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TMI Blog1973 (10) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... sh credits were noticed in the books of the assessee amounting to Rs. 11,500 and the sources for these were not explained by the assessee. The Income-tax Officer included a sum of Rs. 12,500 as concealed income of the assessee in the computation of the total income. On the ground that the assessee had concealed the said income, the Income-tax Officer initiated proceedings under section 271(1)(c) and a notice to show cause why penalty should not be imposed was issued. There was no response to this. A further opportunity was afforded to the assessee to offer his explanation by 10th March, 1965, but even then the assessee did not offer any explanation. An appeal filed against the assessment also came to be dismissed. In these circumstances, the Income-tax Officer imposed a penalty of Rs. 750 by an order dated 31st March, 1965. This order was, however, served on the assessee on 7th June, 1966. Thereupon the assessee preferred an appeal to the Appellate Assistant Commissioner of Income-tax and it was contended that the order imposing penalty was barred by limitation. The ground urged was that as the order had been served only on 7th June, 1966, it must be held that it was passed after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which proceedings for the imposition of penalty had been commenced. It is, therefore, contended that the expression "passed" denotes something other than "made" and must be construed as an order issued. He further contended that in order to be an order "passed" it must be an effective order and unless it is communicated to the party affected thereby, there is no effective order. Reliance was placed in this behalf on the rulings in N. N. Majumdar v. N. M. Bardhan and Abdul Ali v. Mirja Khan and also Secretary of State for India in Council v. Gopisetti Narayanaswami Naidu, which have been referred to in N.N.Majumdar v. N. M. Bardhan . For the department, it is urged that the expressions " made " and " passed " used in the various sections of the Act are synonymous and an order should be held to have been " made " or " passed " when it is made and signed by the authority concerned and when the provision provides that an order shall be "made " or " passed " within a particular time it means that the order should be made or signed by the authority concerned within that time and the communication of the said order may be after the expiry of that time. It was argued that every liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight in regard to his property. He should know how and to what extent his rights are affected or liability is created against him before it can become effective and enforced against him. Chandavarkar J., while construing the expression " making an order " in section 77 of the Indian Registration Act (Act III of 1877), held in Abdul Ali v. Mirja Khan, that it meant not merely recording the order of refusal in writing, but communicating it to the party concerned so as to bind him by it. He further held that an order does not become an order unless and until steps are taken by the officer passing it to bring it to the consciousness and knowledge of the party against whom it is passed. If the party affected by the order acts in such a way as to prevent the officer from communicating it to him within a reasonable time after he has written it, it may be that the date of the order would be the date when it could have been brought to the knowledge of the party within a reasonable period. In that case it was not contended that there was any conduct of any kind on the part of the plaintiff, and it was found by both the courts that though the order was recorded in writing on 21st December, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order imposing a penalty does affect the rights of an assessee and in order to be complete and effective it must be communicated to the party. If an officer draws up an order imposing a penalty but wishes to change his mind or take a different view, he could do so until the said decision is made known to the party affected thereby. Merely because he signs an order, it cannot be said to have become final because there is no publication of it, and the process of publication would not commence until steps are taken to issue the order for communication to the party affected. In the present case section 275 of the Income-tax Act prescribes the time limit within which an order imposing penalty has to be passed. It prescribes a period of two years from the date of completion of the proceeding in the course of which proceedings for the imposition of penalty have been commenced. Proceedings for the imposition of penalty have to be taken in the course of the assessment proceedings or in the course of an appeal by the Appellate Assistant Commissioner. Therefore, an action to impose penalty under section 271(1)(c) would have to be initiated by the Income-tax Officer before the assessment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or has been given a reasonable opportunity of being heard." The expression used in this section is "made". It is in regard to such an order that is going to be "made" that section 275 prescribes the time limit. It provides that no order imposing a penalty (under Chapter XXI) shall be passed after the expiration of two years. Therefore, the subject-matter under reference under both sections 274 and 275 is the same and the expression used in section 274 is "made" and the expression used in section 275 is "passed". It is, therefore, obvious that no special significance need be attached to the use of the expression "passed" and that it is synonymous with the expression "made". We, therefore, reject the contention urged for the assessee that the expression "passed" should be construed differently from the expression "made". It is seen that the expressions "made" and "passed " are used in various sections of the Act and, therefore, they should be construed similarly wherever they occur. In the case of Badri Prosad Bajoria v. Commissioner of Income-tax, interpretation of the provision in section 34(3) of the Indian Income-tax Act, 1922, was involved. The assessment for 1954-55 had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence of the order is only possible when the Income-tax Officer has made that order. From the point of view of the Income-tax Officer, he has discharged the statutory liability to assess if he makes an order of assessment within four years after the end of the assessment year. The statute does not say that the Income-tax Officer must communicate the order of assessment within four years after the end of the assessment year." Therefore, the contention for the assessee that the date of communication of the order of assessment was the date of making the order was rejected. This court in Esthuri Aswathiah v. Commissioner of Income-tax considered a similar point. In that case, the assessment was completed under section 23(3) of the Indian Income-tax Act, 1922, on 29th February, 1960. The assessment order was sent by registered post to the assessee and it was received by him on 4th April, 1960. The assessment was for the year 1955-56, the relevant accounting year being one ended 31st March, 1955. In the appeal before the Appellate Assistant Commissioner, against a reassessment it was contended that the assessment was barred by limitation as the order was not communicated to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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