1968 (4) TMI 18 - HC - Income Tax

Whether a notice regarding penalty is issued u/s 28 of the IT Act, 1922, after an unreasonable lapse of time, it amounts to an abuse of power - since no period of limitation is provided in the Act for the issue of a notice u/s 28, the issue of fresh notice in the year 1956, after having taken no action for 12 years on the original notice issued in 1944, would be fully within jurisdiction and valid

Summary

Issues:
1. Delay in filing the writ petition.
2. Availability of alternative remedy.
3. Validity of the notice issued by income-tax authorities after a significant lapse of time.

Detailed Analysis:

1. Delay in filing the writ petition:
The special appeal challenged the order allowing a writ petition against the imposition of a penalty for concealment of income. The appellant argued that the petitioner had filed the writ petition with undue delay. However, the court acknowledged the delay but noted that the income-tax authorities had contributed to the delay by their inaction, leading the petitioner to believe there was no urgency to approach the court earlier. The court upheld the single judge's decision to condone the delay, emphasizing the discretion exercised in such matters.

2. Availability of alternative remedy:
The appellant contended that the petitioner should have pursued the alternative remedy of allowing the Income-tax Officer to impose the penalty and then appealing as per the Income-tax Act. Despite the existence of an alternative remedy, the court found the petitioner justified in opting for the writ petition given the circumstances. The court respected the single judge's decision to issue the writ even with the alternative remedy available, highlighting the efficacy of the chosen legal recourse.

3. Validity of the notice issued after a significant lapse of time:
The crucial point raised was the validity of the notice issued by income-tax authorities in 1956, after a substantial delay following the original notice in 1944. The appellant argued that since no specific limitation period was prescribed in the Act for issuing such notices, the delay did not affect the jurisdiction or validity of the notice. However, the court disagreed, emphasizing that notices must be issued within a reasonable time to prevent abuse of power. Citing precedents, the court established that unreasonable delays in issuing notices could lead to the quashing of proceedings through a writ. In this case, the court found the delay between the original assessment in 1944 and the notice in 1956 unreasonable, with no valid justification provided for the prolonged inaction by the income-tax department. Consequently, the court dismissed the special appeal, affirming the decision to quash the penalty proceedings due to the unreasonable delay in issuing the notice.

In conclusion, the High Court dismissed the special appeal, upholding the writ petition's decision to quash the penalty proceedings due to the unreasonable delay in issuing the notice by the income-tax authorities. The court emphasized the importance of reasonable timelines for issuing notices to prevent abuse of power and affirmed the discretion exercised by the single judge in condoning the delay and choosing the writ petition as a legal remedy.