Income Tax Appellate Tribunal - Gauhati
Income-Tax Officer vs Jalan Timbers on 13 April, 1993
Equivalent citations: [1993]46ITD176(GAU)
ORDER
R.V. Easwar, Judicial Member
1. The appeals and the cross objections pertain to the assessment years 1981-82 and 1982-83. The appeals are by the Department and the cross objections are by the assessee. The appeals ought to have been filed on or before 22-10-1990, but they were filed only on 22-11-1990. There is thus a delay of 31 days in filing the appeals. It was explained by the Ld. Departmental Representative that the Income-tax Officer had applied for certified copy of the order of the CIT(A) on 12-10-1990 within the period of limitation. When it was noticed that the certified copy was not forthcoming from the office of the CIT(A), the appeals were filed enclosing photostat copies of the orders on 22-11-1990. It was pointed out that under Rule 9 of the Income-tax Appellate Tribunal Rules read with the Explanation thereto, the appellant before the Tribunal had an option to file the photostat copies of the order appealed against or one certified copy along with a photostat copy and in the present case, the Income-tax Officer had chosen to file a certified copy of the order of the CIT(A) for which he had also made an application to the CIT(A) well in time. Since the certified copy was getting delayed the Income-tax Officer saw no point in waiting further and therefore he had filed the appeals by enclosing photostat copies of the orders of the CIT(A) duly authenticated. Under the circumstances, it was pointed out that there was no delay which required to be condoned. On the other hand, the Ld. Representative for the assessee vehemently objected to the delay being condoned. Relying on the decision of the Madras High Court in K. Muthusamy Pillai v. ITAT [1988] 174 ITR 636, he pointed out that the Department was not vigilant and was guilty of laches, and, therefore the delay should not be condoned. In this connection, he pointed out that the Department could have very well filed the appeals enclosing photostat copies of the impugned orders, as was done by it ultimately, instead of waiting for the certified copy from the office of the CIT(A) and there by allowing the time limit to get barred. It was therefore submitted that the Income-tax Officer was not really serious in obtaining the certified copy of the impugned orders.
2. On a consideration of the rival submissions, we are of the view that the delay of 31 days in filing the appeals should be condoned. We cannot accept the submission of the Ld. Departmental Representative that there was no delay at all in filing the appeals. The delay however, was due to reasonable or sufficient cause in as much as the Income-tax Officer had been vigilant enough to apply for a certified copy of the impugned order. The Income-tax Officer is entitled to retain the copy of the order received by him from the CIT(A). Any time taken to obtain the certified copy of the impugned order must be held to give rise to reasonable or sufficient cause for filing the appeals belatedly,. In this connection, we may refer to the decision of the Madras High Court in the case of Rasipuram Union Motor Service Ltd. v. CIT [1956] 30 ITR 687, the decisions of the Kerala High Court in the case of Malayalam Plantations Ltd. v. CIT [1959] 36 ITR 205 and in the case of Varkey Ousephv. Agrl. ITAT [1975] 101 ITR 334 and the decision of the Calcutta High Court in the case of Ruby General Insurance Co. Ltd., In re 1950 ILR 2 Cal. 167. The fact that the Income-tax Officer did not wait long enough to receive the certified copy of the impugned orders cannot be held against him. We can only infer that having been worried by the undue delay caused in obtaining the certified copy of the impugned orders, the Income-tax Officer hastened to file the appeals by enclosing photostat copies of the impugned orders which he was entitled to by Rule 9 of the Appellate Tribunal Rules. By doing so, the Income-tax Officer cannot be accused of delaying the appeals without reasonable cause. Having regard to the decision of the Hon'ble Supreme Court in the case of Collector. Land Acquisition v. Mst Katiji [1987] 167 ITR 471, we condone the delay, admit the appeals and proceed to dispose of the same on merits.
