R. K. AGRAWAL, J. ( 1 ) THE Tribunal, Allahabad, has referred the following questions of law under Section 256 (2) of the IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court : "1. Whether, on the facts and in the circumstances of the case, the penalty under Section 28 (1) (c) has rightly been cancelled by the Tribunal ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in ignoring the reasonable cause for inordinate delay in imposing penalty under Section. 28 (1) (c) and in holding that the case of the assessee falls within the purview of the decisions of the Honble High court in the case of Ram Kishan Baldeo Prasad v. CIT (1967) 65 ITR 491 (All) and in the case of Bisheshwar Lal v. ITO [1970 ]75 ITR698 (All) ?" ( 2 ) BRIEFLY stated the facts giving rise to the present reference are as follows : the reference relates to the asst. yr. 1947-48. The ITO completed the assessment for the aforementioned assessment year under Section 23 (3)/34 of the Indian IT Act, 1922, hereinafter referred to as the Act of 1922 on 28th March, 1956. The status of the respondent was taken as huf. The addition of Rs. 1,20,000 was added to the total income. The ITO initiated the proceedings under Section 28 (1) (c) under the Act of 1922. He imposed a sum of Rs. 50,000 as penalty vide order dt. 7th Dec. , 1976. Feeling aggrieved, the respondent preferred an appeal before the AAC, who deleted the penalty on the ground that there was an inordinate delay in the imposition of penalty inasmuch as the assessment was made on 28th March, 1956 while the penalty was imposed on 7th Dec. , 1976. The Revenue, feeling aggrieved, preferred an appeal before the Tribunal, Allahabad. The two Members differed in their views. The AM was of the view that the order cancelling the order passed by the AAC has to be restored whereas the JM, disagreeing with the conclusion of the AM, held that the proceedings have been unduly delayed by the ITO for about 20 years and, therefore, the respondent-assessee was entitled to claim cancellation of the penalty imposed. As there was difference of opinion, the matter was referred to the Third Member. As there was difference of opinion, the matter was referred to the Third Member. The Third Member dealt with the different aspects of the matter and agreed with the view expressed by the JM to the effect that for the inordinate delay there was no explanation and, therefore, the penalty has rightly been cancelled. The Tribunal has passed the order in conformity with the opinion expressed by the Third Member and had upheld the order passed by the AAC cancelling the penalty. ( 3 ) WE have heard Sri Shambhoo Chopra, learned standing counsel appearing for the Revenue, and Sri V. K. Upadhyay, learned counsel appearing for the respondent. ( 4 ) THE learned counsel for the Revenue submitted that there was sufficient explanation for the inordinate delay in imposition of penalty and, therefore, it could not have been cancelled only on the ground of the order having been passed after more than 20 years. According to him, this was a case where the total income itself and the tax thereon were the subject-matter of multifarious proceeding by way of appeal to the AAC, to the Tribunal, revision before the CIT and various rectifications arising out of the appellate orders in the case of the company of which the respondent was a shareholder and change in the total income and consequently the respondents share therefrom the various firms of which the respondent was a partner, as a result of the appellate orders in the case of the company and firms. He further submitted that penalty under section 28 (1) (c) of the Act of 1922 depended on the amount of income-tax and supertax which would have been avoided if the income as returned had been accepted as the correct income and this figure could not be determined till the total income and the tax thereon was finally worked out. He further submitted that the last order was passed on 2nd Feb. , 1975 and in these circumstances, if the penalty was imposed on 7th Dec. , 1976, the delay in the imposition of the penalty cannot be said to be without reasonable cause. He, therefore, submitted that no adverse inference can be drawn on account of the mere so-called inordinate delay in the imposition of the penalty. , 1975 and in these circumstances, if the penalty was imposed on 7th Dec. , 1976, the delay in the imposition of the penalty cannot be said to be without reasonable cause. He, therefore, submitted that no adverse inference can be drawn on account of the mere so-called inordinate delay in the imposition of the penalty. ( 5 ) LEARNED counsel appearing for the respondent, however, submitted that the assessment order having been passed on 28th March, 1956 and the penalty order having been passed on 7th Dec. , 1976, there was an inordinate delay of more than 20 years and, therefore, the Tribunal has rightly upheld the order passed by the AAC cancelling