Amended limitation for penalty proceedings applied to pending matters, preventing the penalty order from being treated as time-barred.

For penalty proceedings initiated before 1 April 1971 but still pending on that date, the amended section 275 of the Income-tax Act, 1961 applied where the limitation period had not expired. The amendment enlarged the time-limit for passing penalty orders, and the pending proceedings were governed by the revised provision. As a result, a penalty order passed after two years from the assessment order was not barred merely on that ground, because the amended limitation period controlled the case.

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Issues: Whether, for penalty proceedings initiated before 1 April 1971 but still pending on that date, the amended section 275 of the Income-tax Act, 1961 governed the time-limit for passing the penalty order.

Analysis: The reference turned on the effect of the amendment to section 275, which enlarged the limitation period for imposing penalty. The Court agreed with the consistent view of several High Courts that where the period of limitation was still running on 1 April 1971, the amended provision applied to the pending proceeding. On that basis, the penalty order could not be treated as barred by time merely because it was passed after two years from the assessment order.

Conclusion: The amended section 275 applied to the proceedings and the penalty order was not time-barred.

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