided under
Section 275 of the Act to the Joint Commissioner.
16. The meaning of the expression "initiation of proceedings"
has been extensively considered by the Hon'ble Supreme Court
in Armour Security (India) Limited v. Commissioner,
CGST, Delhi [2025 SCC Online SC 1700]. While examining
the said expression, the Hon'ble Supreme Court held that
initiation of proceedings commences with the issuance of a
show cause notice and does not encompass the issuance of
summons or the conduct of any search or seizure proceedings.
17. It was further held that the mere issuance of summons
does not imply that the Department has taken a decision to
proceed against the taxpayer for recovery of liability. The
issuance of summons, by no stretch of imagination, can be
regarded as initiation of proceedings, since, at that stage, the
Department still retains the discretion whether or not to initiate
proceedings. A mere contemplation or possibility of initiating
action cannot be equated with initiation of proceedings. Any
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such interpretation would undermine the statutory framework
governing the exercise of powers under the Act.
18. The principles enunciated by the Hon'ble Supreme Court
in the aforesaid decision lend support to the view that a
proposal/reference made by the Assessing Officer to the Joint
Commissioner cannot, by itself, be construed as initiation of
penalty proceedings under Section 271DA of the Act. Initiation,
in the context of Section 271DA read with Sections 274 and
275(1)(c) of the Act, can only be understood as the issuance of
a notice by the Joint Commissioner calling upon the assessee to
show cause against the proposed imposition of penalty.
19. Reference in this regard may be made to relevant
paragraphs extracted below of the judgment in Armour
Security (India) Limited (supra),
"57. Section 70 of the CGST Act empowers a proper
officer to summon any person whose presence is
considered necessary for giving evidence or producing
documents or any other relevant material in an
inquiry. The issuance of summons is one of the
instruments employed by the Department to obtain
information, documents, or statements in cases
involving suspected tax evasion. Such summons may
be issued to the person under investigation or to a
person considered a witness in investigation against
another person.
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58. A summons is not the culmination of an
investigation, but merely a step in its course. It is in
this context that the Legislature has used the term
"inquiry" in section 70, as at the stage of issuing a
summons, the Department is primarily engaged in
gathering information regarding a possible
contravention of law, which may subsequently form
the basis for proceedings against an assessee. Since
the objective is to collect information, the Department
has, in certain instances, advised resorting to a letter
of requisition in place of a formal summons.
59. At the stage of issuing a summons, the
Department is yet to determine whether proceedings
should be initiated against the assessee. Such
evidence-gathering and inquiry do not constitute
"proceedings" within the meaning of section 6(2)(b) of
the CGST Act. The mere issuance of a summons
cannot be equated with proceedings barred under the
Act, as the subject-matter cannot be ascertained solely
through summons. That said, summons should not be
issued in routine matters or for documents readily
available on the GST portal. They ought to be issued
after much thought and consideration as to the exact
information required. We acknowledge that the
issuance of multiple, cyclostyled summons may
indicate a roving inquiry.
60. We affirm and appreciate the view taken by the
High Court of Allahabad in G.K. Trading [G.K. Trading
Company v. Union of India, (2021) 88 GSTR 293 (All);
2020 SCC OnLine All 1907.] and the High Court of
Kerala in K.T. Saidalavi [K.T. Saidalavi v. State Tax
Officer, SGST Department, (2025) 145 GSTR 369
(Ker); 2024 SCC OnLine Ker 5674.] respectively. The
High Court of Allahabad rightly held that the issuance
of summons cannot be conflated with a statutory step
taken upon conclusion of an inquiry. Similarly, the
High Court of Kerala was correct in holding that
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initiation of inquiry or the issuance of summons does
not amount to the initiation of "any proceedings". The
phrase "initiation of any proceedings" refers
specifically to the issuance of a notice under the
relevant provisions of the GST enactment.
61. At this juncture, we wish to refer to the Guidelines
on Issuance of Summons under section 70 of the CGST
Act issued by the Central Board of Indirect Taxes and
Customs (GST--Investigation Wing) dated August 17,
2022. In view of the facts of the present case in hand,
we would like to inject thrust into the Guidelines dated
August 17, 2022, and direct the concerned
Departments to adhere to the said Guidelines, in both
letter and spirit.
62. In the present case, the petitioner was served with
a show-cause notice dated November 18, 2024 by
respondent No. 2 under section 73 of the CGST Act,
thereby initiating proceedings. The petitioner has
impugned the summons dated January 16, 2025 and
January 23, 2025 respectively issued by respondent
No. 1 for production of documents. At the summons
stage, it cannot be predicated with certainty that the
subject-matter of the proceedings will be identical; the
mere presence of an overlapping aspect under
investigation does not ipso facto render the subject-
matter "same".
63. The High Court correctly held that the term "any
proceedings" does not encompass summons issued
pursuant to a search or investigation, as at the stage
of issuance of summons the Department is merely
engaged in gathering information. We are in
agreement with the finding that a case of search is
clearly distinct and separate from proceedings initiated
only after issuance of a show-cause notice.
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64. We may now proceed to elaborate on our
understanding of "initiation of any proceedings" within
the meaning of section 6(2)(b) of the CGST Act. P.
Ramanatha Aiyar's, 6th Edition, pages 4415-4420,
defines "proceedings" as under:
"It is not a technical expression with defined meaning
attached to it but the one ambit of whose meaning will
be governed by the statute. The word 'proceedings'
can be given a narrow or wide import depending upon
the nature and scope of an enactment in which it is
used and in the particular context of the language of
the enactment in which it appears." (emphasis
supplied)
65. We may quote an extract from the Black's Law
Dictionary, 4th Edition, page 1368, it stated as under:
"An act which is done by the authority or direction of
the court, express or implied; an act necessary to be
done in order to attain a given end; a prescribed mode
of action for carrying into effect a legal right."
