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Hargu Charan Srivastava Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 173 of 1976
Judge
Reported in[1979]119ITR622(All)
ActsIncome Tax Act, 1961 - Sections 212(3), 271(1), 273 and 275; Taxation Laws (Amendment) Act, 1970
AppellantHargu Charan Srivastava
RespondentCommissioner of Income-tax
Appellant AdvocateR.R. Agarwal, Adv.
Respondent AdvocateA. Gupta, Adv.
Excerpt:
.....in holding that the amended provisions of section 275 were applicable and the orders passed by the income-tax officer on 24th march, 1972, were, therefore, not barred by limitation ? 2. whether, on the facts and in the circumstances of the case, the tribunal was justified in holding that the assessee was liable to penalty under sections 271(1)(a) and 273(b) of the income-tax act, 1961 ?' 7. on the first question the position is well settled. the assessee, who was an advocate, thought that the penalty was imposable and so he may better apply for its waiver or reduction to the higher authority......the imposable penalty be waived or reduced.4. the assessee thereafter applied for adjournment of penalty proceedings on the ground that he had made an application before the commissioner for waiving or reducing the imposable penalty. the proceedings were adjourned on february 18, 1972 and march 20, 1972, on which date march 24, 1972, was fixed. on this date, i.e., march 24, 1972, the assessee again made an application for adjournment, but the same was rejected and the penalty orders were passed on the same day. the ito imposed penalty in different amounts for late filing of the returns as well as for not filing the estimate of income totalling rs, 5,239 in all, for all the five years.5. the assessee went up in appeal and then to the tribunal, but failed.6. at the instance of the.....
Judgment:

Satish Chandra, C.J.

1. The assessee filed returns of income on 27th August, 1968, for the assessment years 1964-65 to 1968-69. On 14th August, 1969, he filed revised returns for all the aforesaid years, except for the year 1966-67. The income in the original as well as in the revised returns was as follows:

Year

Originalreturn

Revisedreturn

Rs.

Rs.

1964-65

9,304

14,304

1965-66

9,913

14,932

1966-67

8,903

15,403

1967-68

17,715

20,715

1968-69

22,397

24,397

2. The ITO accepted the revised returns and passed the assessment orders on different dates of August, 1969, except for the year 1966-67, for which the assessment was completed on an income of Rs. 16,903. In the assessment orders he recorded a finding that the assessee filed returns late and that he had not filed estimate of income under Section 212(3) of the I.T. Act. Hence, proceedings for levying the penalty were initiated.

3. In due course a notice was issued to show cause why penalty under Sections 271(1)(a) and 273(b) of the Act be not imposed. The assessee made an application to the CIT under Section 271(4A) of the Act praying that the imposable penalty be waived or reduced.

4. The assessee thereafter applied for adjournment of penalty proceedings on the ground that he had made an application before the Commissioner for waiving or Reducing the imposable penalty. The proceedings were adjourned on February 18, 1972 and March 20, 1972, on which date March 24, 1972, was fixed. On this date, i.e., March 24, 1972, the assessee again made an application for adjournment, but the same was rejected and the penalty orders were passed on the same day. The ITO imposed penalty in different amounts for late filing of the returns as well as for not filing the estimate of income totalling Rs, 5,239 in all, for all the five years.

5. The assessee went up in appeal and then to the Tribunal, but failed.

6. At the instance of the assessee, the Tribunal has referred the following questions of law for our opinion :

' 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amended provisions of Section 275 were applicable and the orders passed by the Income-tax Officer on 24th March, 1972, were, therefore, not barred by limitation ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was liable to penalty under Sections 271(1)(a) and 273(b) of the Income-tax Act, 1961 ?'

7. On the first question the position is well settled. Section 275, which lays down the period of limitation for initiating penalty proceedings, was amended with effect from 1st April, 1971, by the Taxation Laws (Amend.) Act, 1970. Previously, the limitation was two years commencing from the date of the assessment order. After the amendment, the limitation was changed to two years commencing from the end of the financial year in which the assessment order was passed.

8. In the present case, assessment orders were passed in August, 1969. Therefore, if the amendment was applicable, the period of limitation commenced from 1st April, 1970, and continued till 3Ist March, 1972.

