TMI Blog2005 (7) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. Consequently, the penalty proceedings under section 271D of the Act were initiated by issuing the show-cause notice dated 1-2-1999. In response to the same, the explanation of the assessee was two folds - ( i ) that actual amount received during the year was Rs. 1,81,800, which was not received as a loan but as an advance towards distribution rights of assessee s movie " Sabse Bada Khiladi", which was under production and ( ii ) that penalty proceedings were time-barred in terms of the provisions of section 275(1)( c ) of the Act. The Assessing Officer accepted the fact that the assessee had received the sum of Rs. 1,81,800 in cash from the said firm. However, the second contention of the assessee was rejected, as, in his view, the penalty proceedings under section 271D could not be linked with the assessment proceedings. In view of the same, the penalty of Rs. 1,81,800 was imposed under section 271D of the Act. On appeal, the learned CIT (Appeals) confirmed the action of the Assessing Officer following his order in assessee s own case for the assessment year 1994-95. Aggrieved by the same, the assessee is in further appeal before the Tribunal. 3. The learned counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 275(1)( c ) of the Act. In order to appreciate the controversy, it would be appropriate to reproduce the relevant provisions of the above section : "275. Bar of limitation for imposing penalties (1) No order imposing a penalty under this Chapter shall be passed ( a )in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or an appeal to the Appellate Tribunal under section 253, after expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later; ( b )in a case where the relevant assessment or other order is the subject-matter of revision under section 263, after the expiry of six months from the end of the month in which such order of revision is passed; ( c )in any other case, after the expiry of the financial year in which the proceedings, in the course of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f power by the tax authorities. The powers to initiate proceedings cannot be unfettered. That is why the Legislature has provided some restriction or the powers of taxing authorities for initiating penalty proceedings. 9. Section 275, as originally enacted, read as under : "275. Bar of limitation for imposing penalties No order imposing a penalty under this Chapter shall be passed after the expiration of two years from the date of the completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced." The above provisions were considered by the Hon ble Delhi High Court in the case of Rajinder Kumar Somani ( supra ). Their Lordships at Page-760 of the report held as under : "A careful perusal of section 275 of this Act shows that it has laid down bars of limitation in two respects, one explicitly and the other by necessary implication. The explicit limitation is that the order imposing the penalty has to be passed within a particular time. While we are not concerned with the period of limitation here, it is necessary to notice that the period of limitation prescribed starts running from the "end of the financial ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there must be some proceeding under the Act relating to the year under consideration against the assessee before initiating the penalty proceedings. 11. No doubt, the Chapter-XXI of the Act, as originally enacted, contained penalty provisions under section 271, under section 272 and under section 273 where levy of penalty depended on the amount of tax assessed and thus penalty proceedings were connected with assessment proceedings. Thus, one can argue that after the amendments effective from 1989, the ratio of the aforesaid judgment cannot be applied as new provisions of penalties under sections 271B, 271C, 271D and 271E did not refer to assessed tax. In our opinion, such contention, as raised by the revenue before us, cannot be accepted for the following reasons : ( i )It is the settled legal position that no person can be taxed unless his case falls within the four corners of the tax provisions [ Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 (SC)]. The penalty provisions, which are more stringent, should be construed more strictly and, therefore, no person can be penalized unless the language employed by the Legislature brings the case of assessee within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 271A and section 272A. ( iii )Sections 271B, 271C, 271D and 271E were inserted with effect from 1-4-1985 and 1-4-1989 as the case may be. These sections also did not contain any provision for levy of penalty with reference to assessed income. Despite the same, the Legislature while amending section 275 simultaneously effective from 1-4-1989 did not depart from the earlier legal position. The only departure made by the Legislature related to levy of penalty where assessment order was subject-matter of revision under section 263. Only in such case, there is no mention as to when penalty proceedings is to be initiated. The only limitation was that penalty order was to be passed within six months from the end of the month in which order under section 263 was passed. But in respect of other situations, the earlier legal position still continues as clauses ( a ) and ( c ) of section 275( i ) continue to retain the earlier expression. ( iv )If the Legislature intended to depart from the earlier legal position, it could easily do the same by making suitable amendment at least when section 275 was amended with effect from 1-4-1989. That shows that Legislature deliberately continue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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