TMI Blog1977 (7) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner. For the other five years, 1963-64 to 1967-68, proceedings for assessment were pending before the Income-tax Officer. In all these proceedings settlement had been reached, and in so far as the present two years were concerned in the assessment proceeding for 1958-59, Rs. 15,000 with Rs. 920 as interest had been added on account of the hundi loan in question, as per the order at annexure " H ", dated January 25, 1969; while in the proceeding for the assessment year 1964-65, the amount of Rs. 20,000 with interest of Rs. 5,875 and an additional amount of Rs. 10,000 by way of cash credit in the account of one Harshrai Thaker had been added as per the order at annexure " F " dated March 10, 1969. Both the orders recited the fact that penalty proceedings had been initiated for concealment of income. On the basis of the aforesaid orders, the Inspecting Assistant Commissioner levied penalty of Rs. 1,582.02 and Rs. 3,445. The assessee having challenged this order in appeal before the Tribunal on the ground that no show-cause notice had been served on him as required by section 274 for giving due opportunity for hearing, the Tribunal upheld the contention. The Tribunal even perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcluded." Mr. Patel, therefore, vehemently argued that the penalty proceedings for both these years having been initiated on the date of the completion of the reassessment proceeding in 1958-59, and the assessment proceeding in 1964-65, by the aforesaid order dated January 25, 1969, and March 10, 1969, the two years' limitation period had expired as the final order imposing the penalty should have been passed before January 25, 1971, and March 10, 1971, in these two cases. Therefore, the Tribunal had no jurisdiction to pass such a remand order proceeding on an assumption that the Inspecting Assistant Commissioner would have authority to impose this penalty in the face of this bar of limitation enacted in section 275. Mr. Patel invoked the terms of the Explanation where the legislature lifted the bar when the opportunity for re-hearing had to be given under the proviso to section 129, when the incumbent in office had been changed and the assessee demanded such fresh opportunity or when the proceeding for imposition of penalty under Chapter XXI had been stayed by some order or injunction of any court. He also relied even on the analogy of the other analogous provisions in the old ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e whole intention of the legislature. The legislature could never have intended that these higher authorities which are set up to interfere with the penalty order in their entirety (sic) or should only set it aside, and should not pass such just remand orders, requiring the fresh order to be passed by the authority imposing the penalty. Even Mr. Patel had to concede on the basis which he had accepted that if the higher authority adopted a colourable device to call for merely a finding from the original authority retaining the original matter on its file, this bar of limitation would not apply. The legislature could never have intended that for doing justice and for exercising the jurisdiction created in these higher authorities, such a colourable device should be adopted. The plain effect of such a situation would be that the interpretation sought to be put by Mr. Patel leads to such an absurd result that if two constructions are possible, that construction must be preferred which avoids this result. In such cases where the authority imposing penalty had not given due hearing as required by the mandatory provisions of section 274, and when under our Constitution none can be penalis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had expired from the date of the completion of the assessment proceedings, was without jurisdiction and it was against the statutory provision in section 275. The Bombay view in Commissioner of Income-tax v. Kishoresinh Kalyansinh Solanki [1960] 39 ITR 522, which was a decision dated April 6, 1960, and it would be binding on this court, had not been accepted on the ground that, however desirable it would be to have a provision that the period of limitation would not apply when the authority was acting under the direction of the appellate authority, such a provision could not be introduced by the judicial decision. With great respect to the learned judges of the Kerala High Court, this view of the legal position is entirely erroneous and contrary to all settled principles of construction of statutes. Even the limitative construction placed by us would carry out fully this salutary object of the legislature because the initial order would have to be passed by the original competent authority within two years' statutory time-limit and it is only in that limited class of cases where the penalty order would have to be interfered with by a remand by higher authorities in appeal or rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must not be reduced to a nullity by the draftsman's unskilfulness. The court will read not only the particular provision but also allied and cognate provisions as forming a connected scheme and not treat them as detached provisions. A casus omissus was not rightly inferred in such a case, when the true meaning could be given by preferring a limited construction in consonance with the particular subject-matter by avoiding the other wider meaning resulting in absurdity, repugnancy and inconsistency. The same is the approach adopted by their Lordships in Director of Inspection of Income-tax (Investigation) v. Pooran Mall Sons [1974] 96 ITR 390 (SC), where an identical question had arisen because the order under section 132(5) of the Act had to be passed within 90 days of the seizure of the article in question. Under section 132(10) if a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1A) objects for any reason to the approval given by the Commissioner under sub-section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity to the party concerned, it should not be left with the only option of quashing it and putting the party at an advantage even though it may be satisfied that on the material before him the conclusion arrived at by the Income-tax Officer was correct or dismissing the petition because otherwise the party would get an unfair advantage. It was pointed out that the power to quash an order under article 226 can be exercised not merely when the order sought to be quashed was one without jurisdiction in which case there could be no room for the same authority to be directed to deal with it. But, in the circumstances of a case, the court might take the view that another authority had the jurisdiction to deal with the matter and may direct that authority to deal with it or where the order of the authority which had the jurisdiction was vitiated by the circumstances like failure to observe the principles of natural justice, the court might quash the order and direct the authority to dispose of the matter afresh after giving the aggrieved party opportunity of putting forward its case.Their Lordships pointed out that otherwise it would mean that where a court quashed an order because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 132(1), the Income-tax Officer was not exercising any powers of taxation but only the question as to the person to whom the property seized belonged and to such a case the provisions of ordinary law which deals with the tribunals and courts which decide the question of title to properties should be deemed to apply. These observations, however, have been made by their Lordships to repel the contention that there can be no question of any equity about limitation and the provisions must be strictly construed. In that case, the person concerned having by consent obtained a remand order was held to be precluded from urging any such contention. The question is not of any equity in the present case but about the true construction of such a limitation provision and the question is already answered by their Lordships that in order that such hierarchical scheme under the Act or the Constitution, where the other higher authority or superior court could pass order of remand for passing a fresh order would not be rendered ridiculous and useless, such limitation must be spelt out looking to the reason and justice behind such a provision. That order to which such limitation applie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the bar of limitation period prescribed under section 275 and on that ground urged that the Tribunal was not justified in law in remanding the matter back to the Inspecting Assistant Commissioner for passing a fresh order under section 271(1)(c) of the Act. Mr. Patel wanted to urge that the order of the competent authority was a mala fide order as at the very fag end, when the limitation period was about to expire, this order had been passed and the Tribunal without going into this material aspect had remanded the matter, which would enable the original authority to get out of the bar of limitation. Such a question should have been urged before the Tribunal and without proper material and findings of the Tribunal on this material question, it would not be open to us to go into this question and, therefore, we have not permitted Mr. Patel to raise any such contention. In that view of the matter this reference must be answered in the affirmative, that is to say, against the assessee and in favour of the revenue. Reference is accordingly disposed of and the assessee shall pay the costs of the Commissioner. Mr. Patel asks for a certificate for appeal to the Supreme Court un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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