Section 472: bar of limitation for imposing penalties

Introduction

Section 472 limits how long the authority has to pass a penalty order. The six-month period is counted from the end of a quarter, but its triggering event depends on whether the related assessment or other order is under appeal, revision, or neither.

Key takeaways

The six-month limit

No order imposing a penalty under this Chapter shall be passed after the expiry of six months from the end of the quarter in which:

• The proceedings, in the course of which action for imposing the penalty was initiated, are completed - if the relevant assessment or other order is not the subject-matter of an appeal under section 356 or 357 or 362.
• The order of revision is passed - if the relevant assessment or other order is the subject-matter of revision under section 377 or 378.
• The order of appeal is received by the jurisdictional Principal Commissioner or Commissioner - if the relevant assessment or other order is the subject-matter of an appeal under section 356 or 357 or 362.
• Notice for imposition of penalty is issued, in any other case.

Revising the penalty order after appeal or revision

The order imposing, enhancing, reducing or cancelling a penalty, or dropping the penalty proceedings, may be revised based on the assessment as revised by giving effect to an order under section 356, 357, 362, 365 or 367, or a revision under section 377 or 378, where the relevant assessment or other order is the subject-matter of an appeal or revision under those sections.

Conditions for that revised order

No order imposing, enhancing, reducing or cancelling a penalty, or dropping the proceedings for imposing a penalty, under this revision power shall be passed:

• Unless the assessee has been heard, or has been given a reasonable opportunity of being heard.
• After the expiry of six months from the end of the quarter in which the order under section 356, 357, 362, 365 or 367 is received by the jurisdictional Principal Commissioner or Commissioner, or the order of revision under section 377 or 378 is passed.

Cross-reference and exclusions from the limitation period

Section 471(2) - on prior approval of the Joint Commissioner - applies to an order imposing, enhancing or reducing a penalty under this section.

In computing the limitation period, the following are excluded:

• The time taken in giving the assessee an opportunity to be re-heard under section 244(2).
• The period beginning on the date a court order or injunction granted a stay on the penalty-levy proceeding, and ending on the date the jurisdictional Principal Commissioner or Commissioner received a certified copy of the order vacating that stay.

Step-by-step flow for the time limit under Section 472

1. 1

   What is the status of the relevant assessment or other order?

   Section 472(1) gives the starting quarter for each case.

   • Not under appeal under section 356, 357 or 362: Clause (a): the quarter in which the proceedings in which penalty was initiated are completed. Go to the next step.
   • Under revision under section 377 or 378: Clause (b): the quarter in which the revision order is passed. Go to the next step.
   • Under appeal under section 356, 357 or 362: Clause (c): the quarter in which the jurisdictional Principal Commissioner or Commissioner receives the appeal order. Go to the next step.
   • Any other case: Clause (d): the quarter in which the penalty notice is issued. Go to the next step.
2. 2

   Count six months from the end of that quarter

   No penalty order can be passed after that date.

3. 3

   Exclude the periods in Section 472(5)

   Exclude the time taken to give a rehearing under section 244(2), and the period from the date a court stay on the penalty proceedings was granted to the date the certified copy of the order vacating it was received.

4. 4

   Is the penalty order being revised after an appeal or revision effect?

   Section 472(2) allows revision of the penalty order. Section 472(3) requires a hearing and a six-month limit from the end of the quarter in which the order is received or passed. Section 472(4) applies the approval rule in section 471(2).

Practical checklist

Glossary

Quarter-end trigger

Section 472 calculates six months from the end of the quarter containing the specified event, not invariably from the event date itself.

Excluded period

Time left out of the limitation calculation under section 472(5), including specified rehearing time and court-stay time.

Frequently asked questions