9. The prescription of period of limitation is a matter of procedure. Any amendment in this regard is retrospective in the sense it is applicable to all those matters which are pending and which had not become closed or dead. If in a particular proceeding the period of limitation on 1st April, 1971, was still running, the amended provision enlarging the period of limitation would apply. This is the view taken by the Andhra Pradesh, Gujarat, Karnataka and Orissa High Courts in Addl. CIT v. Watan Mechanical and Turning Works : [1977]107ITR743(AP) , CIT v. Royal Motor Car Co. : [1977]107ITR753(Guj) , CIT v. M. Nagappa : [1978]114ITR707(KAR) , CIT v. Soubhagya Manjari Devi : [1976]105ITR82(Orissa) and CIT v. Bhikari Charan Panda : [1976]104ITR73(Orissa) . We are in respectful agreement with these authorities. On facts it is clear that the amended period of limitation was applicable to the present case.

10. In respect of the second question, the position is that on receipt of the notice to show cause the assessee made an application before the CIT under Section 271(4A) for waiver or reduction of the imposable penalty. The Commissioner had jurisdiction to reduce or waive the penalty in the case of delay in filing the return under Section 271(1)(a), but it is not disputed that Section 271(4A) did not apply to imposition of penalty under Section 273(b) for not filing the estimate. The assessee, who was an advocate by profession, still applied before the ITO to adjourn penalty proceedings both under Section 271(1)(a) and under Section 273(b) and, in fact, obtained adjournments on February 18, 1972, and March 20, 1972. In the application for adjournment the assessee did not furnish any explanation, whatsoever, either for the delay in filing the return or for not filing the estimate of income. It is apparent that since limitation was going to expire on March 31, 1972, the ITO was anxious to complete the proceedings before that date. He did adjourn the hearing on March 20, 1972, but fixed March 24, 1972, On this date, the assessee again made an application for adjournment, but the same was refused on the view that the CIT had by his order dated 8th March, 1972, rejected the assessee's application for waiver or reduction of the penalty. Since the assessee had not appeared himself but had only got an application sent, the ITO, after rejecting the application, proceeded to consider the matter on merits and passed the penalty orders on that very date. In these circumstances, the AAC and the Tribunal held that the assessee was afforded a reasonable opportunity of showing cause.

11. We are not disposed to disagree with the view expressed by the Tribunal. The reason why the assessee did not file a return or estimate in time was within the special knowledge of the assessee. He did not take the ITO into confidence and explain the factual position as to the cause for delay. He remained content by making an application for adjournment on the ground that he had already applied to the Commissioner. The Commissioner had jurisdiction to reduce or waive the imposable penalty. The assessee, who was an advocate, thought that the penalty was imposable and so he may better apply for its waiver or reduction to the higher authority. This explains the basis for not furnishing any explanation before the ITO, which may go to show that the assessee had reasonable cause for the delay. He did not care to file an explanation before the ITO.

12. The learned counsel for the assessee stressed that after the ITO had rejected the application for adjournment, he should have considered that the assessee had not till then become aware of the order of the Commissioner dismissing his application and so he should have given a short date, may be a day or two, after March 24, 1972. The submission is apparently plausible, but the difficulty in accepting it is that the assessee had chosen to remain absent. He was not present before the ITO when the application for adjournment was considered by him. It was hence difficult for the ITO to know that the assessee wants an adjournment to enable him to furnish an explanation for the delay. This could not be assumed by the ITO. If the assessee had been present, he could have submitted the explanation without asking for a fresh opportunity. Take a case where the assessee had really no explanation to offer on facts ; he as a responsible advocate could have taken the view that it was unnecessary to prolong the proceedings when the period of limitation was expiring shortly. It cannot hence be assumed that the assessee would have necessarily asked for an adjourn-ment on March 24, 1972. In the circumstances, it is difficult to castigate the ITO for not having granted an adjournment or for not having postponed the delivery of the final orders by a day or two. In these circumstances, it is difficult to hold that the Tribunal was not justified in holding that the assessee was liable to pay the penalty.

13. In the result, both the questions referred to us are answered in the affirmative, in favour of the department and against the assessee. The Commissioner would be entitled to costs, which are assessed at Rs. 200.


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