Reasonable time for income-tax penalty: inordinate unexplained delay can make the levy unenforceable.

Penalty under the Indian Income-tax Act, 1922 had to be imposed within a reasonable time, even though no express limitation period was prescribed. On the facts stated, the penalty order was passed about nine years after the assessment had become final, and no explanation was given for the delay. The later reduction of the penalty quantum did not cure the inordinate lapse of time. The document states that the levy was therefore not made within a reasonable time and was not exigible.

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Issues: Whether penalty was exigible in the assessee's case for the assessment year 1946-47 when the penalty order was passed after an inordinate lapse of time.

Analysis: No period for levy of penalty was fixed under the Indian Income-tax Act, 1922, but penalty had to be imposed within a reasonable time. The delay in the present case was about nine years after the assessment had become final, and no explanation was furnished for such inordinate delay. The fact that the quantum of penalty was later reduced did not justify sustaining the levy despite the delay.

Conclusion: The levy of penalty was not made within a reasonable time and was therefore not exigible.

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