TMI Blog1979 (3) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... its order in IT Appeal No. 1069 of 1970-71, dated 5-11-1973, set aside the assessment with directions to the ITO to make a fresh assessment in accordance with law. The penalty imposed by the IAC under section 271(1)(c) on the basis of the original assessment was also set aside by the Tribunal by their order in IT Appeal No. 334 of 1972-73, dated 10-1-1974. 3. The ITO completed the fresh assessment, which may be for the sake of distinction, called de novo assessment, on 30-9-1974. In this assessment he once again determined the income of the assessee at Rs. 1,02,300 and further held that the assessee had 'concealed income from karyana shop by alteration and manipulation in the account books' and 'also did not disclose any income from contract business in the original return filed by the assessee' and, therefore, a notice under section 274 read with section 271(1)(c) has been issued. Since the penalty imposable exceeded the statutory limit prescribed for the ITO, the penalty proceedings were referred to the IAC. In the meantime, the de novo assessment travelled up before the appellate authorities and finally, on 21-1-1977 in IT Appeal No. 533 of 1975-76, the Tribunal dismissed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment made de novo on 30-9-1974 and it is within the time limit prescribed under section 275, taking into consideration the order of the Tribunal dated 21-1-1977 in IT Appeal No. 533 of 1975-76. In this regard, the learned departmental representative invited our attention to the provisions of sub-section (2A) of section 153 which was inserted by section 31 of the Taxation Laws (Amendment) Act, 1970, with effect from 1-4-1971. It was pointed out that this sub-section makes it clear that notwithstanding anything contained in sub-sections (1) and (2) of section 153, prescribing time limit for completion of the assessment and reassessments, in relation to the assessment year commencing of the first days of April, 1971, and any subsequent assessment year, an order of fresh assessment under section 146 of the Act or in pursuance of an order, under section 250, section 254, section 263 or section 264 of the Act, setting aside or cancelling an assessment, may be made at any time before the expiry of two years from the end of the financial year in which the order under such section was made. It was also contended that there is nothing like original assessment and a de novo assessment becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed under section 275 as substituted by section 50, Taxation Laws (Amendment) Act, 1970, with effect from 1-4-1971 is as under : "275. Bar of limitation for imposing penalties.--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 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 (ii) six months from the end of the month in which the order of the Appellate Assistant Commissioner or, as the case may be, the Appellate Tribunal is received by the Commissioner, whichever period expires later ; (b) in any other case, after the expiration of two years from the end of the financial year in which the proceedings, in the course of which an action for imposition of penalty has been initiated, are completed. " This section has an Explanation which was substituted by section 66 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of 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, were finalised. 12. However, if an assessment is taken up in appeal before the AAC or the Tribunal and either of these appellate authorities gives a decision which is received by the Commissioner on a date (end of the month in which order is received) which either falls within a period of two years or beyond the period of two years mentioned in clause (i) the limitation is extended by six months which may take the bar of limitation either partly or wholly, beyond the period of 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 taken, were completed. 13. This clearly shows that the bar of limitation for imposition of penalty in case of contested assessments varies depending upon the date of receipt by the Commissioner of the decision of the appellate authority before whom the assessment is contested. Thus, if the AAC or the Tribunal decides an appeal and the decision is received by the Commissioner beyond the period of two years and there are proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... six months envisaged in section 275(a)(ii). We, therefore, see no reason why this penalty did not suffer from a bar of limitation of time. It cannot be held as a penalty ab initio void because of limitation. 16. The learned counsel for the assessee submitted that the case of the assessee is covered by section 275(b). Now section 275 providing for a bar of limitation for imposition of penalty talks of the penalty imposable 'under this Chapter'. This Chapter is XXI of the Act and has facsiculus of sections starting from 270 to 275. The penalties provided under this Chapter are for failure to furnish information regarding securities, etc. (section 270), failure to furnish return, comply with notices, concealment of income, etc. (section 271), failure to keep, maintain or retain books of account, documents, etc. (section 271A), failure to give notice of discontinuance (section 272), failure to answer questions, sign statements, allow inspection, etc. (section 272A), failure to comply with the provisions of section 139A (section 272B), furnishing of false estimates of, or failure to pay, advance tax (section 273), etc. Thus, it would be seen that when section 275 specifies penalty im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of the judgment, their Lordships had considered, inter alia, the provisions of section 153(3) providing for exclusion, for the purposes of computing the period of limitation for assessment or reassessment, the time taken in reopening the whole or in part of the proceedings, etc. Thereafter, they have observed that the Legislature did not provide any period of limitation for the imposition of penalty under section 28 of the 1922 Act and, similarly, the Legislature has not provided under section 34 of the 1922 Act for excluding any period while computing the period of limitation in regard to cases where the income had escaped assessment under the 1922 Act. They also noticed that while no time of limitation was prescribed Under section 28, a period of limitation of two years is prescribed under the Act. Therefore, the question that they considered was as to what could be the legislative intent in fixing the period of limitation under section 275 and not fixing the period of limitation under section 28 and similarly, excluding certain periods for the purposes of computing the period of limitation under section 153 and not making any provision for excluding certain periods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us in appeal, is nothing but a superstructure based on the assessment and if this assessment does not exist, ordinarily, the superstructure cannot survive. Therefore, to our mind, when the Legislature provided the limitation of time for completion of various types of assessments, it did not consider it necessary to repeat that limitation for the purposes of imposition of penalty because it had already made a comprehensive scheme of limitation for the completion of penalties under section 275 based upon the finality of the assessment. Section 275 links the period of limitation with the assessment and, therefore, once the assessment is made, the limitation for the purposes of imposition of penalty becomes referable to that assessment. Thus, with due respect, we think that there was no necessity for providing for limitation for imposition of penalty in section 153 and this aspect of the matter was, it appears, not projected in proper focus for their Lordships consideration. Therefore, the argument that the absence of a provision for extending the period of limitation for imposition of penalties, as against a specific provision for extension for the assessments under section 153, indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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