TMI Blog1995 (3) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... situations of urgency. 3. The Dy. Commissioner did not accept any of these contentions. He thereupon proceeded to levy the impugned penalty. 4. During the course of the first appellate proceedings, the assessee through its written submissions raised the following points : (1) the penalty proceedings initiated by the show-cause notice dated 30-9-1991 by the Dy. Commissioner suffered from legal infirmity and were void ab initio in terms of the implicit bar of limitation provided by section 275(1)(c) of the Income-tax Act, (2) the penalty order dated 27-5-1992 passed by the Dy. Commissioner under section 271D was barred by limitation in terms of the explicit provisions of section 275, (3) the penalty order was non-speaking one and does not show that there had been application of mind by the Dy. Commissioner, (4) the Dy. Commissioner failed to consider and apply the provisions of section 273B and appreciate the superiority of that provision over the combined reading of sections 269SS and 271D, (5) penalty proceedings have got to be initiated before the completion of the proceedings out of which the said penalty proceedings crop up or emanate. In support of the above co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee with regard to the nonspeaking nature of the penalty order and non-application of mind by the Dy. Commissioner, the learned CIT(A) referred to the record of the proceedings and found that the Dy. Commissioner had in fact required further information and statements from the assessee and had examined the facts relating to the availability of cash or otherwise and the transaction of deposits. All these facts and circumstances clearly showed that there had been application of mind by the Dy. Commissioner. Similar was the case with regard to the question of consideration of reasonable cause under section 273B. He thus concluded that there was no reasonable cause which could explain the borrowings in cash. He further held that there was no legal infirmity in the penalty order on account of limitation or non-commencement of penalty proceedings during the course of assessment proceedings. He accordingly dismissed the appeal giving rise to the present appeal before us. 6. Let us for the sake of convenience take up the question of fact relating to the date of initiation of proceedings. Before us also the original notice of penalty proceedings received by the assessee was produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the effect that such notices ordinarily fix the date of hearing of about two week distance. In the instant case, had the notice been actually issued on 30-9-1991, the date of hearing would not have been such distant as 3-12-1991. There is another finding of the learned CIT(A) to the effect that the notice was served on the assessee on 26-11-1991. This fact was not contradicted by the assessee at any stage of the original or appellate proceedings. Had the notice actually been issued on 30-9-1991, it would not have taken almost two months to reach the assessee. These circumstances further support the departmental version to the effect that the notice was actually issued on 20-11-1991 and, therefore, served on the assessee on 26-11-1991. Thus, no case has been made out for our interference in the learned CIT(A)'s finding to the effect that the penalty proceedings were initiated only on 20-11-1991. 8. As to the validity of the penalty order, it was stressed by the learned counsel that since neither the penalty proceedings were initiated nor any direction for initiation of penalty proceedings was passed during the course of or up to the completion of the assessment proceedings, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us not enough that the ITO is satisfied in the course of the assessment proceedings that a case for penalty exists, it is further necessary that he should have initiated some action for the imposition of penalty in the course of such proceedings. It depends on the facts of each case whether any such action has been initiated before the date of completion of the assessment. If, even before the completion of the assessment, the ITO has issued a penalty notice, it is clear that he has taken necessary action for the imposition of penalty. The above condition can also be said to be satisfied where, though a penalty notice has not been issued before that date, it is seen that the officer had given a direction to his office before completing the assessment that such a notice should be issued. Similarly, in cases governed by section 274(2) (which has been deleted w.e.f. April 1, 1976), action could be considered to have been initiated if the officer had made a reference to the IAC under that provision though the IAC might apply his mind and issue a further notice to the assessee only long thereafter. But some definite step by way of initiation of penalty proceedings should be taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs even after completion of assessment proceedings or independently of the assessment proceedings. In this connection, the learned departmental representative referred, inter alia, to the following provisions of the Income-tax Act, viz: sections 271A, 271B, 271C, 271D, 271E, 272A, clause (1) sub-clause (a), clause (1) sub-clause (c), clause (1) sub-clause (a), sections 272AA, 272BB, 272A sub-section (2). The learned departmental representative submitted that recent amendments in the Act have introduced a large number of penalty provisions which arise out independently and not out of assessment proceedings. The period of limitation even for these penalties has been provided in section 275. It was, therefore, necessary that the provisions of section 275 should be amended correspondingly. It is for this reason that section 275 has undergone material changes including the changes with regard to the commencement of period of limitation. In the changed context of section 275 therefore, such implicit bar as has been enunciated by the Delhi High Court in Rajinder Kumar Somani's case can no longer operate. We have given our anxious thought to this aspect of the matter and find that the arg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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