66. A show-cause notice is a document served on a
noticee, requiring them to explain why a particular
action should not be initiated against them. Under the
GST regime, issuance of a show-cause notice is a
mandatory pre-condition for raising a demand. It
forms the bedrock for proceedings related to the
recovery of tax, interest, and penalty. The notice
ensures adherence to the principles of natural justice
by granting the assessee an opportunity to present
their case before any adverse action is taken. In
essence, it serves as both a procedural safeguard and
a legal necessity, marking the commencement of
quasi-judicial adjudication under the Act.
67. A show-cause notice sets the law in motion
concerning the liability under the statute, containing
charges that a specific person is called upon to answer.
In other words, it sets out the alleged violations of
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legal provisions and requires the assessee to explain
why the duty should not be recovered from them.
Thus, a show-cause notice cannot be vague, nor can
any allegations be made without evidence being
commensurate with the gravity of the charges levelled
against the noticee.
68. It sets forth the framework for the proceedings
proposed to be undertaken and provides the noticee
with an opportunity to submit their explanation before
the adjudicating authority. It outlines the background
for the initiation of such proceedings, whether arising
from an audit of accounts by the internal audit wing,
scrutiny of returns, or intelligence gathered by officers
of the Audit and Intelligence Commissionerate. It is
further mandated that the authority issuing the notice
must meticulously set out all relevant legal provisions
under which the alleged contraventions are framed.
The materials obtained through summons and relied
upon for issuing the show-cause notice must be
appended and disclosed to the assessee. In essence, a
show-cause notice enumerates the charges levelled
against the notice.
73. The statutory framework of the CGST Act does not
admit of any interpretation of the phrase "initiation of
proceedings" under section 6(2)(b) other than one
which ties it to the issuance of a show-cause notice.
An action qualifies as "proceedings" only when it is
undertaken with the object of attaining a determinate
outcome. In the present context, the issuance of a
show-cause notice partakes the character of
proceedings, as it is inherently required to culminate in
a definitive determination; there must exist a point of
finality or conclusion thereto.
74. Proceedings, by their very nature, cannot be said
to be initiated in the absence of certainty, nor can they
culminate without adherence to the principles of
natural justice. A show-cause notice marks the
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commencement of a process that culminates in an
order passed by the adjudicating authority. The
legislative intent to prevent the subjugation of a
taxpayer to parallel proceedings and to avoid
contradictory orders can only be realized only when
the Department is clear about the subject-matter it
seeks to pursue, a certainty that arises only at the
stage of issuance of the show- cause notice.
75. In the facts of the present case, the mere issuance
of summons does not imply that the Department has
decided to proceed against the taxpayer for recovery
of liability. Therefore, issuance of summons, by no
stretch, can be considered as the initiation of
proceedings, since at that stage, the Department still
retains the discretion not to initiate any proceedings. A
mere contemplation or possibility of initiating action
cannot be equated with "proceedings", as doing so
would undermine the framework of cross-
empowerment under the Act. Even when a discovery is
made during the search proceedings under section 67
of the CGST Act, the Department is required to bring
such proceedings to a definitive conclusion, either by
issuing a show-cause notice under section 74 or by
dropping the matter altogether.
(i) Reading of Circular dated October 5, 2018
97. We summarize our final conclusion as under:
(i) Clause (b) of sub-section (2) of section 6 of the
CGST Act and the equivalent State enactments bars
the "initiation of any proceedings" on the "same
subject-matter".
(ii) Any action arising from the audit of accounts or
detailed scrutiny of returns must be initiated by the
tax administration to which the taxpayer is assigned.
(iii) Intelligence based enforcement action can be
initiated by any one of the Central or the State tax
administrations despite the taxpayer having been
assigned to the other administration.
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(iv) Parallel proceedings should not be initiated by
other tax administration when one of the tax
administrations has already initiated intelligence-based
enforcement action.
(v) All actions that are initiated as a measure for
probing an inquiry or gathering of evidence or
information do not constitute "proceedings" within the
meaning of section 6(2)(b) of the CGST Act.
(vi) The expression "initiation of any proceedings"
occurring in section 6(2)(b) refers to the formal
commencement of adjudicatory proceedings by way of
issuance of a show-cause notice, and does not
encompass the issuance of summons, or the conduct
of any search, or seizure, etc.
(vii) The expression "subject-matter" refers to any tax
liability, deficiency, or obligation arising from any
particular contravention which the Department seeks
to assess or recover.
(viii) Where any two proceedings initiated by the
Department seek to assess or recover an identical or a
partial overlap in the tax liability, deficiency or
obligation arising from any particular contravention,
the bar of section 6(2)(b) would be immediately
attracted.
(ix) Where the proceedings concern distinct
infractions, the same would not constitute a "same
subject-matter" even if the tax liability, deficiency, or
obligation is same or similar, and the bar under section
6(2)(b) would not be attracted.
(x) The twofold test for determining whether a
subject-matter is "same" entails, first, determining if
an authority has already proceeded on an identical
liability of tax or alleged offence by the assessee on
the same facts, and secondly, if the demand or relief
sought is identical."
20. As noticed hereinabove, the Hon'ble Supreme Court in
Armour Security (India) Limited (supra) has authoritatively
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explained the scope of the expression "initiation of
proceedings" and held that a mere contemplation of action or
the taking of preliminary steps preceding the exercise of
statutory power cannot be equated with initiation of
proceedings. The Court has clarified that initiation occurs only
when the competent authority manifests its decision to proceed
by issuing the statutory notice contemplated under the relevant
enactment. Consequently, the notice issued under Section 274
of the Act read with the relevant penal provision alone qualifies
as the initiation of proceedings, as it reflects the decision of the
competent authority to commence action with the object of
attaining a determinative outcome. Until such notice is issued,
the proceedings cannot be said to have been initiated in the
eye of law.
21. No doubt, the aforesaid enunciation of law was rendered
while interpreting the provisions of the CGST Act. However, the
principles laid down therein would provide valuable guidance in
understanding and ascribing meaning to the expression, "action
for imposition of penalty is initiated", occurring in Section
275(1)(c) of the Act.
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22. In circumstances of a similar nature, while dealing with
the imposition of penalty under Sections 271D and 271E of the
Act, the High Court of Kerala, in Grihalakshmi Vision v.
