Procedural limitation and fair hearing principles governed the penalty proceedings, with the amended time limit and adequate opportunity upheld.

An amendment to a procedural limitation provision applies where the limitation period had not begun to run before the amendment took effect, so the assessee had no vested right to rely on the unamended section 275 and the penalty order was within time. A reasonable opportunity of hearing is satisfied where notice is issued, an explanation is filed, appearances are made, and the assessee is later heard on merits; absence of prejudice from refusal of a further adjournment defeats the complaint. The penalty was thus sustained.

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Issues: (i) Whether the penalty order was barred by limitation under section 275 of the Income-tax Act, 1961. (ii) Whether the assessee was denied a reasonable opportunity of being heard before the penalty was imposed.

Issue (i): Whether the penalty order was barred by limitation under section 275 of the Income-tax Act, 1961.

Analysis: The limitation provision was held to be procedural. Since the period for imposing penalty had not begun to run before the amendment brought in by the Taxation Laws (Amendment) Act, 1970, there was no vested right in favour of the assessee to invoke the unamended provision. The amended section governed the case, and the penalty order was passed within the time prescribed by that amended provision.

Conclusion: The order imposing penalty was within limitation.

Issue (ii): Whether the assessee was denied a reasonable opportunity of being heard before the penalty was imposed.

Analysis: The assessee had received notice, filed an explanation, appeared before the authority, and obtained an adjournment. Even if illness prevented appearance on the adjourned date, the assessee was later heard at length on merits, and no prejudice was shown from the absence of a further adjournment.

Conclusion: Reasonable opportunity of hearing was afforded.

Final Conclusion: Both questions were answered in favour of the Revenue, and the penalty order was sustained.

Ratio Decidendi: An amendment to a limitation provision applies where the limitation period has not begun to run before the amendment takes effect, and a hearing requirement is satisfied where the party had notice, an opportunity to explain, and no prejudice from the alleged denial of adjournment is shown.

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