1987 (8) TMI 36 - HC - Income Tax

Summary

Issues:
- Refusal by the Tribunal to entertain the ground of inordinate delay in passing the penalty order as a reason for not levying the penalty.

Analysis:
The judgment pertains to a case where the Tribunal refused to entertain a ground raised by the assessee regarding the inordinate delay in passing the penalty order as a reason for not levying the penalty. The assessee contended that the delay of about 13 years in imposing the penalty should be considered a valid ground for not levying the penalty. However, the Tribunal held that the reasonableness of the delay in finalizing penalty proceedings is a question of fact, not law. The Tribunal also emphasized that a question of law could be raised at any stage only if the proceedings were pending before the assessing or appellate authorities. The Tribunal did not permit the assessee to raise the additional ground during the course of arguments, stating that the plea was not raised earlier before any authority.

The High Court analyzed the facts and noted that the assessee had not claimed that the penalty order was passed in violation of any statutory limitation. The Court referred to a previous judgment where it was held that when considering the expediency of imposing a penalty due to delay, a finding on the sufficiency of the cause for the delay, fixing responsibility, and assessing the impact on the penalty order is necessary. In this case, the question of the expediency of imposing the penalty due to delay was not raised before the lower authorities. The Court observed that the assessee did not seek to raise a pure question of law before the Tribunal, and relevant facts regarding the delay were not on record.

The High Court further emphasized that the discretion of the Tribunal to permit the new ground to be raised during arguments was not arbitrary in this case. The Court stated that since the question was a mixed question of fact and law, it was within the Tribunal's discretion to allow or disallow it. The Court concluded that the Tribunal's decision to refuse the ground related to the delay in passing the penalty order was legally sound. Therefore, the Court answered the question in favor of the Department and against the assessee. The judgment highlighted that the discretion must be exercised judiciously and not arbitrarily, and in this case, the Tribunal's decision was considered judicial and not arbitrary.