1. This is a reference made under Section 256(1) of the Income-tax Act, 1961, referring for our answer the following questions of law :
'(1) Whether the order of the Tribunal that the penalty order was not passed beyond the prescribed period of limitation was correct in law ?
(2) Whether the order of the Tribunal that reasonable opportunity had been provided to the assessee of being heard against the proposed penalty was justified in law ?'
2. The case arises out of imposition of penalty proceedings for the assessment year 1968-69. The assessment order for the year was passed on March 29, 1972. The order imposing penalty was passed by the IAC on April 30, 1975. The contention of the assesses on the point of limitation was that Section 275, as it stood before its amendment by the Taxation Laws (Amendment) Act, 1970, applied and the order imposing penalty ought to have been passed within two years from the date of completion of the assessment proceedings, i'.e., within two years from. March 29, 1972. Now, the Taxation Laws (Amendment) Act, 1970, came into force on April 1, 1971, even before the date of the assessment order. It is well settled that a provision as to the limitation is a procedural provision except in those cases where, by expiry of limitation, a vested right has arisen in favour of the assessee. In the instant case, the limitation for imposition of penalty did not start to run at all before Section 275 was amended by the Taxation Laws (Amendment) Act, 3970. In the circumstances, there is no question whatsoever of application Section 275 as it stood before the amendment. The Tribunal, in our opinion, was clearly right in holding that Section 275 as amended by the Taxation Laws (Amendment) Act, 1970, applied. It is not in dispute that the order of the IAC dated April, 30, 1975, was passed within six months from the end of the month in which the order of the Appellate Tribunal was passed. In this view of the matter, the order imposing penalty was clearly within limitation under Section 275 as amended.
3. Coming next to the second question, the facts are that the IAC issued a notice to show cause to the assessee why penalty be not imposed. The assessee submitted a lengthy statement setting out the facts and appeared before the IAC and prayed for adjournment which was granted and the case was posted for April 25, 1975. On that date no one appeared for the assessee and the order imposing penalty was passed on April 30, 1975. The assessee argued before the Tribunal that he had been taken suddenly ill two days prior to the date of hearing and, therefore, he could not appear before the IAC on the date of hearing and that, therefore, there was no reasonable opportunity to him to meet the proposed penalty. It is clear from the facts that the assessee had the opportunity of filing his explanation to the show-cause notice. Even assuming that he fell ill and this was the reason for his non-appearance, the Tribunal heard him at length on merits. In the circumstances, in our opinion, there was no prejudice to the assessee for want of any adjournment before the IAC and it cannot be said that no reasonable opportunity had been provided to the assessee.
4. For the reasons given above, we answer the questions as follows :
'(1) The Tribunal was right in holding that the order imposing penalty was passed within limitation under Section 275.
(2) The Tribunal was right in holding that reasonable opportunity was given to the petitioner for being heard against the proposed penalty.'
5. The assessee will pay the costs of this reference to the Department Counsel's fee Rs. 100 if certified.