Assistant Commissioner of Income Tax, Range I,
Kozhikode [2015 SCC OnLine Ker 23752], had occasion to
consider the scope and ambit of Section 275(1)(c) of the Act.
The Court held as under:
"10. Question to be considered is whether proceedings
for levy of penalty, are initiated with the passing of the
order of assessment by the Assessing Officer or
whether such proceedings have commenced with the
issuance of the notice issued by the Joint
Commissioner. From the statutory provision, it is clear
that the competent authority to levy penalty being the
Joint Commissioner. Therefore, only the Joint
Commissioner can initiate proceedings for levy of
penalty. Such initiation of proceedings could not have
been done by the Assessing Officer. The statement in
the assessment order that the proceedings under
section 271D and section 271E are initiated is
inconsequential. On the other hand, if the assessment
order is taken as the initiation of penalty proceedings,
such initiation is by an authority who is incompetent
and the proceedings thereafter would be proceedings
without jurisdiction. If that be so, the initiation of the
penalty proceedings is only with the issuance of the
notice issued by the Joint Commissioner to the
assessee to which he has filed his reply."
23. The aforesaid decision, though rendered in the context of
Sections 271D and 271E, assumes significance, as the penalties
under those provisions are also required to be imposed by an
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authority other than the Assessing Officer. The reasoning
adopted therein, therefore, lends support to the interpretation
that the expression "action for imposition of penalty is initiated"
cannot be understood as a mere proposal/reference made by
the Assessing Officer, but must relate to the stage at which the
competent authority initiates penalty proceedings in accordance
with law.
24. Section 275 prescribes the period of limitation for
penalties leviable under Chapter XXI of the Act. Section 273B of
the Act, on the other hand, provides that notwithstanding
anything contained in the provisions of the various sections
referred to therein, no penalty shall be imposable on the person
or the assessee, as the case may be, in respect of any failure
referred to in the said provisions, if such person proves that
there was reasonable cause for the said failure.
25. It is no doubt true that Section 271DA of the Act does not
find place among the provisions enumerated in Section 273B of
the Act. However, reference to Section 273B of the Act is both
relevant and necessary for interpreting clause (c) of sub-
section (1) of Section 275 of the Act.
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26. If the commencement of limitation is to be reckoned from
the date of proposal/reference made by the Assessing Officer,
as urged by the learned counsel for the respondents-assessees,
the Joint Commissioner would not, at that stage, have issued
any notice seeking an explanation from the assessee. In such
circumstances, the "action for imposition of penalty" can be
said to have been initiated only when a notice is issued by the
Joint Commissioner affording an opportunity to the assessee to
explain the alleged default or granting an opportunity of being
heard.
27. It is clarified that Section 273B of the Act has been
referred to only as an aid to understand the scope and meaning
of Section 275 of the Act, notwithstanding the fact that Section
271DA of the Act is not one of the provisions covered by
Section 273B of the Act. It is also relevant to notice that
several other provisions under Chapter XXI, where the
jurisdiction to impose penalty is vested in the Joint
Commissioner, are covered by Section 273B of the Act. One
such provision is Section 271D of the Act.
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28. When interpreting Section 275 of the Act, this Court must
bear in mind that the said provision prescribes the period of
limitation applicable to all penalties leviable under Chapter XXI
of the Act. Therefore, a harmonious reading of Sections 271DA,
273B, 274 and 275 of the Act leads to only one conclusion,
namely, that the "action for imposition of penalty" is initiated
only upon issuance of a notice under Section 274 of the Act,
either calling upon the assessee to furnish an explanation or
affording an opportunity of being heard. Any other
interpretation would render Sections 273B and 274 of the Act
otiose in their operation and would dilute the requirement of
compliance with the principles of natural justice before the
competent authority proceeds to impose penalty.
REASONING
29. In the batch of matters before us, the parties have placed
on record the details relating to the assessment year, the date
of proposal/reference/intimation made by the Assessing Officer,
the date of issuance of show cause notice by the Joint
Commissioner, and the date of the penalty order. The said
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particulars are extracted in the tabular statement below for
ready reference:
Sl. WA No. Assessm Date of Date of Date of
No. ent Year Intimation Show Penalty
by AO cause by Order
JCIT
1 WA No.1991/2025
2022-23 16.11.2023 29.11.2024 28.03.2025
Ganesh Agarwal
2 WA No.1994/2025 29.03.2025
2020-21 17.04.2024 29.11.2024
Rajanikanth Saraf
3 WA No.1995/2025
Basavanna 2022-23 17.04.2024 03.10.2024 28.03.2025
Nanjamari Sunil
4 WA No.1996/2025
Rajastan Commercial 2022-23 17.04.2024 29.11.2024 29.03.2025
Corporation
5 WA No.1977/2025
Basavanna 2022-23 17.04.2024 03.10.2024 28.03.2025
Nanjamari Sunil
6 WA No.1980/2025
Pramod Kumar 2019-20 17.04.2024 03.10.2024 28.03.2025
Pandey
7 WA No.1982/2025
Pramod Kumar 2022-23 17.04.2024 03.10.2024 28.03.2025
Pandey
8 WA No.2003/2025 17.04.2024 28.03.2025
2022-23 03.10.2024
Shri. Anup Kumar
9 WA No.2021/2025 17.04.2024 28.03.2025
2019-20 29.11.2024
Rajanikanth Saraf
10 WA No.2023/2025
Pramod Kumar 2020-21 17.04.2024 03.10.2024 28.03.2025
Pandey
30. The above details would be relevant for examining
whether the penalty proceedings under Section 271DA of the
Act were initiated and concluded within the period of limitation
prescribed under Section 275(1)(c) of the Act, having regard to
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the interpretation placed by this Court on the expression,
"action for imposition of penalty is initiated."
31. It is the contention of the Revenue that there is no
limitation prescribed for initiation of proceedings under Section
271DA of the Act and that the period of limitation under Section
275 of the Act commences only from the date of such initiation.
