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TMI Blog1989 (7) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... sessments for the asst yrs. 1968-69 to 1974-75 after determining the correct value of the gold ornaments and articles of 'Judtar' and after referring them for valuation to the Government's Approved Valuer. The WTO shall, of course, give adequate opportunity to the assessee to present her case in this regard, before modifying the assessments in question". The penalty proceedings initiated under s. 18(1)(a) at the time of completing the original assessments on 30th March, 1979 were to get time barred by limitation on 31st March, 1981. However, since the CWT had already passed the order under s. 25(2) on 18th March, 1981 prior to the aforesaid date of limitation of time for penalty order, the WTO neither dropped the penalty proceedings nor passed any order imposing penalty under s. 18(1)(a) with reference to penalty proceedings initiated at the time of making the original assessment orders on 31st March, 1979. The WTO passed fresh orders pursuant to order under s. 25(2) passed by the CWT on 29th March, 1985 and once again initiated penalty proceedings under s. 18(1)(a) on that date i.e. on 29th March, 1985. The WTO levied penalties for all the aforesaid years under consideration und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or imposing the penalty pursuant to first initiation of penalty proceedings, the same would have become infructuous with passing of the order by the CWT under s. 25(2) and it would have unnecessarily resulted in multiplicity of proceedings. He further submitted that the doctrine of merger is also available in the present case and the original assessment order merged with the order passed by the CWT under s. 25(2) and the assessment proceedings should be deemed to have been completed on 29th March, 1985. When the WTO passed fresh assessment orders pursuant to order passed by the CWT. The learned Departmental Representative contended that the penalty proceedings initiated once again at the time of making fresh assessment order on 29th March, 1985 was perfectly valid and in view of this fact the penalty orders passed by the WTO on 19th March, 1987 are not barred by limitation of time, as erroneously decided by the AAC of WT. He, therefore, submitted that the order passed by the AAC of WT deserves to be cancelled and the orders passed by the WTO imposing the penalties under s. 18(1)(a) for all the aforesaid years should be restored. The learned Departmental Representative further co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. In this case the penalty proceedings were initiated during the course of assessment proceedings which were completed on 30th March, 1979 and hence the time-limit for levy of penalty expired on 31st March, 1981. In view of the aforesaid provisions, the penalty orders passed by the WTO are apparently barred by limitation of time and the learned AAC of WT was fully justified in cancelling the penalty orders for all the aforesaid years. He further contended that there is no provision in the WT Act for separate limitation of time with reference to order of revision passed by the CWT under s. 25(2). The learned counsel also contended that Direct Tax Laws (Amendment) Act, 1989 has now inserted s. 5(ii) providing for separate limitation of time where the relevant assessment is the subject-matter of revision under s. 25(2). This provision is effective from 1st April, 1989. It was submitted that by necessary implication, it establishes that prior to amendment of s. 18(5) made by Direct Tax Laws (Amendment) Act, 1989 the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 the order of the Dy. CWT(A) or the CWT(A) or as the case may be, the Tribunal is received by the Chief CWT or CWT, whichever is later; (ii) in a case where the relevant assessment is the subject-matter of revision under sub-s. (2) of s. 25, after the expiry of six months from the end of the month in which such order of revision is passed; (iii) 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. Explanation—In computing the period of limitation for the purposes of this section— (i) any period during which the immunity granted under s. 22H remained in force; (ii) the time taken in giving an opportunity to the assessee to be reheard under the proviso to s. 39; and (iii) any period during which a proceeding under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res later. This provision was inserted to enable the WTO to pass penalty orders after the quantum appeals are decided by the appellate authorities so that the penalty can be correctly quantified. This amendment was made to obviate difficulties arising in cases where the appeals were filed against the assessments, for reducing infructuous work and avoiding hardships to the assessee. The provision of s. 18(5), as it existed during the relevant periods did not contain any separate period of limitation where the relevant assessment is the subject-matter of revision under s. 25(2). Although specific provision was provided for with reference to limitation of time for passing penalty orders where the relevant assessments were the subject-matter of appeals. In s. 18(5)(b) the limitation is provided for all residuary cases where the assessments are not subject-matter of appeals. The penalty proceedings were admittedly initiated in the aforesaid case at the time when the original assessments orders were passed on 30th March, 1979. The proceedings in the course of which the aforesaid penalty proceedings were initiated, were completed when the original assessments were made on 30th March, 1979 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpreted to mean that the period of limitation of two years will begin 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. The proceedings for penalty in this case were initiated during the course of original assessment proceedings. Therefore the limitation period of two years should be computed from the date when the original assessments were completed on 30th March, 1979. The subsequent revision or modification of the assessment order pursuant to order under s. 25(2) passed by the CWT cannot alter the limitation period which had already expired with reference to the date of completion of the original assessments. Any modification, revision or alteration in the assessment order will take place only after the completion of the original assessments and it cannot be said that the proceedings in which the penalty proceedings were initiated, were completed when the modified assessment order was passed pursuant to order under s. 25(2). Such modification/revision of assessment can never precede the completion of the original assessment for the purposes of computing the limitation period u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son can be vexed twice in respect of the same default, namely, the filing of the return, which are obviously quasi-criminal proceedings. In the present case the order passed by the CWT under s. 25(2) merely contained directions for modification of the assessment orders already passed by the WTO only with regard to specific items of wealth mentioned in the CWT's order under s. 25(2). Such specific direction also precludes the WTO to once again initiate penalty proceedings under s. 18(1)(a) at the time of passing modified order in pursuance of the order of the CWT. In view of specific order of the CWT requiring limited and specific modification, the WTO could not validly re-initiate the penalty proceedings specially when the earlier proceedings initiated under s. 18(1)(a) on 30th March, 1979 were allowed to become barred by limitation of time by him. In view of the aforesaid discussions we agree with the findings given by the AAC of WT that the penalties imposed for all the aforesaid years by the WTO vide order dt. 19th March, 1987 already become barred by limitation of time and the AAC of WT was therefore fully justified in cancelling the penalties for all the aforesaid years. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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