3. It would be logical to deal with the cross objections first. The first point taken by the assessee in the cross objection is basic to the question of levy of penalty under Section 271 (1) (c) of the Act. The Income-tax Officer levied penalty under Section 271 (1)(c) by orders passed on 29-3-1990 for both the years under appeal. The penalties were cancelled by the CIT(A) against which the Department is in appeal. While cancelling the penalties, the CIT(A) held against the assessee in respect of two points. The first is the point of limitation. The question arises under these facts. The following chart sets out the relevant dates:
Particulars/Assessment year 1981-82 1982-83 Assessment Order Passed 22-9-1984 23-3-1985 Penalty Proceedings initiated 22-9-1984 23-3-1985 Appellate Order of CIT(A) passed 7-8-1986 7-8-1986 Appellate Order Received by Department 15-9-1986 15-9-1986 Penalty limitation under Section 275 31-3-1987 31-3-1987 Appeal under Section 253(3) filed by Department 3-7-1987 3-7-1987 Tribunal Order passed 13-9-1989 13-9-1989 Penalty Order passed 29-3-1990 29-3-1990
The contention of the assessee before us is that under Section 275(a)(ii) of the Act, the period of six months from the end of the month in which the order of the CIT(A) (in the quantum appeals) was received by the CIT expired on 31-3-1987 and the Department not having preferred any appeal before the date to the Tribunal against the orders of the CIT(A), the last date for passing the penalty order expired on 31-3-1987 and the penalty orders having been passed only on 29-3-1990 were hopelessly barred by limitation. The CIT(A) had held on this point that the appeals to the Tribunal had been sanctioned by the CIT and merely because there was delay in filing the second appeal due to non-receipt of the certified copy of the orders of the CIT(A), it does not mean that the orders of the CIT(A) were not the subject matter of an appeal to the Tribunal and since the Tribunal had also condoned the delay in filing the appeals, it cannot be stated that there was no appeal to the Tribunal. He therefore held that the Income-tax Officer had a period of six months from the end of the month in which the orders of the Tribunal were received by the CIT and thus the orders of penalty passed on 29-3-1990 were within the period of limitation prescribed by Section 275(a)(ii). The Ld. Departmental Representative relied on this line of reasoning of the CIT(A) and submitted that the penalty orders were within the period of limitation.
4. On a careful consideration of the rival contentions on the issue of limitation, we are of the view that the contention of the Ld. Representative for the assessee should prevail. Section 275 as it stood at the material time was as under :
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 appeai 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 financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed.
Explanation: In computing the period of limitation for the purposes of this section,-
(i) the time taken in giving an opportunity to the assessee to be re-heard under the proviso to Section 129;
(ii) any period during which the immunity granted under Section 245 remained in force; and
(iii) any period during which a proceeding under this Chapter for the levy of penalty is stayed by an order or injunction of any court, shall be excluded.
The penalty order has to be passed within two years from the end of the financial year in which proceedings, in the course of which action for imposition of penalty has been initiated are completed, or six months from the end of the month in which the order of the CIT(A) or the Tribunal is received by the CIT, whichever period expires later. It is common ground that the time limit of two years prescribed by Sub-clause (0 has expired. The only question is, whether the order of the CIT(A) in the quantum appeals were the subject matter of appeal to the Tribunal. The order of the CIT(A) in the quantum appeals were received by the CIT on 15-9-1986. Thereafter, the Income-tax Officer had a'period of six months from the end of that month to pass the penalty orders. However, if he had filed appeals to the Tribunal before 31-3-1987, the period of six months would be reckoned from the end of the month in which the order of the Tribunal on the appeals filed by the Department was received by the CIT. The contention of the Departmental Representative supported by the order of the CIT(A) on the point of limitation is that the appeals filed by the Department though belatedly on 3-7 -1987, were admitted by the Tribunal and therefore it must be taken that the orders of the CIT(A) in the quantum appeals had been made the subject matter of appeal to the Tribunal even