It is difficult to countenance such a submission, insofar as it
seeks to contend that there is no limitation whatsoever for
initiation of proceedings under Section 271DA of the Act.
32. Having regard to the timelines prescribed under various
provisions of the Act mandating time-bound compliance, time-
bound initiation of proceedings and time-bound conclusion of
proceedings, such an unrestricted latitude cannot be made
available to the Revenue. The initiation of penalty proceedings
by the Joint Commissioner cannot be whimsical or arbitrary; it
must necessarily be undertaken within a reasonable time.
33. At the same time, this Court is conscious of the practical
realities of tax administration. The Joint Commissioner, being
the Range Head, ordinarily exercises supervisory jurisdiction
over a number of Assessing Officers, including Income Tax
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Officers, Assistant Commissioners and Deputy Commissioners.
Proposals/References received from all such Assessing Officers
within the Range would require a reasonable amount of time for
the Joint Commissioner to examine the material placed on
record and to independently assess whether the facts warrant
initiation of penalty proceedings. Otherwise, the very object
behind vesting the power of imposing penalty in the Range
Head would be defeated. Such an approach would reduce the
role of the Joint Commissioner to a mere formality, leading to
arbitrary exercise of power and consequent harassment to
taxpayers.
34. The Act may not have expressly prescribed a period of
limitation within which the Joint Commissioner is required to
initiate proceedings under Chapter XXI with reference to the
date of proposal/reference made by the Assessing Officer. This
legislative silence may proceed on the reasonable expectation
that the Joint Commissioner, being a senior officer and the
head of the Range, would exercise such power judiciously,
qualitatively and within a reasonable period of time.
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35. However, in certain matters placed before this Court,
initiation of proceedings by the Joint Commissioner has taken
place more than one year after the date of proposal/reference
made by the Assessing Officer. In the light of such
circumstances, this Court finds it necessary to examine the
concept of "reasonable time" and determine whether the
exercise of power after such prolonged delay can be sustained
in law.
36. It is a settled position of law that where the statute does
not prescribe any specific timeline, it is open to the Court to
read into the provision a requirement that the power be
exercised within a reasonable period and, where necessary, to
indicate the contours of such reasonable time for initiation or
completion of proceedings.
37. Section 275 of the Act prescribes the period of limitation
for completion of penalty proceedings. However, the provision
is conspicuously silent with regard to the period within which
such proceedings are required to be initiated. It is this
legislative silence that has given rise to the present batch of
litigation. Here, it would be apposite to refer to the judgment of
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the Hon'ble Supreme Court in State of Punjab v. Bhatinda
District Coop. Milk Producers Union Ltd., [(2007) 11 SCC
363];
"18. It is trite that if no period of limitation has been
prescribed, statutory authority must exercise its
jurisdiction within a reasonable period. What, however,
shall be the reasonable period would depend upon the
nature of the statute, rights and liabilities thereunder
and other relevant factors.
19. Revisional jurisdiction, in our opinion, should
ordinarily be exercised within a period of three years
having regard to the purport in terms of the said Act. In
any event, the same should not exceed the period of
five years. The view of the High Court, thus, cannot be
said to be unreasonable. Reasonable period, keeping in
view the discussions made hereinbefore, must be found
out from the statutory scheme. As indicated
hereinbefore, maximum period of limitation provided for
in sub-section (6) of Section 11 of the Act is five years."
38. When this Court considers what would constitute a
reasonable period for initiation of proceedings, the answer, in
our considered view, lies within the scheme of Section 275 of
the Act itself. When Section 275 of the Act provides a period of
six months for completion of penalty proceedings from the end
of the month in which action for imposition of penalty is
initiated, this Court finds it reasonable to adopt a similar
timeline for initiation of such proceedings by the Joint
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Commissioner, reckoned from the end of the month in which
the proposal/reference is received from the Assessing Officer
for consideration of imposition of penalty under Chapter XXI of
the Act.
39. While arriving at the aforesaid conclusion, this Court has
taken into consideration the overall object underlying Chapter
XXI, the prescription of limitation under Section 275 of the Act,
and the procedural safeguards contained in Sections 273B and
274 of the Act. This Court has also borne in mind the
administrative realities that the Joint Commissioner ordinarily
supervises several Assessing Officers and is required to deal
with proposals/references received from such officers
recommending initiation of penalty proceedings vested in the
Joint Commissioner. The Joint Commissioner is also entrusted
with various other supervisory and administrative functions and
approvals mandated under the Act.
40. Having regard to all these circumstances, this Court finds
it reasonable to hold that initiation of proceedings by the Joint
Commissioner should ordinarily take place within a period of six
months from the end of the month in which the
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proposal/reference from the Assessing Officer is received for
consideration of action for imposition of penalty under Chapter
XXI of the Act. Any initiation beyond the said period, the
exercise of power would be vulnerable to challenge on the
ground that it was not undertaken within a reasonable time.
41. In the present batch of cases before us, as noticed in the
earlier part of this judgment, notices under Section 274 read
with Section 271DA of the Act were issued to the assessees,
affording them an opportunity of being heard. Pursuant thereto,
the assessees filed detailed replies, which were considered by
the Joint Commissioner before passing orders under Section
271DA of the Act.
42. The sequence of events in the cases on hand clearly
demonstrates that the issuance of notice under Section 274 of
the Act constituted the commencement of the penalty
proceedings. It is only upon issuance of such notice that the
assessee is informed of the proposed action, called upon to
furnish an explanation, and afforded an opportunity of being
heard in compliance with the mandate of Section 274 of the Act
and the principles of natural justice.
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43. This factual position fortifies the view taken by this Court
that initiation of proceedings for imposition of penalty under
Section 271DA of the Act commences only upon issuance of a
notice under Section 274 of the Act by the competent authority.
Such initiation cannot be traced back to the date on which the
Assessing Officer addressed a letter or made a proposal to the
Joint Commissioner forwarding the material for consideration of
initiation of penalty proceedings under Section 271DA of the
Act.
