TMI Blog2016 (11) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... .1990. In our view, penalty orders are within the period of limitation. - Decided against assessee - Income Tax Reference No. 11, 12 of 2010 - - - Dated:- 26-9-2016 - Hon'ble Sudhir Agarwal And Hon'ble Dr. Kaushal Jayendra Thaker, JJ. For the Applicant : R.R. Kapoor, S.D. Singh For the Opposite Party : C.S.C., RK Upadhyay ORDER 1. At the instance of Assessee, Income Tax Appellate Tribunal, Allahabad (hereinafter referred to as Tribunal ) under section 256(2) of Income Tax Act 1961 (hereinafter referred to as ''Act 1961') has referred following two questions, involved in both these cases, for opinion of this Court: (1) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that for imposing penalty under section 271B of I.T Act, 1961, its initiation in the course of assessment proceedings, is not necessary within the meaning of Section 275(b)(c) of the above Act? (2) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that the penalty order passed by the learned Assessing Officer on 30.10.199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75(b) but in fact the matter has to be considered in the light of Section 275(1)(c) and therefore, we have corrected question no.1 and proceed to consider the aforesaid question in the context of limitation prescribed under section 275(1)(c) which reads as under: 275.(1) No order imposing a penalty under this Chapter shall be passed- (a) .......... (b)........... (c) in any other case, after the 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 action for imposition of penalty is initiated, whichever period expires later. 10. The aforesaid provision contains two clauses: first is, after the expiry of financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, and, second is, within six months from the end of the month in which action for imposition of penalty is initiated. It further says that out of two, whichever is later shall apply. 11. Shri S.D.Singh, learned Senior Counsel submitted that both clauses in sub section (c) of Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.11.1963. A notice under section 271(1)(c) was issued on 25.4.1964 and thereafter order imposing penalty was passed. An objection was raised that penalty proceedings must have commenced before conclusion of assessment proceeding. It was argued that penalty proceedings were initiated by issue of a notice to show cause but since it was done after completion of assessment, hence illegal. Penalty for the purpose of Section 271(1)(c) is attracted where there is a case of concealment of particulars of income by Assessee or it has deliberately furnished in accurate of such income. This Court relied on a pari materia provision contained in Section 28(1) Indian Income Tax Act 1922 considered in Commissioner of Income Tax versus S.V.Angidi Chettiar (1962) 44 I.T.R 739 wherein Court held that proceedings to levy penalty are not to be commenced by Assessing Officer before completion of assessment proceedings. To attract penalty under section 271(1)(c) only satisfaction of Assessing Officer in the assessment proceedings that there existed a case where conditions specified in clauses (a), (b) or (c) are specified, have to exist, since that is a condition for exercise of jurisdiction. Referring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Shanbhag Restaurant versus Deputy Commissioner of Income Tax (2004) 266 ITR 393 (Kar) has considered Section 275(1)(c) holding that it comprises of two parts. First part provides that no order imposing penalty under Chapter XXI could be made, in cases, which do not fall under section 275(1)(a) and (b) after the expiry of financial year in which proceedings in the course of which action for imposition of penalty, has been initiated, are completed. Second part relates to cases which prohibit passing of an order imposing penalty after expiry of six months from the end of the month in which action for imposition of penalty is initiated. It further says that out of the two parts, whichever period would expires later, would enure to the benefit of Revenue, and would apply. Having said so Court said that for the purpose of first part, financial year in which proceedings in the course of which action for imposition of penalty, is required to be understood as the proceedings relating to assessment order. The financial year in which proceedings in the course of which action for imposition of penalty has been initiated can be understood as the proceedings relating to imposition of penalty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposition of penalty is initiated.The period of limitation in such a case would be six months from the end of the month in which the action for imposition of penalty is initiated. It is clear that where penalty proceedings are initiated in the course of some other proceedings, the Legislature has provided for for two different periods of limitation. However, so that there is no confusion with regard to which of the two would apply, the Legislature has added the expression whichever period expires later at the end .To explain this ,let us take two examples: Example 1: Assumes that the action for imposition of penalty is initiated on March 15, 2007, in the course os some proceedings which are completed on March 25, 2007. On the basis of