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2005 (9) TMI 40 - HC - Income TaxBest Judgment Assessment - Whether section 5 of the Indian Limitation Act is applicable to the income-tax proceedings? - Whether the Tribunal was correct in law in cancelling penalty imposed under section 273(c) in view of the facts and circumstances of the case when the order dated January 21, 1986 in I.T.A. Nos. 2086 and 2087 (All.) relied upon is already sub judice before the hon ble High Court by way of departmental application under section 256(1) against it allowed by the Tribunal? - Tribunal will redecide the appeals on grounds other than the question of applicability of the Limitation Act - we answer the aforesaid question of law in both the income-tax references in the negative, i.e., in favour of the Revenue and against the assessee and hold that section 5 of the Indian Limitation Act is not applicable to the income-tax proceedings under section 146
Issues Involved:
1. Applicability of Section 5 of the Indian Limitation Act to income-tax proceedings. 2. Legality of cancelling penalty under Section 273(c) of the Income-tax Act. Issue-wise Detailed Analysis: 1. Applicability of Section 5 of the Indian Limitation Act to income-tax proceedings: The primary issue in Income-tax Reference No. 68 of 1987 was whether Section 5 of the Indian Limitation Act, 1963, applies to income-tax proceedings, specifically to an application under Section 146 of the Income-tax Act, 1961. The facts reveal that the assessee filed an application for reopening assessments one day late and sought condonation of the delay under Section 5 of the Limitation Act. The Income-tax Officer rejected the application, citing lack of authority to condone the delay. The Commissioner of Income-tax (Appeals) and the Tribunal disagreed, supporting the assessee's view based on precedents from the Punjab and Haryana High Court. The court noted a divergence of opinion among various High Courts. The Madhya Pradesh High Court, in Nihalkaran v. CWT, held that Section 5 applies unless expressly excluded by the special law, relying on Supreme Court precedents like Hukumdev Narain Yadav v. Lalit Narain Mishra. In contrast, the Andhra Pradesh High Court in B. Subba Rao v. IAC of IT, held that the Limitation Act applies solely to civil courts and not quasi-judicial tribunals, supported by the Supreme Court's decision in Sakuru v. Tanaji. Further, the court examined the scheme of the Income-tax Act, which is self-contained and does not expressly incorporate Section 5 of the Limitation Act for applications under Section 146. It was concluded that the assessing authority, acting as a quasi-judicial body, does not have the jurisdiction to condone delays as per Section 5. This conclusion aligns with the Supreme Court's stance in cases like CIT v. Data Software Research Co. Ltd., which emphasized that courts must adhere to statutory provisions without extending limitation periods unless explicitly allowed by the statute. 2. Legality of cancelling penalty under Section 273(c) of the Income-tax Act: In Income-tax Reference No. 275 of 1991, the issue was whether the Tribunal was correct in cancelling a penalty of Rs. 15,000 under Section 273(c) of the Act, considering that the order relied upon was sub judice before the High Court. The Tribunal had set aside the penalty based on its earlier decision, which applied Section 5 of the Limitation Act to income-tax proceedings. Given the court's decision in Reference No. 68 of 1987, which held that Section 5 of the Limitation Act does not apply to income-tax proceedings, the basis for the Tribunal's cancellation of the penalty was invalidated. The court directed the Tribunal to reconsider the appeals on grounds other than the applicability of the Limitation Act. Conclusion: The court concluded that Section 5 of the Indian Limitation Act is not applicable to income-tax proceedings under Section 146 of the Income-tax Act. Consequently, the Tribunal's cancellation of the penalty under Section 273(c) was unjustified, and the matter was remanded for reconsideration on other grounds. The questions of law were answered in the negative, favoring the Revenue and against the assessee. There was no order as to costs.
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