44. The proposal made by the Assessing Officer is merely a
communication of information and material for the
consideration of the competent authority. It neither determines
the rights of the assessee nor manifests a final decision by the
Joint Commissioner to proceed with the imposition of penalty.
The decision to initiate proceedings remains that of the Joint
Commissioner and attains legal expression only upon issuance
of the statutory notice under Section 274 of the Act.
45. Much reliance has been placed by the learned counsel for
the respondents-assessees on the judgment of this Court in the
case of K. Umesh Shetty (supra). In the said decision, this
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Court interpreted Section 275 of the Act in the context of
penalty proceedings under Section 271D of the Act. It was held
that where notice was issued by the Joint Commissioner after a
period of one year from the date of reference made by the
Assessing Officer, the proceedings were beyond the period of
limitation prescribed under Section 275 of the Act. In that
context, it was held that the order passed under Section 271D
of the Act was barred by limitation under Section 275 of the
Act.
46. To the aforesaid extent, and for the reasons assigned
hereinabove, we concur with the conclusion reached therein.
However, insofar as the observations made in the said
judgment to the effect that the period of limitation under
Section 275 of the Act would commence from the date of
reference made by the Assessing Officer are concerned, we are
of the considered view that the same cannot be applied in light
of the law subsequently elucidated by the Hon'ble Supreme
Court in Armour Security (India) Limited (supra).
47. In the light of the principles laid down by the Hon'ble
Supreme Court, the proposal/reference made by the Assessing
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Officer to the Joint Commissioner can only be regarded as a
contemplation or possibility of initiating penalty proceedings
and cannot, by itself, be equated with the initiation of such
proceedings. The decision whether to initiate penalty
proceedings remains within the exclusive jurisdiction and
discretion of the Joint Commissioner. It is only upon the
issuance of notice under Section 274 of the Act read with
relevant penal provisions that the competent authority
manifests its decision to commence proceedings with the object
of arriving at a determinative outcome. Until such notice is
issued, the proceedings cannot be said to have been initiated in
the eye of law.
48. A proposal/reference made by the Assessing Officer, in
the absence of a notice under Section 274 of the Act issued by
the Joint Commissioner, does not result in any determinative
consequence. Therefore, the interpretation placed on the
expressions initiated in K. Umesh Shetty (supra), treating the
date of reference by the Assessing Officer as the point of
commencement for computing limitation under Section 275 of
the Act is inconsistent with the law declared by the Hon'ble
Supreme Court in Armour Security (India) Ltd., (supra).
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Consequently, the law laid down by this Court in K. Umesh
Shetty (supra), to that extent, cannot be regarded as
governing the issue that arises for consideration in the present
batch of cases.
49. Further reliance has been placed by the learned counsel
for the respondents-assessees on the judgment of the Delhi
High Court in Principal Commissioner of Income Tax-5 v.
JKD Capital & Finlease Limited, (2017) 81 taxmann.com
80 (Delhi). However, as the said decision proceeds on the
premise that the reference made by the Assessing Officer
constitutes initiation of penalty proceedings for the purpose of
computing limitation under Section 275 of the Act. The above
judgment does not lend any support to the case of the
respondent in view of the law enunciated by the Hon'ble
Supreme Court in Armour Security (India) Ltd., (supra).
50. Therefore, to the extent the view expressed by the Delhi
High Court in JKD Capital & Finlease Limited (supra) is
inconsistent with the interpretation placed by the Hon'ble
Supreme Court in Armour Security (India) Limited (supra),
the same cannot govern the issue arising for consideration in
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the present batch of cases. Accordingly, the decision in JKD
Capital & Finlease Limited (supra) is distinguishable and
does not advance the case of the Revenue in the facts and
circumstances of the present matter.
51. The learned counsel for the assessees have relied upon
the judgment of the Hon'ble Supreme Court in Armour
Security (India) Limited (supra) to contend that unless the
show cause notice specifically sets out the alleged violations of
the statutory provisions and calls upon the assessee to explain
why the liability should not be fastened upon them, such notice
would be unsustainable in law.
52. The said contention requires careful examination. The
Hon'ble Supreme Court, while considering the validity and
essential components of a show cause notice, was interpreting
the mandatory requirements of show cause notices
contemplated under Sections 73, 74 and 76 of the CGST Act. In
that context, it was held that the contents of the show cause
notice must disclose the allegations and the basis of the
proposed action so as to enable the noticee to effectively
respond to the same.
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53. However, the position in the present case is materially
different. The notices in question have been issued under
Section 274 read with Section 271DA of the Income-tax Act,
1961. Neither Section 271DA nor Section 274 of the Act
contemplates the issuance of a show cause notice in the
manner envisaged under Sections 73, 74 and 76 of the CGST
Act. What Section 274 of the Act mandates is that before any
order imposing penalty is passed, the assessee shall be heard
or shall be afforded a reasonable opportunity of being heard.
54. For the said purpose, notices under Section 274 of the
Act were issued to the assessees. Pursuant thereto, the
assessees submitted their replies and explanations. Upon
consideration of the replies so furnished, orders imposing
penalty under Section 271DA of the Act came to be passed.
Therefore, the statutory requirement contemplated under
Section 274 of the Act stood complied with.
55. It is a settled principle of interpretation that while
construing a fiscal statute, the plain meaning of the statutory
text has to be given effect to. When Sections 271DA, 274 and
275 of the Act do not contemplate issuance of a detailed show
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cause notice, but merely require that the assessee be afforded
a reasonable opportunity of being heard before imposition of
penalty, the Court cannot import into those provisions
additional procedural requirements not contemplated by the
legislature. Therefore, the contention that a separate show
cause notice ought to have been issued, or that the notice
under Section 274 of the Act should necessarily contain all
particulars and details akin to a show cause notice under the
CGST Act, cannot be accepted.
