TMI Blog2003 (10) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T.A. Nos. 941 and 943/ Bang. of 1995 by the Income-tax Appellate Tribunal, Bangalore (hereinafter referred to as "the Tribunal"). The facts of this case are very brief, which may be stated as hereunder: The appellant (hereinafter referred to as "the assessee") is a partnership firm carrying on restaurant business. For the assessment year 1991-92, i.e., the year ending March 31, 1991, the assessee filed its return of income on August 27, 1991, admitting the income of Rs. 1,09,310 (rupees one lakh nine thousand three hundred ten only). The said assessment was taken up for scrutiny by the Assessing Officer and during the course of the scrutiny it was found that there were certain credit balances in the names of certain persons as seen from the balance-sheet. The Assessing Officer on verification of the accounts, by means of his assessment order dated February 25, 1994, held that the assessee had received loans and deposits in cash in contravention of the provisions of section 26955 of the Act, and also he had made repayment of the loans and deposits received otherwise than by an account payee cheque or account payee bank draft drawn on the names of the persons who had advanced t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax (Appeals) (hereinafter referred to as "the Commissioner (Appeals)"). The Commissioner (Appeals), after hearing the assessee, by means of his common orders dated August 31, 1995, the copies of which have been produced as annexures H and J to this appeal, allowed the appeal filed by the assessee setting aside the orders annexures C and G passed by the Deputy Commissioner of Income-tax on the ground that the proceedings were completed beyond six months from the date of initiation of the proceedings. Aggrieved by the said order, the Revenue had preferred appeals in Nos. 941 and 943 of 1995 before the Tribunal. However, the Tribunal, in the impugned order set aside the order passed by the Commissioner (Appeals) on the ground that the conclusion reached by the Commissioner (Appeals) that the order was required to be passed within six months from the end of the month in which the action for imposition of penalty initiated, is erroneous in law. The Tribunal, further took the view that the order imposing penalty having been passed on March 28, 1995, and the financial year having expired on March 31, 1995; the conclusion reached by the Commissioner (Appeals) that the penalty levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections if the assessee proves that there was a reasonable cause for the failure in contravening the said provision. He also pointed out that since this contention has not been specifically formulated as a question of law at the time of admission of the appeal, this court may, in exercise of the power conferred on it under subsection (6) of section 260A of the Act, permit the assessee to urge the said contention. However, Shri E.R. Indra Kumar, learned counsel for the respondent, strongly supported the impugned order passed by the Tribunal. It is his submission that the conclusion reached by the Commissioner (Appeals) being totally erroneous in law, the Tribunal was justified in interfering against the said order. The substantial question of law raised for decision which was formulated by this court at the time of admission of this appeal, reads as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the penalty orders under sections 271D and 271E had been passed within the period of limitation and whether the Tribunal was right in reversing the order of the Commissioner of Income-tax (Appeals), who held that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the proceedings in the course of which action for imposition of penalty has been initiated is required to be understood as the proceedings relating to the assessment year. The financial year in which the proceedings, in the course of which action for imposition for penalty has been initiated, can be understood as the proceedings relating to imposition of penalty. In our considered view, the financial year in the first part of section 275(1)(c) must be understood as the financial year where the assessment order is made in the course of which proceedings for penalty could be initiated. In the present case, the assessment order was made on February 25, 1994. The financial year in respect of the assessment order, as rightly found by the Commissioner (Appeals), had expired on March 31, 1994. Therefore, if the first part of section 275(1)(c) is not applicable, the only question is whether the order imposing penalty was passed within the period prescribed in the later portion of section 275(1)(c), i.e., within six months from the end of the month in which action for imposition of penalty is initiated? The Commissioner (Appeals), at paragraph 9 of the order has observed thus: "The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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