TMI Blog2005 (7) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order has been passed and only income has been recalculated to give effect to the order of the Tribunal granting relief to the assessee, thus limitation cannot be counted from January 27, 1986 – question is answered in the affirmative, i.e., in favour of the assessee and against the Revenue. - - - - - Dated:- 11-7-2005 - Judge(s) : R. K. AGRAWAL., RAJES KUMAR. JUDGMENT The Income-tax Appellate Tribunal has referred the following question under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") relating to the assessment year 1972-73 for opinion to this court: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in upholding the finding of the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner of Income-tax (Appeals), Lucknow, while granting this relief, however, enhanced the addition on account of low gross profit by Rs. 52,938 (Rs. 84,950 of Rs. 32,012) and sustained an addition of Rs. 7,942 out of addition of Rs. 62,315, made on account of credit in the old Moradabad General Art Metal Mills. The Department and the assessee both filed the appeal against the order of the Commissioner of Income-tax (Appeals), Lucknow. The Department challenged the directions of the Commissioner of Income-tax (Appeals), Lucknow, with regard to the framing of separate assessments in respect of the two periods. The assessee challenged the various additions confirmed by the Commissioner of Income-tax (Appeals), Lucknow. In the order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aising not only arguments on the merits but also on the grounds of limitation. The Commissioner of Income-tax (Appeals) did not adjudicate upon the merits but proceeded to cancel the penalty by taking note of the provisions of section 275(a) of the Income-tax Act, 1961, as it then stood and applying the same to the facts of the case. His observations, thereafter, went as follows: "I have carefully considered the submissions made before me by the learned authorized representative. I agree with the learned authorised representative that in view of the fact that the departmental appeal had been dismissed by the hon'ble Income-tax Appellate Tribunal vide its order dated June 27, 1980, the penalty proceedings should have been completed within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents advanced in respect of the limitation aspect. In order to do so it would first of all be necessary for us to reproduce section 275(a), which, at the relevant point of time, read us follows: '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 Appellate Assistant Commissioner under section 246 or an appeal to the Appellate Tribunal under subsection (2) of section 253, after the expiration of a period of- (i) two years from the end of the financial year in which the proceedings in the course of which action for imposition of penalty has been initiated are completed, or (ii) six months from the end of the month in whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year. It is not the case of the Department that sub-clause (ii) of section 275 (a) is applicable. During the course of the hearing of the present appeal, the learned Departmental Representative sought to contend that the period of limitation be counted from the date of the order passed by the Income-tax Officer finally determining the income of the assessee at Rs. 92,300 on January 27, 1986. We find on a perusal of the penalty order that this was an order giving appeal effect to the order of the Tribunal and, inasmuch as this cannot be taken as an assessment order for purposes of initiating penalty proceedings, the plea is rejected. In the final analysis, we uphold the action of the Commissioner of Income-tax (Appeals) in cancell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellate order was only a pretext to save limitation which had already expired. The Tribunal further held that even the penalty order could not be passed within two years from the date of the assessment order dated March 11, 1983, and as such it was otherwise barred by limitation. We do not find any error in the view taken by the Commissioner of Income-tax (Appeals) and the Tribunal. Pleading of learned standing counsel that the income was finally determined at Rs. 92,300 on January 17, 1986, and from this date penalty order was within time cannot be accepted. On March 27,1986, no assessment order has been passed and only income has been recalculated to give effect to the order of the Tribunal granting relief to the assessee, thus lim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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