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TMI Blog1987 (7) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... se orders were set aside by the Commissioner of Income-tax acting u/s. 263 by orders dated 18-4-1979 and 24-10-1979 respectively requiring the ITO to pass fresh orders of assessment. But no such fresh orders were passed by the ITO as the orders of the CIT were challenged on appeal. The Income-tax Appellate Tribunal by order dated 26-6-1981 set aside the orders made u/s. 263 on the ground that adequate opportunity of being heard was not given to the assessee and remitted the matter to the CIT for fresh disposal in accordance with law. Thereafter, the CIT passed an order on 21-5-1984 dropping the proceedings taken u/s 263. In the meanwhile, the ITO passed an order on 10-8-1981 purporting to revive the assessment orders by giving effect to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers have been set at large by the 263 proceedings and until these 263 proceedings were dropped on 21-5-1984 the assessment proceedings themselves were in abeyance and no penalty proceedings could have been initiated or completed. On the question of limitation, it was argued that the period of limitation could be only two years from the date of original assessment order and even if the period when 263 orders were pending in appeal before the Tribunal were to be excluded, the penalty orders were out of time and rightly cancelled by the CIT (Appeals). 6. On a consideration of the rival submissions, we are of the opinion that the assessee is entitled to succeed only on the point of limitation but not on the point of jurisdiction. As we have s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a situation where the assessment order itself is subject of appeal before the AAC or the Tribunal. Such is not the case here because there was no appeal against the assessment order before the Tribunal. In the circumstances, sub-clause (b) which is the residuary clause applying to any other case would be attracted. That prescribes the limitation of a period of 2 years from the end of the financial year in which the proceedings in the course of which action for imposition of penalty was initiated or completed. In other words, it is two years from the financial year in which the assessment was completed. The contention of the Revenue is that until the 263 proceedings are finalised, the assessment could not be said to have been completed and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal, the ITO could not have initiated or proceeded with any penalty proceedings and hence that period would have to be excluded in computing the period of limitation. But that would not affect the commencement of the period of limitation which had begun to run from the end of the year in which the assessment order had originally been made, i.e., 31-3-1978. The result is that we can only exclude the period from 18-4-1979 to 26-6-1981 in computing the period of two years from 31-3-1978. That would lead us to the conclusion that at best the order of penalty could have been made before 8-6-1982. It follows that the orders made on 31-3-1984 were beyond the period of time limit prescribed under the Act and hence rightly cancelled by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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