1986 (3) TMI 14 - HC - Income Tax

Summary

Issues:
1. Interpretation of the amended provisions of section 275 of the Income-tax Act, 1961 regarding penalty proceedings.
2. Application of the law as it stood prior to April 1, 1971, versus the law amended in 1971.
3. Determination of the time limit for imposing penalty under section 271(1)(a) of the Income-tax Act.

Detailed Analysis:
The judgment pertains to two references under section 256(1) of the Income-tax Act, 1961, concerning assessment years 1965-66 and 1966-67. The main issue was whether the Tribunal was correct in holding that the amended provisions of section 275 were not applicable to penalty proceedings under section 271(1)(a) pending on April 1, 1971, and whether the penalty imposition was time-barred. The assessee filed returns for the two assessment years after the due dates, leading to penalty proceedings initiated by the Income-tax Officer. The penalty was imposed after the completion of assessments, and subsequent appeals resulted in references to the High Court for consideration.

The central question revolved around the applicability of the law prior to April 1, 1971, versus the amended law in 1971 regarding the time limit for imposing penalties. The original section 275 prescribed a two-year limitation from the completion of proceedings for penalty imposition. However, an amendment in 1971 extended the period to two years from the end of the financial year in which the proceedings were completed. The court analyzed the retrospective effect of procedural laws like limitations, emphasizing that no vested right exists in procedure. Citing precedents, the court held that the amended law of limitation would govern the case, as the period under the old law had not expired.

Ultimately, the court concluded that the penalty imposition in this case fell within the two-year limit from the end of the relevant financial year in which the penalty proceedings were initiated. Consequently, the references were answered in favor of the Revenue, rejecting the Tribunal's view that the amended provisions of section 275 were not applicable and that the penalty imposition was time-barred. No costs were awarded in the circumstances, and the judgment was to be transmitted to the Income-tax Appellate Tribunal as per the Income-tax Act.