Madhya Pradesh High Court
Addl. Commissioner Of Income-Tax vs Raichand Amichand on 21 March, 1978
Author: G.L. Oza
Bench: G.L. Oza
JUDGMENT Sohani, J.
1. By this application under Section 256(2) of the I.T. Act 1961, hereinafter referred to as "the Act", the Addl. CIT, Madhya Pradesh, Bhopal, has prayed that the I.T. Appellate Tribunal, Indore Bench, Indore, be required to state the case and refer to this court the following questions of law :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in ignoring the provisions of Section 275 as substituted by Section 50 of the Taxation Laws (Amendment) Act, 1970, which came into force from April 1, 1971, and holding that the order of penalty is hit by the bar of limitation and is bad in law ?
2. Whether the Tribunal was justified in looking out (sic) the penalty of Rs. 25,000 levied under Section 271(1)(c) particularly in view of the fact that the penalty order was passed within the time prescribed under Section 275 as substituted by Section 5.0 of the Taxation Laws (Amendment) Act, 1970 ?
3. Whether the Appellate Tribunal is right in holding that the penalty order passed by the IAC was hit by the bar of limitation and was thus bad in law ?"
2. The material facts giving rise to this application briefly are as follows: For the assessment year 1968-69, a penalty of Rs. 25,000 was imposed on the assessee-firm by the IAC of Income-tax, by his order dated 22nd January, 1972, under Section 271(1)(c) of the Act. On an appeal before the Tribunal, it was urged on behalf of the assessee that the assessment proceedings for the year 1968-69 were completed on 9th December, 1969, and in view of the provisions of Section 275 of the Act prescribing the period of limitation, the order of penalty paseed by the IAC on 22nd January, 1972, was illegal. This preliminary objection was upheld by the Tribunal and the impugned order was set aside. The department submitted an application under Section 256(1) of the Act for making a reference to this court on the aforesaid questions of law. The application was, however, rejected by the Tribunal on the ground that no question of law arose in the case. The Addl. CIT has, therefore, submitted this application under Section 265(2) of the Act.
3. Shri Mathur, learned counsel for the department, contended that the question of applicability of the provisions of Section 275 of the Act, as amended by Section 50 of the Taxation Laws (Amendment) Act, 1970, which is a pure question of law, arose out of the order of the Tribunal. It is true that the said question was not raised before the Tribunal at the time of hearing of the appeal. But the said question was implicit in the question of limitation which the Tribunal had considered. Shri Chitale, learned counsel for the assessee, therefore, very fairly conceded that the question as_ to whether the order of penalty could be held to be illegal in view of the provisions of Section 275 of the Act, as amended by Section 50 of the Taxation Laws (Amendment) Act, 1970, arose in the case. Learned counsel for the department, however, conceded that the only question of law which arose in this case and which should be referred by the Tribunal is as follows :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the order imposing penalty on the assessee-firm was illegal on the ground that it was barred by limitation, having regard to the provisions of Section 275 of the I.T. Act, 1961, as amended by Section 50 of the Taxation Laws (Amendment) Act, 1970 ?"
4. Having heard learned counsel for the parties, we are satisfied that the Tribunal was not right in holding that no question of law arose out of the order of the Tribunal, We, therefore, direct the Tribunal, Indore Bench, Indore, to state the case and to refer it on the aforesaid question of law. In the circumstances of the case, parties shall bear their own costs of this application.