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TMI Blog1989 (1) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... -69. The Inspecting Assistant Commissioner of Income-tax levied a penalty of Rs. 1,200 in respect of the assessment year 1967-68 and Rs. 17,000 for the assessment year 1968-69 under section 274 read with section 271(1)(c) of the Act. The penalties imposed stand challenged on legal grounds. The necessary dates and information relevant to the controversy for the two assessment years in question are as under : --------------------------------------------------------------------------------------------------------------------------------------------------- Assessment Year Assessment Year 1967-68 1968-69 ----------------------------------------------------------------------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w in holding that the order of the Inspecting Assistant Commissioner dated March 18, 1978, imposing a penalty of Rs. 1,200 under section 271(1)(c) was not time-barred under section 275(b) and, therefore, not void ab initio ? (ii) Whether, in view of the fact that the Income-tax Officer had once exercised his discretion in the matter of imposition of penalty under section 271(1)(c) by dropping the penalty proceedings, vide his order dated March 31, 1975, the Tribunal was right in law in holding that penalty proceedings for the default which was existent even before the Income-tax Officer exercised his discretion, vide his order dated March 31, 1975, could again be initiated for the same default ?" The other issue pertains to the findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 31, 1975, of the Income-tax Officer, dropping the penalty proceedings, it was argued, was a nullity, being without jurisdiction. The contention raised was rightly repelled by the Tribunal, as a bare reading of section 275 of the Act would show that it prescribes a bar of limitation for the imposition of penalty of 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. Once an assessment is set aside, the assessment is at large and the rights of the parties are the same as would flow to them if the Income-tax Officer proceeds to make the assessment from the time of filing of the return. This being so, section 275 of the Act clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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