the forst part of section 275(1)(c), the period of limitation would end on March 31,2007, being the end of the financial year in which the proceedings in the course of which action for the imposition of penalty was initiated, is completed.However, taking recourse to the provisions of the second part of section 275(1) (c), the end of the period of limitation would be September 30, 2007. This would be so because the action for imposition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of some proceedings. In such cases, the first part of section 275(1) (c) would have no application and it is only the period of limitation prescribed in the second part which would apply. Since only one period of limitation would be applicable,the expression whichever period expires later would have to be read as that very perod of limitation. The present case undoubtedly falls under section 275(1)(c) and, that too, under the second part thereof. Therefore, on a plain reading and on a logical analysis of the relevant provisions of the said Act, the period of limitation during which an order imposing a penalty could have been passed in the present case would be a period of six months beginning from the end of the month in which the action for imposition of penalty was initiated. We have already noticed above that the show -cause notice under section 274 read with section 271B of the said Act was issued on July 31,2003. Since that happened to be the end of the month also, the period of six months would have to be reckoned from that date. That would take us to January 31, 2004. Thus, the penalty order could have been passed on any date up to and including January 31,2004. The penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation under section 275(1)(c) of Act, 1961. 22. Looking to the facts of the present case, we find that assessments were completed on 31.3.1989 and 30.3.1990 in respect to assessment years 1988-89 and 1989-90. Notices for penalty in respect of assessment year 1988-89 was issued on 2.4.1990 and for assessment year 1989-90, issued on 20.6.1990. Penalty orders were passed in both the cases on 30.10.1990. In our view, penalty orders are within the period of limitation. 23. Now we may refer to some authorities cited by learned Senior Counsel on behalf of Assessee which in our opinion would not help him for answering the questions which are up for consideration in this reference. 24. Shri S.D.Singh, learned Senior Counsel has relied on a judgment in Commissioner of Income Tax versus E.C.C Project Pvt.Ltd. (2015) 374 ITR 44(All) which was decided on the question that no penalty would be leviable under section 271B of Act, 1961 where Assessing Officer has failed to record its satisfaction in the assessment order for levy of penalty. We find that even on this aspect, there is an authority of Supreme Court in Karan Vir Singh Gossal versus Commisisoner of Income Tax and another (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 229 observed as under: Where the language of statute is clear and unambiguous there is no room for reading or interpreting statute in a manner, which may add a few words therein on the assumption that the legislature has left a vacuum need to be bridged by judicial interpretation. It is not the function of the Court to read something in the provision of law, which is not there, or find out a way of obviating the difficulties in enforcing the law howsoever meritorious the intention of the legislature might be. 29. A Constitution Bench in Behram Khurshed Pesikaka Vs. State of Bombay AIR 1955 SC 123 rejecting to interpret a law on the supposed difficulty of prosecution in improving the case, observed as under: The difficulty in the way of the prosecution proving its case need not deflect the Court from arriving at a correct conclusion. If these difficulties are genuinely felt it would be for the legislature to step in and amend the law. It would not be the function of the Court to read something in the provisions of the law, which is not there, or to find out a way of obviating the difficulties in enforcing the law howsoever meritorious the intentions of the Legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or with the policy underlying the statue but must construe statute from plain meaning of the words used therein. 34. In Aron Soloman Vs. A. Soloman Co. Ltd. (1897) AC 22 (38) (HL) 5 Lord Watson observed- In a court of law or equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable and necessary implication. The aforesaid passage has been quoted with approval in R.L.Arora Vs. State of Uttar Pradesh, AIR 1964 SC 1230 (1244), Shahdara (Delhi) Saharanpur Light Railway Co. Ltd. Vs. Workers Union AIR 1969 SC 513 (759), Hansraj Gordhandas Vs. H.H.Dave AIR 1970 SC 755 (759), Sri Umed Vs. Raj Singh AIR 1975 SC 43 (63/64), Commissioner of Sales Tax, U.P. Vs. Super Cotton Bowl Refilling Works AIR 1989 SC 922 (930), State of Madhya Pradesh Vs. G.S.Ball and Flour Mills AIR 1991 SC 772 (785) and Harbhajan Singh Vs. Press Council of India AIR 2002 SC 1351 (1356). 35. We are aware that the rules of the interpretation are not rules of written or codified law and are not to be followed like rules enacted by legislature in Interpretation Act as observed in Su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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