Clix Capital Services Pvt. Ltd. v. Jt. CIT (2023)459 ITR 470 /149 279 / 334 CTR 574/ 225 DTR 232(Delhi)(HC)

S. 275 : Penalty-Bar of limitation-Natural justice-Notice issued in November 2017-Barred by limitation. [S. 271, 274, 275(1)(c)]

The principles of natural justice are engrafted under section 274 of the Act, inter alia, mandate that no order imposing a penalty under the Chapter, i. e., Chapter XXI shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. Court held that  the initial return qua the assessment year in issue, i. e., assessment year 2007-08 was filed on March 31, 2007, and the revised return was filed on March 31, 2009. The scrutiny assessment under section 143(3) concerning the assessment year 2007-08, was framed on October 28, 2011. Despite the fact that the issue concerning limitation was flagged as far back as on September 9, 2013, and then again in an internal communication dated July 11, 2014, no steps were taken for the issuance of a show-cause notice. The show-cause notice was issued only on November 9, 2017. The delay in issuing the show-cause notice dated November 9, 2017 was inexcusable. There was no explanation, whatsoever, available on the record, as to why the show-cause notice under section 274 of the Act was not issued in 2013-14, if not earlier. As a matter of fact, there was no explanation, even with regard to the period falling between the time when the scrutiny assessment was framed (i.e., on October 28, 2011) and the communication dated September 9, 2013. Thus, even if the period for commencement of limitation prescribed in terms of the second limb of clause (c) of sub-section (1) of section 275 were considered, limitation would commence either from 2013 or 2014. There was a period of unexplained substantial delay, as the show-cause notice, concededly, was issued only on November 9, 2017. The show-cause notice dated November 9, 2017  was  quashed. (AY.2007-08)