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1973 DIGILAW 241 (KER)

ADDL. CIT, ERNAKULAM v. K. S. G. PANICKER

1973-09-20

K.SADASIVAN, P.GOVINDA NAIR

body1973
Judgment :- 1. The Income-tax Appellate Tribunal, Cochin Bench has referred the following three questions for our decision: "(i) Whether on the facts and in the circumstances of the case the order of penalty passed by the Income-tax Officer dated 19 31969, in pursuance of the directions contained in the order of the Income Tax Appellate Tribunal in I. T. A. No. 9202 of 1966 67 dated 712-1968 is time barred?. (ii) Whether on the facts and in the circumstances of the case, the assessee is estopped from contending that the order of penalty passed by the Income tax Officer in pursuance of the directions contained in the order of the Income Tax Appellate Tribunal In I. T. A. No. 9202 of 1966 67 dated 7121968 is illegal and void by not challenging the said decision of the Tribunal by applying for a reference therefrom under S.256 (1) of the Income tax Act, 1961? (iii) Whether on the facts and in the circumstances of the case, the acceptance of the assessee's contention by the Income Tax Appellate Tribunal and the grant of Relief on that basis would not amount to a review of its earlier order in I. T. A. No. 9202 of 1966 67 dated 7121968 and whether the Appellate Tribunal is competent to review its previous order?". 2. For the year of assessment 1963-64, an order of assessment was passed imposing Income-tax on one K. S.'G. Panicker, Kerala Produce Exporting Co., Quilon, on 3 71965. Proceedings had been commenced against the assessee for belated filing of return and those proceedings culminated in an order of penalty on 15 11966. The assessment order was not appealed against; but the order imposing penalty was. The Appellate Assistant Commissioner dismissed the appeal from the order imposing the penalty. There was a further appeal before the Tribunal and the Tribunal by its order dated 7121968, Annexure D to the paper book, set aside the penalty order and directed the Income-tax Officer "to dispose of the penalty proceedings after giving the assessee an opportunity to represent his case". The Income tax Officer thereafter imposed an order of penalty on 19 31969. The Income tax Officer thereafter imposed an order of penalty on 19 31969. This was also the subject matter of appeals before the Appellate Assistant Commissioner and the Tribunal, The Tribunal took the view that the order imposing penalty dated 19 31969 cannot stand in view of S.275 of the Income-tax Act, 1961 as it stood at the relevant time. That section is in these terms: "275. Bar of limitation for imposing penalty. No order imposing a penalty under this Chapter shall be passed after the expiration of two years from the date of the completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced." 3. A reading of S.275 alone leaves no doubt that an order of penalty must be passed within two years of the completion of the assessment proceedings. In the case in hand therefore the orders should have been passed before 3-7-1967, the assessment having been completed on 3 71965. The section speaks in terms imperative and the language permits of no relaxation of the rigidity of the role of limitation embodied in the section. The matter appears to be simple enough but counsel for the revenue has brought to our notice a decision of the Bombay High Court in Commissioner of Income-tax, Bombay North v. Kishoresingh Kalyansingh Solanki reported in (1960) 39 ITR. 522 wherein a provision similar to that contained in S.275 was interpreted. That provision is In S.33B (2) (b) of the Indian Income-tax Act, 1922 which was in these terms "33B. Power of Commissioner to revise Income tax Officer's orders. (1) (2) No order shall be made under sab section (1) (a) (b) after the expiry of two years from the date of the order sought to be revised". 4. The Bombay High Court took the view that the period of two years mentioned in S.33B (2) (b) will not apply when the Commissioner acted pursuant to the direction of the Tribunal. However desirable it be to have a provision that the period of limitation would not apply when the authority acted under the direction of the appellate authority, with great respect, we are unable to agree with the view that such a provision can be introduced by judicial decisions. However desirable it be to have a provision that the period of limitation would not apply when the authority acted under the direction of the appellate authority, with great respect, we are unable to agree with the view that such a provision can be introduced by judicial decisions. As a matter of fact, the legislature itself has provided safeguards in such circumstances as is evident from the provisions in S.153(3) and 263(3) of the Income-tax Act, 1961. The presence of such safeguards in these two sections and the absence of any in S.275 can give rise only to one conclusion that S.275 should be applied in its undiluted form, disregarding the consequences. We are therefore constrained to come to the conclusion that the order dated 19 31969 passed by the Income-tax Officer imposing penalty on the assessee is without jurisdiction as it is against the statutory provision contained in S.275 of the Income-tax Act, 1961. Having come to this conclusion, we will now turn to the three questions. The first question answers itself in the light of what we have said. The order dated 19 31969 is beyond the period provided by S.275 and should not have been passed. This is our answer to that question. In regard to the second question, we think ft is the department that should have challenged the decision of the Tribunal and not the assessee. The Tribunal should have noticed the limitations of the Income-tax Officer in view of S.275 and if it committed a mistake, the mistake should have been dealt with by appropriate proceedings before the High Court in reference at the instance of the Commissioner of Income-tax. Perhaps this is a case which should have been dealt with by the Tribunal in the appeal itself, and it would have done so, had it noticed the limitations introduced on the power of the Income-tax Officer, by S.275. The assessee is not estopped from contending that the order of penalty passed by the Income-tax Officer pursuant to the order of the Tribunal dated 7121968 was illegal and void. 5. The present order of the Tribunal is not a review of the order dated 7-12-1968. This is a separate order arising out of a different matter though the effect of the present order would be to make the earlier order of the Tribunal dated 7121968 innocuous. That is our answer to question No. 3. 5. The present order of the Tribunal is not a review of the order dated 7-12-1968. This is a separate order arising out of a different matter though the effect of the present order would be to make the earlier order of the Tribunal dated 7121968 innocuous. That is our answer to question No. 3. 6. We direct the parties to bear their respective costs. 7. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.