TMI Blog2005 (1) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion referred to us in the affirmative, i.e., in favour of the Revenue and against the assessee. We answer the second question referred to us in the negative, i.e., in favour of the assessee and against the Revenue - - - - - Dated:- 27-1-2005 - Judge(s) : R. K. AGRAWAL., PRAKASH KRISHNA. JUDGMENT The Income-tax Appellate Tribunal, Allahabad, has referred the following questions of law under section 256(1) of the Income-tax Act, 1961, (hereinafter referred to as "the Act"), for the opinion to this court. "Whether the Tribunal was right in holding that under the facts and circumstances of the case the Commissioner of Income-tax cannot revise under section 263 the order under section 271(1)(c) passed by the Income-tax Officer beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,705 was confirmed by the Commissioner of Income-tax (Appeals) which represented unexplained cash credit and the amount was treated as undisclosed income of the firm attracting the provisions of section 271(1)(c) of the Act. He further held that the assessing authority has not applied his mind on the question whether on this addition, penalty under section 271(1)(c) of the Act was imposable or not and he has merely dropped the penalty proceedings on a technical ground that there was no tax effect and thus no penalty was leviable. He further held that the order passed by the Income-tax Officer is erroneous and prejudicial to the interests of the Revenue. He accordingly set aside the order dropping the penalty proceeding with a direction to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the provision of limitation provided under section 275 of the Act would not be applicable to a case where the order dropping the penalty proceeding has been revised under section 263 of the Act, inasmuch as in exercise of powers under section 263 of the Act there may be instances where the limitation provided for imposition of penalty may have expired and thus the power under section 263 of the Act cannot be nullified on this ground. Having heard Sri A. N. Mahajan, learned standing counsel for the Revenue, we find that it is not in dispute that the penalty proceeding has been initiated during the course of the assessment proceeding itself. However it was dropped by the assessing authority on September 28, 1984. We find that clause (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the question of limitation is concerned we find that under section 275 of the Act as it stood during the relevant period the limitation for imposition of penalty has been provided, which reads as under: "275. 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 or the Commissioner (Appeals) under section 246 or an appeal to the Appellate Tribunal under sub-section (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from April 1, 1989. Clause (b) as substituted now takes care of all orders which obviously includes an order of penalty also which may be passed pursuant to the order under section 263 of the Act. Clause (b) of the Act reads as under: "(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." Thus, after April 1,1989, if limitation for passing the penalty pursuant to the order under section 263 is available, the order could have been passed after the expiry of six months from the end of the month in which the order under section 263 had been passed. However, as in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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