TMI Blog2011 (9) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... e., within a period of six months from the order of the ITAT - Thus, the impugned order is set aside and the matter is remitted back to the ITAT for a decision on the merits of the Appeal in accordance with law. - ITA NO.511/2011 - - - Dated:- 30-9-2011 - HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE SIDDHARTH MRIDUL Appellant : Mr. Sanjeev Sabharwal, Advocate. Respondent : Mr. Ajay Vohra, Ms. Kavita Jha and Mr. Somnath Shukla, Advocates. SIDDHARTH MRIDUL, J. 1. The present Appeal was admitted on the following substantial question of law:- Whether learned ITAT erred in holding that penalty has been levied after expiry of limitation period as laid down under Section 275(1)(a) of the Income-Tax Act? 2. The fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28th February, 2003 the Assessee approached the Commissioner of Income Tax (Appeals)[CIT(A)]. The CIT(A) confirmed the stand of the Assessing Officer vide order dated 23rd December, 2005. (h) Thereafter the Appeal filed by the Assessee before the Income Tax Appellate Tribunal (ITAT) also came to be dismissed by order dated 11th August, 2008. (i) On 26th September, 2009 the Assessing Officer levied penalty in the sum of Rs. 1,49,38,148/- on the Assessee under Section 271(1)(c) of the Act on the ground that the Assessee had furnished incorrect particulars of his income. The penalty order was confirmed by the CIT(A) vide order dated 12th October, 2009. Consequently the Assessee approached the ITAT which allowed the Appeal of the Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the Chief Commissioner or Commissioner, which is later; 4. On behalf of the Revenue the following submissions were made by the Counsel. Firstly that the proviso to Section 275(1)(a) has been introduced by way of an amendment and that while amending the Section it could not be the intention of the Legislature to obliterate the main provision. Consequently, the proviso cannot be interpreted so as to render the main provision nugatory. Secondly, it was argued that the proviso has to be interpreted giving due regard to the scheme of the Act which provides for thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia, (2007) 288 ITR 452 (Mad). 5. On the contrary, the submission on behalf of the Assessee was that the provision had been amended and the proviso introduced to carve out a new set of cases which dealt with the order passed by the CIT(A) after 1st June, 2003. It was next argued that the objective behind the introduction of the proviso was to accelerate the proceedings in which punishment is imposed by the Assessing Officer. Lastly, it was argued that Section 275(1)(a) has to be read in consonance with Section 275(1A). 6. Before proceeding further it would be beneficial to consider the decision of the Madras High Court in Rayala Corporation (supra). In that case the contention of the petitioner was that the proviso was not applicable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The Supreme Court in considering the function of a proviso in Commissioner of Income Tax v. Ajax Products Ltd., 55 ITR 741(SC), approved the dictum in Commissioner of Income Tax v. Indo-Mercantile Bank Ltd., (1959) 361 ITR I, and summarized it thus: The proper function of a proviso is that it qualified the generality of the main enactment by providing an exception and taking out as it were, from the main enactment, a portion which, but for the proviso, would fall within the main enactment. Ordinarily, it is foreign to the proper function of a proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. It is a fundamental rule of construction that a proviso must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 275(1)(a) starts running after the successive appeals from an assessment order has been finally decided by the CIT(A) or the ITAT as the case may be whichever period expires later. The proviso to section 275(1)(a) has only had the effect of extending the period of imposing penalty from six months to one year within the receipt of the order of the Commissioner after 1st June, 2003. The proviso thus carves out an exception from the main Section inasmuch as in cases where no appeal is filed before the ITAT the Assessing Officer must impose penalty within a period of one year to be reckoned from the date of receipt of the order by the Commissioner. To read this provision as suggested by the Counsel for the Assessee would obliterate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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