1983 (5) TMI 77 - AT - Income Tax

Summary

Issues:
- Appeals by revenue for consecutive assessment years against penalty orders for non-payment of tax on self-assessment under section 140A.
- Argument regarding inordinate delay in passing penalty orders and its impact on the imposition of penalties.
- Application of previous court judgments regarding inordinate delay in penalty proceedings.
- Consideration of the purpose of penalty proceedings as a deterrent and corrective measure.
- Conclusion on the exigibility of penalty due to delay in initiating and concluding penalty proceedings.

Analysis:

The judgment by the Appellate Tribunal ITAT Jaipur involved appeals by the revenue for consecutive assessment years against penalty orders for non-payment of tax on self-assessment under section 140A. The appeals were consolidated and disposed of together due to a common point, which was the inordinate delay in passing penalty orders beyond several years from the date of the original and revised returns. The penalty orders were passed on the same date for all years, leading to the argument by the assessee's counsel that no penalty can be sustained due to the considerable delay. The counsel relied on previous court judgments to support this contention, emphasizing that the purpose of penalty proceedings is to create a deterrent effect on erring assessees and that this purpose is not served if penalties are levied after inordinate delays.

The Tribunal considered the application of previous court judgments where penalties were not deemed exigible due to inordinate delays in penalty proceedings. The revenue argued against this, questioning the lack of reasons in those judgments for not imposing penalties despite delays. However, the Tribunal highlighted the importance of concluding penalty proceedings within a reasonable time to achieve the intended deterrent and corrective effects on the assessee. It noted that delayed penalty imposition could lead to the failure of the penalty's purpose and the frustration of expeditiously recovering taxes from the assessee on self-assessment.

Ultimately, the Tribunal concluded that due to the considerable delay on the part of the Income Tax Officer (ITO) in initiating and passing penalty orders in these cases, no penalty was exigible. It emphasized that timely initiation of penalty proceedings is crucial to prevent default by the assessee and to ensure the expeditious recovery of taxes. Therefore, the appeals by the revenue were dismissed based on the principle that penalties should be imposed within a reasonable time to fulfill the objectives of the penalty provisions effectively.