56. It is also relevant to refer to the judgment of the Hon'ble
Supreme Court in CIT v. Amitabh Bachchan, [(2016) 11
SCC 748] wherein it has been held that unless the statute
specifically mandates issuance of a show cause notice, no such
requirement can be read into the provision. The Hon'ble
Supreme Court further held that where the statute merely
contemplates affording an opportunity of hearing, compliance
with such requirement by providing an adequate and effective
opportunity would satisfy the mandate of the provision. The
relevant portion of the said judgment reads as under:
"10. Reverting to the specific provisions of Section
263 of the Act what has to be seen is that a
satisfaction that an order passed by the authority
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under the Act is erroneous and prejudicial to the
interest of the Revenue is the basic precondition for
exercise of jurisdiction under Section 263 of the Act.
Both are twin conditions that have to be conjointly
present. Once such satisfaction is reached, jurisdiction
to exercise the power would be available subject to
observance of the principles of natural justice which is
implicit in the requirement cast by the section to give
the assessee an opportunity of being heard. It is in
the context of the above position that this Court has
repeatedly held that unlike the power of reopening an
assessment under Section 147 of the Act, the power
of revision under Section 263 is not contingent on the
giving of a notice to show cause. In fact, Section 263
has been understood not to require any specific show-
cause notice to be served on the assessee. Rather,
what is required under the said provision is an
opportunity of hearing to the assessee. The two
requirements are different : the first would
comprehend a prior notice detailing the specific
grounds on which revision of the assessment order is
tentatively being proposed. Such a notice is not
required. What is contemplated by Section 263, is an
opportunity of hearing to be afforded to the assessee.
Failure to give such an opportunity would render the
revisional order legally fragile not on the ground of
lack of jurisdiction but on the ground of violation of
principles of natural justice.
11. Para 4 of the decision in CIT v. Electro
House [CIT v. Electro House, (1971) 2 SCC 647 :
(1971) 82 ITR 824] being illumination of the issue
indicated above may be usefully reproduced
hereunder : (SCC pp. 649-50 : ITR pp. 827-28)
"4. This section unlike Section 34 does not
prescribe any notice to be given. It only
requires the Commissioner to give an
opportunity to the assessee of being heard.
The section does not speak of any notice. It
is unfortunate that the High Court [Electro
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House v. CIT, 1968 SCC OnLine Cal 147 :
(1968) 70 ITR 421] failed to notice the
difference in language between Sections
33-B and 34. For the assumption of
jurisdiction to proceed under Section 34,
the notice as prescribed in that section is a
condition precedent. But no such notice is
contemplated by Section 33-B. The
jurisdiction of the Commissioner to proceed
under Section 33-B is not dependent on the
fulfilment of any condition precedent. All
that he is required to do before reaching his
decision and not before commencing the
enquiry, he must give the assessee an
opportunity of being heard and make or
cause to make such enquiry as he deems
necessary. Those requirements have
nothing to do with the jurisdiction of the
Commissioner. They pertain to the region of
natural justice. Breach of the principles of
natural justice may affect the legality of the
order made but that does not affect the
jurisdiction of the Commissioner. At present
we are not called upon to consider whether
the order made by the Commissioner is
vitiated because of the contravention of any
of the principles of natural justice. The
scope of these appeals is very narrow. All
that we have to see is whether before
assuming jurisdiction the Commissioner
was required to issue a notice and if he was
so required what that notice should have
contained? Our answer to that question has
already been made clear. In our judgment
no notice was required to be issued by the
Commissioner before assuming jurisdiction
to proceed under Section 33-B. Therefore
the question what that notice should
contain does not arise for consideration. It
is not necessary nor proper for us in this
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case to consider as to the nature of the
enquiry to be held under Section 33-B.
Therefore, we refrain from spelling out what
principles of natural justice should be
observed in an enquiry under Section 33-B.
This Court in Gita Devi
Aggarwal v. CIT [Gita Devi Aggarwal v. CIT,
(1970) 76 ITR 496 (SC)] ruled that Section
33-B does not in express terms require a
notice to be served on the assessee as in
the case of Section 34. Section 33-B merely
requires that an opportunity of being heard
should be given to the assessee and the
stringent requirement of service of notice
under Section 34 cannot, therefore, be
applied to a proceeding under Section 33-
B."
(emphasis supplied)
[Note.--Section 33-B and Section 34 of the
Income Tax Act, 1922 corresponds to Section 263
and Section 147 of the Income Tax Act, 1961.]
12. It may be that in a given case and in most cases
it is so done a notice proposing the revisional exercise
is given to the assessee indicating therein broadly or
even specifically the grounds on which the exercise is
felt necessary. But there is nothing in the section
(Section 263) to raise the said notice to the status of
a mandatory show-cause notice affecting the initiation
of the exercise in the absence thereof or to require
CIT to confine himself to the terms of the notice and
foreclosing consideration of any other issue or
question of fact. This is not the purport of Section
263. Of course, there can be no dispute that while CIT
is free to exercise his jurisdiction on consideration of
all relevant facts, a full opportunity to controvert the
same and to explain the circumstances surrounding
such facts, as may be considered relevant by the
assessee, must be afforded to him by CIT prior to the
finalisation of the decision."
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57. For similar reasons, the reliance placed by the assessees
on the judgment of the Hon'ble Supreme Court in Oryx
Fisheries Pvt. Ltd. v. Union of India [(2010) 13 SCC 427],
is of no assistance to their case. The principles laid down in the
said decision were rendered in the context of the statutory
scheme governing the proceedings under consideration therein
and the specific requirements contemplated by the relevant
provisions. The ratio of the said judgment cannot be
mechanically extended to proceedings under Sections 271DA
and 274 of the Income-tax Act, 1961.
57.1 As already noticed, neither Section 271DA nor Section
274 of the Act, mandates the issuance of a detailed show cause
notice setting out all factual allegations and legal consequences
in the manner contemplated under other enactments. The
statutory requirement under Section 274 of the Act, is confined
to affording the assessee a reasonable opportunity of being
heard before an order imposing penalty is passed.
57.2 In the present batch of cases, notices under Section 274
of the Act, were admittedly issued to the assessees. The
assessees participated in the proceedings by submitting
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detailed replies and explanations, which were considered by the
competent authority before passing orders under Section
271DA of the Act. Thus, the requirement of providing a
reasonable opportunity of hearing stood duly complied with.
