TMI Blog1987 (8) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under: An order of assessment was passed against the assessee on August 12, 1969. Subsequently, on August 9, 1971, an order imposing penalty on the assessee was passed by the Inspecting Assistant Commissioner. An appeal was preferred by the assessee against this order which was allowed by the Income-tax Appellate Tribunal on November 18, 1972, and the matter was remanded to the Inspecting Assistant Commissioner for being decided afresh. In pursuance of the order of remand, the Inspecting Assistant Commissioner passed a fresh order on January 30, 1979, imposing penalty on the assessee. An appeal was again preferred against this order by the assessee before the Tribunal which was allowed on October. 16, 1980, and the order imposing penalty was quashed. The Commissioner of Income-tax thereupon made an application for referring question No. (i) stated above. This application was numbered as R. A. No. 43 (JAB) of 1980. A miscellaneous application was filed by the assessee before the Tribunal asserting that apart from the point on which the appeal had been allowed by the Tribunal, another plea bad been raised to the effect that the order of the Inspecting Assistant Commissioner dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the order of remand. In our opinion, the Tribunal has apparently committed an error of law in taking this view. In Vasani and Co. v. CIT [1978] 112 ITR 819 (Guj), a question came up for consideration in regard to the scope of an order of penalty to be passed under section 275 of the Act. It was held that on a plain reading of this provision, it was obvious that the term " no order imposing penalty under Chapter XXI shall be passed " would refer prima facie to the initial order or the first order which would have to be passed by the competent authority and the two years' period was never intended to set up a limit for final completion of all proceedings. In CIT v. Rupsa Rice Mill [1964] 54 ITR 328 (Orissa), a similar question came up for consideration before the Orissa High Court under section 28(1)(c) of the Indian Income-tax Act, 1922. In that case, the assessment proceedings were completed on October 31, 1950. Thereupon notice under section 28(1)(c) of the 1922 Act was issued to show cause why penalty should not be levied for concealment of income. A fresh notice was again issued to him on April 1, 1955, and the matter was posted for hearing on April 13, 1955. It was again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 28 of the Act that no period of limitation can be even impliedly inferred from the other provisions contained in that section. But as the Tribunal is the final appellate authority over orders passed by the Income-tax Officer, it had undoubtedly jurisdiction to set aside the order of penalty, if, after taking all the facts and circumstances of the case into consideration, it was of the view that the penalty should not have been imposed. The question is mainly one of propriety and not of law, and, as the final court of appeal, the Tribunal could exercise all the powers which the original taxing authority had. But this reference was necessitated because the order of penalty was set aside solely on the ground that it was bad in law and for the reasons already given above this view of the Tribunal was based on a misconception." In Swastik Oil Mills Ltd. v. H. B. Munshi, Dy. CST [1968] 21 STC 383 (SC), while dealing with the scope of the revisional powers under section 22 of the Bombay Sales Tax Act, 1946, and section 31 of the Bombay Sales Tax Act, 1953, it was held by the Supreme Court that since there was no period of limitation prescribed for exercise of revisional powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e delay, it would be vexatious to the assessee if the proceedings were allowed to continue. Reliance in that case was placed on behalf of the Department on the case of Rupsa Rice Mill [1964] 54 ITR 328 (Orissa). After referring to the law laid down in that case, it was pointed out as under (p. 700): " An order imposing penalty had been passed by the Income-tax Officer. The question before the High Court was whether that order was bad in law. It was held by the High Court that the order imposing penalty could not be said to be bad in law merely on the ground of delay. In the present case, we are not dealing with any older imposing penalty. The question before us is whether the pending proceedings under section 28(1)(c) of the Act should be allowed to proceed or not. " It is in view of these observations that we are of the opinion that the law laid down by the Orissa High Court in Rupsa Rice Mill's case [1964] 54 ITR 328, in so far as the cases where an order of penalty had already been passed are concerned, was approved in the case of Bisheshwar Lal [1970] 75 ITR 698 (All). At any rate, no dissent was expressed in that case. The case of Mohd. Atiq [1962] 46 ITR 452 (All) came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the view taken in Vasani Co.'s case [1978] 112 ITR 819 (Guj), it is apparent that the limitation of two years would not apply when an order of penalty is to be passed consequent upon an order of imposition of penalty being set aside and the matter being remanded for fresh decision. Reliance has been placed by learned counsel for the assessee also on the case of S. B. Gurbaksh Singh v. Union of India [1976] 37 STC 425 (SC), where it was held by the Supreme Court that even if no limitation is prescribed, the rule of reasonable time will apply and that what is reasonable time will depend upon the facts of each case. The rule in this behalf is well-settled. However, the said decision cannot be taken to be an authority for the proposition that an order imposing penalty would become bad in law simply on the ground of delay in passing the said order when no period of limitation is prescribed therefor. Reliance was also placed by learned counsel for the assessee on decision of the Kerala High Court in Krishna Bhatta v. Agricultural Income-tax Officer [1981] 132 ITR 21. That was a case where penalty had been imposed under section 41(1) of the Kerala Agricultural Income-tax Act, 1950 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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