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TMI Blog1977 (5) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... ypothesis by the appellant. It was next contended that the firm was dissolved on account of differences among the partners and this had taken time to finalise the accounts. This plea was rejected by the ITO holding that when the partners have filed their returns showing their share income, there is no difficulty in filing the firm s return. 3. The appellant filed an appeal to the AAC Regarding the plea of limitation, the AAC held that the penalty order is not barred by limitation is view of the Expln. (1) to s. 275 and the proviso to s. 129. AAC has not given any specific fining regarding the plea of reasonable cause urged before him. The AAC ultimately confirmed the penalty order passed by the ITO. Aggrieved against the order of the AAC, the appellant has come up in appeal before the Tribunal. 4. The assessment was completed on 18th March, 1971 and the penalty notice was issued on 20th March, 1971. The ITO passed the penalty order on 25th Jan., 1973. Against the penalty order. The appellant filed a revision petition to the CIT under s. 264. It was contended before the CIT that after the issue of penalty notice by the ITO, his successor passed the penalty order without giving n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expression "the time taken in giving an opportunity to the assessee to be reheard under the proviso to s. 129" means the time taken by the assessee for taking steps to reopen the proceedings and secure for himself the right of being heard by the successor officer before he could continue the proceedings initiated by his predecessor and the time taken by the ITO in giving a fresh opportunity to the assessee and comply with the requirements of the proviso to s. 129. So, the time taken for fulfilling the statutory requirement of the proviso to s. 129 covers the time taken by the assessee as well as the time taken by the Department in fulfilling that statutory requirement. If the Expln. (1) to s. 275 is so construed, the time lag between the date of passing of the original penalty order 25th Jan., 1973 and the date of the subsequent penalty order 1st Aug., 1975 should be taken as "the time taken in giving an opportunity to the assessee to be re-heard under the proviso to s. 129 and the entire period should be excluded in computing the period of limitation. If this period is so excluded, then the penalty order passed on 1st Aug., 1975 is well within the time limit as the original pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the delayed submission of return and that the appeal should be allowed and the penalty be cancelled. I would also hold that the order passed by the ITO is barred by limitation and is ab initio illegal on that score. 2. The assessment in this case was completed on 18th March, 1971 and a show cause notice for levy of penalty was issued on 20th March, 1971. On 25th Jan., 1973 the ITO levied penalty of Rs. 5,080 under s. 271(1)(a). The assessee filed a revision petition to the CIT, One of the issues raised before him was that the penalty notice was issued by one ITO but the final penalty order was passed by his successor without an opportunity of being heard being granted to the assessee. The CIT accepted this contention and cancelled the penalty order. In so doing, he directed the ITO to give a fresh opportunity of being heard to the assessee before the levy of penalty if it was leviable. The successor ITO subsequent to the order of the CIT gave such an opportunity and passed the penalty order on 1st Aug., 1975. The contention of the learned counsel for the assessee before us was that this penalty order passed on 1st Aug., 1975 was barred by limitation. Normally an order of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and subsequently an order is passed directing the ITO to give a rehearing all the time spent to the detriment of the assessee and on account of the ITO not having taken the elementary precaution of informing the assessee about his rights under the proviso to s. 129 cannot be regarded as the time taken in giving an opportunity to the assessee to be reheard. It may also be that in law or and in the circumstances of the case such a rehearing need not be given, but if a rehearing is necessary the time required for that could not be anything more than the actual period from the date of communication of the succession by the ITO to the assessee till the assessee is reheard. The time used for any other subsidiary, collateral or other purpose without which possibly such a rehearing cannot have taken place would not constitute time taken for the rehearing or giving an opportunity to the assessee. It might be stated that in such a case if rehearing is ordered after appeals, revisions etc. the time limit might expire. The difficulty is there. The solution for the same is not extending the period of limitation to all other collateral activities the assessee of the ITO might get involved in, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple is based on the well-known rule of interpretation that, unless the terms of the statue expressly so provide or unless there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive any remedy already lost by efflux of time." Continuing they further observe : "In our view the new statute does not disclose in express terms or by necessary implication that there was a revival of the right of the ITO to reopen an assessment which was already barred under the old Act." Their Lordships relied on their earlier decision in S.S. Gadgil vs. Lal Co. (1964 53 ITR 231 SC). In that case for the asst. yr. 1954-55 a notice was issued to the assessee as an agent of the non-resident on 27th March, 1957. Under cl. (iii) of the proviso to s. 34(1) as it stood prior to the amendment by the Finance Act, 1956 the time limit for issuing a notice of assessment or reassessment on an agent of a non-resident was one year from the end of the year of assessment. Under the amendment made by the Finance Act, 1956 this period of limitation was extended to two years from the end of the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the order is made must be applicable. So the above decisions clearly indicate that if the matter has become barred by limitation on a particular day, a subsequent amendment or a direction by an appellate or revisional authority would not take away the limitation unless specific provision exists of retrospective operation of the amended law or removal of time taken. The case such as J.P. Jain, ITO vs. Indu Prasad Dev Shankar Bhatt affirm this on the positive side, where as Bhikari Charan Panda (1976) 104 ITR 73 case affirm it on the negative side. In the present case, on the day the CIT passed the order of revision the time for passing an order of penalty has already elapsed accrued to the assessee and neither a subsequent amendment nor a direction of the CIT would save this position. That an appellate authority cannot restore a case to the file of an officer after action has become time barred and direct a fresh assessment would be clear from the decision of Delhi High Court in Narinder Singh Dhingra vs. CIT (1973 90 ITR 110 (Del)). In that case an assessment was completed for the asst. yrs. 1961-62 under s. 143(3) of the 1961 Act. In 1966, the Tribunal held that the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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