57.3 Therefore, the decision in Oryx Fisheries Pvt. Ltd.
(supra) does not advance the case of the assessees and is
distinguishable on both facts and the statutory framework
involved. Consequently, the reliance placed thereon is
misplaced and does not warrant interference with the
proceedings on the ground urged by the assessees.
58. The reliance placed by the learned counsel for the
respondents-assessees on the decision of the Delhi High Court
in Property Plus Realtors v. Union of India, [(2025) 171
taxmann.com 426 (Delhi)], is equally misconceived. As
noticed hereinabove, the controversy arising in the present
batch of cases has to be examined in the light of the principles
authoritatively laid down by the Hon'ble Supreme Court in
Armour Security (India) Ltd., (supra). The Hon'ble Supreme
Court categorically explained the scope of the expressions
"initiation of proceedings" and held that mere preliminary
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steps, contemplation of action, or communication preceding the
exercise of statutory power cannot be construed as initiation of
proceedings. Initiation occurs only when the competent
authority manifests its decision to proceed by issuing the
statutory notice contemplated under the relevant enactment.
Therefore, insofar as the reasoning in Property Plus Realtors
(supra) proceeds on an interpretation inconsistent with the law
declared by the Hon'ble Supreme Court in Armour Security
(India) Ltd., (supra), it cannot govern the issue arising in the
present cases. The said decision cannot advance the case of the
respondents-assessees and is of no assistance.
59. For the very same reasons, the judgment of the
Rajasthan High Court in CIT v. Hissaria Brothers, [(2008)
169 Taxman 262], is also inapplicable to the facts of the
present case.
60. Further reliance has been placed by the assessees on the
judgment of the Hon'ble Supreme Court in CIT v. Jai Laxmi
Rice Mills, Ambala City, [(2016) 379 ITR 521 (SC)], to
contend that the Joint Commissioner, before issuance of notice
under Section 274 of the Act, is required to record satisfaction
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for initiation of penalty proceedings. The observations made by
the Hon'ble Supreme Court in the said case were in the peculiar
factual backdrop involved therein.
60.1 In the said case, while framing the original assessment,
the Assessing Officer had recorded satisfaction that penalty
proceedings under Section 271E of the Act were required to be
initiated. Subsequently, the assessment order was set aside
and the matter was remanded for framing a de novo
assessment. In the fresh assessment order, no satisfaction
regarding initiation of penalty proceedings under Section 271E
of the Act was recorded. Nevertheless, penalty proceedings
came to be initiated on the basis of the satisfaction recorded in
the original assessment order, which had ceased to exist upon
the order of remand. It was in those circumstances that the
Hon'ble Supreme Court held that, in the absence of satisfaction
recorded in the de novo assessment proceedings, penalty
proceedings under Section 271E of the Act could not be
sustained.
60.2 As observed hereinabove, while interpreting a fiscal
statute, the plain meaning of the statutory text has to be given
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effect to. A reading of Section 271DA of the Act does not
mandate or require the Joint Commissioner to record any
satisfaction before initiating proceedings. It is a settled principle
of law that while interpreting a taxing statute, no words can be
added, implied, omitted or substituted by judicial
interpretation. The statute has to be read as it stands, giving
the words employed therein their ordinary and natural
meaning. In this regard, it is relevant to refer to the judgment
of the Hon'ble Supreme Court in CIT v. Calcutta Knitwears,
[(2014) 6 SCC 444];
"31. Thus, the language of a taxing statute should
ordinarily be read and understood in the sense in
which it is harmonious with the object of the statute to
effectuate the legislative animation. A taxing statute
should be strictly construed; common sense approach,
equity, logic, ethics and morality have no role to play.
Nothing is to be read in, nothing is to be implied; one
can only look fairly at the language used and nothing
more and nothing less.
32. It is also trite that while interpreting a machinery
provision, the courts would interpret a provision in
such a way that it would give meaning to the charging
provisions and that the machinery provisions are
liberally construed by the courts. In Mahim Patram (P)
Ltd. v. Union of India [(2007) 3 SCC 668] this Court
has observed that: (SCC p. 680, paras 25-26)
"25. A taxing statute indisputably is to be
strictly construed. (See J. Srinivasa
Rao v. State of A.P. [(2006) 12 SCC 607 :
(2006) 13 Scale 27] ) It is, however, also well
settled that the machinery provisions for
calculating the tax or the procedure for its
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calculation are to be construed by ordinary rule
of construction. Whereas a liability has been
imposed on a dealer by the charging section, it
is well settled that the court would construe
the statute in such a manner so as to make the
machinery workable.
26. In J. Srinivasa Rao [(2006) 12 SCC 607 :
(2006) 13 Scale 27] this Court noticed the
decisions of this Court in Gursahai
Saigal v. CIT [(1963) 48 ITR 1 (SC)] and Ispat
Industries Ltd. v. Commr. of Customs [(2006)
12 SCC 583 : (2006) 202 ELT 561] .
'17. In Gursahai Saigal [(1963) 48 ITR 1 (SC)]
the question which fell for consideration before
this Court was construction of the machinery
provisions vis-Ã -vis the charging provisions.
The Schedule appended to the Motor Vehicles
Act is not machinery provision. It is a part of
the charging provision.
18. By giving a plain meaning to the Schedule
appended to the Act, the machinery provision
does not become unworkable. It did not
prevent the clear intention of the legislature
from being defeated. It can be given an
appropriate meaning.'"
33. A reference to the observations of this Court
in J.K. Synthetics Ltd. v. CTO [(1994) 4 SCC 276]
would be apposite: (SCC p. 291, para 16)
"16. It is well known that when a statute levies
a tax it does so by inserting a charging section
by which a liability is created or fixed and then
proceeds to provide the machinery to make the
liability effective. It, therefore, provides the
machinery for the assessment of the liability
already fixed by the charging section, and then
provides the mode for the recovery and
collection of tax, including penal provisions
meant to deal with defaulters. ... Ordinarily the
charging section which fixes the liability is
strictly construed but that rule of strict
construction is not extended to the machinery
provisions which are construed like any other
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statute. The machinery provisions must, no
doubt, be so construed as would effectuate the
object and purpose of the statute and not
defeat the same."