before 31-3-1987. We are unable to appreciate the logic behind this reasoning. For one thing, factually, the appeals to the Tribunal were filed by the Department only on 3-7-1987. By that time, the period of six months computed from the end of the month in which the orders of the CIT(A) were received by the CIT had lapsed. Secondly, apart from the fact that there is no discussion in the order of the Tribunal in the appeals filed by the Department regarding the delay, it cannot be stated that the appeals must be taken to have been filed on the due date merely because the delay was condoned by the Tribunal. It is not correct to state that there was no delay at all, when once the Tribunal condones the delay, but by condoning the delay, the Tribunal only holds that the appellant was prevented by reasonable or sufficient cause in filing the appeals in time. Condonation of the delay does not mean that the appellant must be deemed to have filed the appeals in time. The fact that there is a delay is admitted, but the Tribunal only finds that the delay is attributable to reasonable cause. In the present case, the Department ought to have filed the appeals against the orders passed by the CIT(A) in the quantum proceedings on or before 14-11-1986, taking the date of receipt of the order by the CIT as 15-9-1986. If the Department had filed the appeals on that day or at least before 31-3-1987, though after a delay but subject to condonation, it would have been possible to argue that the orders of the CIT(A) had been the subject matter of appeal before the Tribunal. But that is not the position in the present case. We are therefore unable to uphold the reasoning of the CIT(A) on the question of limitation.
5. In the case of S.C. Prashar v. Vasantsen Dwarkadas [1963] 49 ITR 1 the Hon'ble Supreme Court held that the change in the law regarding the period within which action can be taken by the Income-tax Officer to commence an assessment or reassessment does not impair the rights already acquired by the assessee by the bar of limitation and does not revive the power of the Income-tax Officer which has already become incapable of being exercised by lapse of time. In the case of J.P. Jani, ITO v. Induprasad Devshanker Bhatt [1969] 72 ITR 595, it was again held by the Hon'ble Supreme Court, that unless the terms of statute 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 vested right acquired or to revive any remedy already lost by efflux of time. In the case of S.S. Gadgil v. Lal & Co. [1964] 53 ITR 231, the Hon'ble Supreme Court, speaking through His Lordship Justice Shah, held that the time limit within which a particular Act may be done under the I.T. Act is not a mere period of limitation, but it is in fact a fetter on the power of the Income-tax Officer. In the present case, the Income-tax Officer lost the power to impose penalty by not preferring appeals to the Tribunal before 31-3-1987. After that date, the assessee acquired a right of not being visited with a penalty. That right cannot be stated to have been taken away by the Income-tax Officer filing appeals on 3-7-1987 to the Tribunal and by the Tribunal condoning the delay and passing an order on the merits of the additions. In Smt. NaniRaiv.ITO [1989] 31 ITD 229, the Delhi Bench of the Tribunal presided over by the Hon'ble President of the Tribunal, wherein a similar question was raised, held that on the lapse of the period of limitation prescribed for passing the penalty order, a right got vested in the assessee and that right was that he will not be visited with a penalty order. It was further held that the law of limitation does not contemplate the divesting of such right and that the duty of the Tribunal is merely to apply the law as it stands, however harsh it may appear to be. Respectfully following the principles laid down in the aforementioned decisions of the Hon'ble Supreme Court and the Tribunal, we have no hesitation in holding that penalty orders passed on 29-3-1990 under Section 271 (1)(c) of the Act were beyond the period of limitation. The CIT(A) was wrong in holding otherwise.
6. In view of our decision that the penalty orders were passed beyond the period of limitation and are therefore invalid, it is not necessary for us to adjudicate on the other grounds taken in the cross objections on the basis of the decision of the Hon'ble Guwahati High Court in Sri Brajalal Banik v. State of Tripura [1989] 2 GIR 220.
7. Similarly, in view of our decision as stated above, we do not think it necessary to go into the grounds raised by the Department in its appeals regarding the cancellation of the penalty on merits. In the result, the cross objections are partly allowed and the appeals by the Department are dismissed.