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TMI Blog1989 (8) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the original return was filed. In response to this enquiry, the assessee had only asserted that she had filed return sometime in June, 1975 through Shri S.C. Kumar & Company, Chartered Accountants but the receipt or the acknowledgement given by the Department was not produced on the ground that it was not available. However, in a bid to support the theory of filing the return in June, 1975, a photostat copy of the challan for payment of tax u/s 140A on 5-1-1976 for Rs. 462 was filed and it was submitted that payment of tax u/s 140A would not have been made on 5-1-1976 unless the return was filed sometime in June, 1975 and from this payment it should be inferred that the return was filed in June, 1975 or thereabout. Since the assessee was not able to prove that the return was filed in June, 1975, the explanation of the assessee was rejected and the payment of tax on 5-1-1976 was not considered as proof at all to show that the return was filed in June, 1975 because no one would wait under the law for 7 months to pay the self-assessment tax. 4. The assessment was, however, completed and a notice to show cause as to why penalty should not be imposed for the late submission of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed before the Commissioner (A). When this appeal was taken up for hearing a contention was raised before the Commissioner (A) that the appeal filed against the quantum was still pending and therefore the penalty appeal should be kept pending till the quantum appeal was disposed of as the computation of penalty is linked with the computation of income. Rejecting this contention and also rejecting the contention advanced on merits, namely, that the assessee had already filed a return in June, 1975 and what was filed later was only a duplicate return, the Commissioner (A) held that the assessee was guilty of late submission of return without reasonable cause and therefore the Income-tax Officer was justified in imposing the penalty u/s 271(1)(a) of the Income-tax Act, 1961. He, however, gave a direction to recompute the penalty in accordance with the tax ultimately found payable on the disposal of the appeal against quantum of income. 6. Before we go to the limitation point, we would like to address ourselves to the merits. The only point on merit was that the return was filed in June, 1975 and what was filed on20-2-1979was only a duplicate return and as such there was no del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not have been filed in June, 1975 as claimed. 7. Now coming to the point of limitation, we have got to turn to section 275 of the Income-tax Act, 1961, which prescribes the time limit for the imposition of penalties. Section 275 was in the following terms at the relevant time : --- 275. Bar of limitation for imposing penalties.---No order imposing a penalty under this Chapter shall be passed--- " (a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the Appellate Assistant Commissioner or the Commissioner (Appeals) under section 246 or an appeal to the Appellate Tribunal under sub-section (2) of section 253, after the expiration of a period of --- (i) two years from the end of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or (ii) six months from the end of the month in which the order of the Appellate Assistant Commissioner or the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Commissioner, whichever period expires later ; (b) in any other case, after the expiration of two years from the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of two years automatically gets excluded because of the delay involved in disposing of the appeals. According to a circular issued by the C.B.D.T. bearing No. 56 of 19-3-1971 this amendment will apply to penalty proceedings commenced on or after that date i.e. 1-4-1971 and also to penalty proceedings commenced before that date but pending on that date provided the period of limitation specified in the existing provisions of section 275 had not already expired. 8. The argument of the learned representative of the assessee is that the section spoke of a period of six months from the end of the month in which the order of the Commissioner (A) was received and it does not matter whether the order of the Commissioner (A) was the first order or the second order. By laying emphasis on clause (a) of section 275 the argument developed was that when the assessment becomes the subject matter of an appeal to the Commissioner (A) u/s 246, the period of six months from the end of the month in which the order of the Commissioner (A) is passed would be automatically attracted unless the other period of two years subsists. But the argument of the learned Departmental Representative here is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the time bar of section 275 applies to initial penalty order or to penalty order passed in consequence of or to give effect to any direction contained in an appeal. But we have not come across any decided case as to whether which order of the Commissioner (A) is to be taken as the disposal of the appeal spoken of in section 275. Thus the matter appeared to us to be res integra. 10. Now let us see the facts of this case and how far the law of limitation provided for in section 275 would apply. For this purpose, the relevant dates are : (i)30-9-1979--- Date of passing the assessment order. (ii)22-8-1980--- Date of passing the 1st order by the Commissioner of Income-tax (Appeals). (iii)23-12-1981--- Date of order of the Commissioner of Income-tax (Appeals) recalling the above order for not following the principles of natural justice and setting it aside. (iv)26-2-1982--- Date of the IInd Appellate order of the Appellate Tribunal against the order dated22-2-1980of the CIT(A) dismissing the appeal as withdrawn because the CIT(A) had himself recalled the order. (v)30-4-1983--- Date of fresh order of the CIT(A) after hearing both sides. (vi)7-10-1983--- Penalty order passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed for the service of the order of the Commissioner (A) on the Commissioner, the time for passing the penalty order can be safely taken to have expired long before7-10-1983. In this view of the matter the penalty order became time barred. It is no doubt true that the order dated22-8-1980had been recalled and set aside by the Commissioner (A) himself on23-12-1981. However, the order passed by the Commissioner (A) on22-8-1980was a valid order till it was recalled on23-12-1981. We have already noticed above that there is nothing in the Act or elsewhere by which the running of the period of limitation (with effect from 22-8-1980) could be stopped by subsequent events (in this case the order dated 23-12-1981 recalling the order dated 22-8-1980). Another consideration which has to be home in mind is that since the period of limitation prescribed for passing the penalty order had expired before the recall of the order dated22-8-1980, a right got vested in the assessee for not being visited with a penalty order. The law of limitation does not contemplate the divesting of such a right. The Court's duty is merely to apply the law as it is, however harsh it may appear to be. The Court's h ..... 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