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Commissioner of Income-tax Vs. Sadhu Ram - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 58 of 1975
Judge
Reported in(1980)18CTR(P& H)93; [1981]127ITR517(P& H)
ActsIncome Tax Act, 1961 - Sections 148, 271 and 275; Taxation Laws (Amendment) Act, 1970
AppellantCommissioner of Income-tax
RespondentSadhu Ram
Appellant Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Respondent Advocate B.K. Gupta, Adv.
Excerpt:
.....where the state or regional transport authority has not communicated the order of refusal passed to the persons concerned, the period of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order. - the tribunal rightly took the view that for the determination of the limitation, the amended clause would be applicable because it is well settled that the law of limitation being a procedural law always has retrospective effect unless the amending statute provides otherwise......second question, the relevant facts are that the assessment order in the proceedings in which the penalty notice was issued were concluded on february 9, 1970. the order imposing the penalty was passed on march 4, 1972. the limitation for imposing the penalty is contained in section 275(1)(b) of the act. when the notice was issued the said clause provided that the penalty could be imposed within two years of the date of the final order in the assessment proceedings in which the notice for penalty was issued. but before the date when the penalty was imposed, the clause had been amended by the taxation laws (amendment) act, 1970, and the period of two years under the amended clause was to expireat the end of the financial year in which the assessment proceedings were concluded. the.....
Judgment:

S.P. Goyal, J.

1. The Income-tax Appellate Tribunal, Chandigarh Bench, vide order dated June 23, 1975, has referred the following two questions (question No. 1 at the instance of the revenue and question No. 2 at theinstance of the assessee) to this court under Section 256(1) of the I.T, Act, 1961 (hereinafter called ' the Act '):

' (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Inspecting Assistant Commissioner of Income-tax was not legally competent to pass the penalty order

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the penalty order made by the Inspecting Assistant Commissioner of Income-tax was within time '

2. In response to a notice under Section 148 of the Act, the assessee filed the return on June 17, 1968, showing an income of Rs. 7,094. The ITO, however, after necessary proceedings, assessed the income at Rs. 22,140 on February 9, 1970, and issued notice to show cause as to why penalty may not be imposed for concealment of income. He referred the matter to the IAC on February 20, 1970, for the imposition of the penalty because at that time, the ITO was competent only to impose a penalty of Rs. 1,000. The assessment order was later on rectified by the ITO on April 27, 1970, so as to reduce the total income to Rs. 10,738. The IAC, after hearing the assessee, imposed a penalty of Rs. 16,000 under Section 271(1)(iii) of the Act, vide order dated March 4, 1972. This order was challenged by the assessee by way of appeal before the Appellate Tribunal on two grounds, namely, that the penalty order having been passed more than two years after the assessment order was without jurisdiction and that the penalty levied being less than Rs. 25,000 it could be imposed by the ITO and not by the IAC. The Tribunal rejected the first contention but allowed the appeal on the second and set aside the order imposing penalty.

3. The learned counsel for the parties are agreed that the first question stands concluded by a Division Bench decision of this court in ITR No. 72 of 1974 (C1T v. Raman Industries), decided on August 27, 1979 , wherein a similar question was answered in the negative. This question is accordingly answered in the negative, in favour of the revenue and against the assessee.

4. As regards the second question, the relevant facts are that the assessment order in the proceedings in which the penalty notice was issued were concluded on February 9, 1970. The order imposing the penalty was passed on March 4, 1972. The limitation for imposing the penalty is contained in Section 275(1)(b) of the Act. When the notice was issued the said clause provided that the penalty could be imposed within two years of the date of the final order in the assessment proceedings in which the notice for penalty was issued. But before the date when the penalty was imposed, the clause had been amended by the Taxation Laws (Amendment) Act, 1970, and the period of two years under the amended clause was to expireat the end of the financial year in which the assessment proceedings were concluded. The Tribunal rightly took the view that for the determination of the limitation, the amended clause would be applicable because it is well settled that the law of limitation being a procedural law always has retrospective effect unless the amending statute provides otherwise. A similar view was taken in Hargu Charan Srivastava v. CIT : [1979]119ITR622(All) , Kerala Oil Mills v. CIT : [1980]121ITR254(Ker) and CIT v. M. Nagappa : [1978]114ITR707(KAR) . In all these cases, it was held that Section 275 of the Act which provides the time limit within which proceedings for imposition of penalty had to be completed, was amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, and after its amendment the penalty proceedings could be completed within two years of the completion of the financial year in which the penalty proceedings were initiated because the section embodies a rule of limitation which is procedural in character and, therefore, would govern the penalty proceedings at the time of the imposition. Respectfully agreeing with these decisions, we hold that the limitation for the imposition of penalty would be governed by the amended clause, as it stood on the date when the penalty was imposed.

5. Consequently, the second question is answered in the affirmative, in favour of the revenue and against the assessee. No costs.

B.S. Dhillon, J.

6. I agree.


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