the penalty. He submitted that reliance placed by the learned counsel for the Revenue on the various proceedings, which did not relate to the respondent, would not come to his rescue for explaining the delay. He further submitted that the tribunal had not committed any illegality. ( 6 ) HAVING heard the learned counsel for the parties, we find that the facts are not in dispute. The assessment order for the asst. yr. 1947-48 was admittedly passed on 31st March, 1956 and the penalty proceeding was also initiated during the course of the assessment proceedings. However, the penalty was imposed vide order dt. 7th Dec. , 1976, i. e. , after more than 20 years. It is not clear from the record as to whether any proceeding in respect of the present respondent was continued upto the year 1976 or not. Even though no period of limitation for imposing the penalty under the Act of 1922 had been provided, but action for imposing penalty is to be within a reasonable time. The imposition of penalty after more than 20 years cannot be said to be justified. This Court in the case of Mohd. Atiq v. ITO (1962) 46 ITR 452 (All) has held that even though no period of limitation is prescribed for imposing penalty, proceedings for levy of penalty must be taken within a reasonable time. Where proceedings for levy of penalty for non-compliance with notices issued under Sub-sections (2) and (4) of Section 22 of the Act of 1922 were taken after the expiry of about fourteen years, this Court has held that there was unreasonable delay in commencing the proceedings and consequently the proceedings were quashed. Where proceedings for levy of penalty for non-compliance with notices issued under Sub-sections (2) and (4) of Section 22 of the Act of 1922 were taken after the expiry of about fourteen years, this Court has held that there was unreasonable delay in commencing the proceedings and consequently the proceedings were quashed. Similar view has been taken by this Court in the case of ITO v. Bisheshwar Lal (1970)76 ITR 653 (All ). ( 7 ) IN the case of Bharat Steel Tubes Ltd. v. State of Haryana JT1988 (2)SC 320 , 1988 (1)SCALE842 , (1988)3 SCC478 , [1988 ]3 SCR895 , [1988 ]70 STC122 (SC), 1988 (2)UJ204 (SC), the apex Court has field that in absence of any prescribed period of limitation, the assessment has to be completed within a reasonable period. What such reasonable period would be, would depend upon facts of each case. ( 8 ) IN the case of Ram Kishan Baldeo Prasad v. CIT (1967) 65 ITR 491 (All), this Court has held that even though no period of limitation has been prescribed for imposing a penalty and a penalty in respect of the asst. yr. 1945-46 could have been imposed in August, 1957, propriety required the changed circumstances to be taken into consideration and the responsibility for the inordinate delay should be considered and fastened before levying the penalty or upholding it. This Court had also referred the decision in the case of Mohd. Atiq (supra) and had held that where there is no prescribed period of limitation, the delay can only be factor, albeit a very relevant factor, to be taken into consideration in determining the propriety of the order and where the assessee is not to blame for the inordinate delay in completing penalty proceedings and the sword of damocles has been kept hanging over his head for many a year without any rhyme or reason, it will certainly be a factor, amongst others, for the Tribunal to consider whether the order passed by the ITO was a proper one. ( 9 ) IN the case of Bisheshwar Lal v. ITO [1970 ]75 ITR698 (All), this court had quashed the penalty notices which were issued to the petitioner between 1949 and 1961 in respect of the asst. yrs. ( 9 ) IN the case of Bisheshwar Lal v. ITO [1970 ]75 ITR698 (All), this court had quashed the penalty notices which were issued to the petitioner between 1949 and 1961 in respect of the asst. yrs. 1944-45, 1945-46, 1946-47 and 1948-49 were kept pending till 1963, holding that as the Department did not explain why the proceedings could not be completed during the interval of 14 years, the proceedings were vexatious and amounted to an abuse of the powers conferred on the ITO under Section 28 (1) (c) of the Act of 1922. ( 10 ) APPLYING the principles laid down in the aforesaid cases to the facts of the present case, we find that by no stretch of imagination, long period of 20 years can be said to be a reasonable time for imposing penalty. The explanation given by the Department for the inordinate delay did not amount to reasonable cause. In this view of the matter, we are of the considered opinion that the tribunal has not committed any error in cancelling the penalty imposed under Section 28 (1) (c)of the Act. ( 11 ) IN view of the forgoing discussion, we answer both the questions referred to us in the affirmative, i. e. , in favour of the assessee and against the Revenue. However, there shall be no order as to costs. . .