34. It is the duty of the court while interpreting the
machinery provisions of a taxing statute to give effect
to its manifest purpose. Wherever the intention to
impose liability is clear, the courts ought not be
hesitant in espousing a commonsense interpretation to
the machinery provisions so that the charge does not
fail. The machinery provisions must, no doubt, be so
construed as would effectuate the object and purpose
of the statute and not defeat the same. Francis
Bennion in Bennion on Statutory Interpretation, 5th
Edn., Lexis Nexis in support of the aforesaid
proposition put forth as an illustration that since
charge made by the legislator in procedural provisions
is excepted to be for the general benefit of litigants
and others, it is presumed that it applies to pending as
well as future proceedings."
61. The Hon'ble Supreme Court in Amitabh Bachchan
(supra) has held that where the statute does not mandate the
issuance of a show cause notice and merely requires that an
opportunity of hearing be afforded, the requirement of a show
cause notice cannot be read into the provision. By the same
principle, a requirement of recording satisfaction cannot be
imported as a condition precedent when the statute itself does
not prescribe such a requirement. Accordingly, when Sections
271DA, 274 and 275 of the Act neither mandate nor even
contemplate the recording of satisfaction by the Joint
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Commissioner, no such procedural requirement can be insisted
upon. The absence of a recorded satisfaction by the Joint
Commissioner does not vitiate the proceedings or warrant
interference by this Court.
62. The learned Single Judge, placing reliance on the
judgment of this Court in K. Umesh Shetty (supra), interfered
with and set aside the orders imposing penalty under Section
271DA of the Act by holding the proceedings to be barred by
limitation, reckoning the commencement of limitation from the
date of reference made by the Assessing Officer to the Joint
Commissioner of Income Tax. In view of the reasons assigned
and discussion made, the order of the learned Single Judge is
not sustainable.
63. We conclude our findings as under;
(i) The limitation under Section 275(1)(c) of the Act
commences only from the date of issuance of notice
under Section 274 of the Act by the Joint
Commissioner of Income Tax. The
proposal/reference forwarding information or
material by the Assessing Officer to the Joint
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Commissioner, for consideration of initiation of
penalty proceedings under Section 271DA of the
Act, cannot, be construed as initiation of
proceedings for imposition of penalty under Section
271DA of the Act.
(ii) The proceedings under Section 271DA of the Act can
be said to have been initiated only upon issuance of
notice under Section 274 of the Act by the Joint
Commissioner of Income Tax. The period of six
months prescribed under Section 275(1)(c) of the
Act for passing the penalty order shall commence
from the end of the month in which such notice
under Section 274 of the Act is issued by the Joint
Commissioner.
(iii) The Joint Commissioner shall issue the notice under
Section 274 of the Act within a period of six months
from the end of the month in which the
proposal/reference is received from the Assessing
Officer for the purpose of considering initiation of
proceedings for imposition of penalty under Section
271DA of the Act.
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(iv) The notice issued under Section 274 read with
Section 271DA of the Act which is beyond the period
of six months from the end of the month in which
the proposal/reference was received by the Joint
Commissioner from the Assessing Officer, the
proceedings shall be liable to be declared as time-
barred. Where the notice under Section 274 of the
Act is issued within the aforesaid period and the
order imposing penalty under Section 271DA of the
Act is passed within six months from the end of the
month in which such notice is issued, the order shall
be regarded as having been passed within the
period of limitation prescribed under Section 275 of
the Act.
64. Now, let us examine the timelines between the proposal
made by the Assessing Officer and the issuance of notice by the
Joint Commissioner, as well as the period within which the
penalty order was passed from the date of issuance of notice by
the Joint Commissioner.
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64.1 In the batch of ten cases before us, it is found that the
orders imposing penalty were passed within six months from
the date of issuance of notice by the Joint Commissioner.
However, insofar as the issuance of notice by the Joint
Commissioner from the date of the proposal made by the
Assessing Officer is concerned, in the light of the legal position
discussed above, it is found that the penalty orders, which are
the subject matter of Writ Appeal Nos.1991/2025, 1994/2025,
1996/2025 and 2021/2025, are barred by limitation. The
notices issued by the Joint Commissioner, reckoned from the
date of the proposal/reference made by the Assessing Officer,
were beyond the prescribed period of six months. Accordingly,
those penalty orders are declared to be barred by limitation.
64.2 However, in respect of the remaining cases, the notices
issued by the Joint Commissioner were within six months from
the date of receipt of the proposal/reference from the Assessing
Officer and, therefore, were issued within the prescribed period
of limitation.
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65. Accordingly, the following:
ORDER
(i) Writ Appeal Nos.1991/2025, 1994/2025,
1996/2025 and 2021/2025 are
SPONSORED
dismissed.
(ii) Writ Appeal Nos.1995/2025, 1977/2025,
1980/2025, 1982/2025, 2003/2025 and
2023/2025 are allowed.
(iii) The orders of the learned Single Judge in
Writ Petition Nos.20219/2025,
20242/2025, 20220/2025, 20235/2025,
22032/2025 and 20212/2025 are hereby
set aside.
(iv) The penalty orders dated 28.03.2025
passed under Section 271DA of the
Income-tax Act, 1961, and the
consequential demands which were subject
matter of Writ Petition Nos.20219/2025,
20242/2025, 20220/2025, 20235/2025,
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22032/2025 and 20212/2025 are hereby
restored.
Pending I.As., if any, stand disposed of.
We place on record our appreciation for the able
assistance rendered by Sriyuths Sri Amaregouda Kellur,
Research Assistant, and Sri Harshith A., Law Intern.
Sd/-
(S.G.PANDIT)
JUDGE
Sd/-
(K. V. ARAVIND)
JUDGE
DDU*
