1987 (2) TMI 118

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..... The assessee preferred quantum appeal and as a result of the appellate order, the Income-tax Officer, B-Ward, Special Investigation Circle II, Hyderabad, passed modification order under section 250 on 30-3-1981 and subsequently levied penalty of Rs. 3,084 on 28-3-1983. 3. In the first appeal, the Appellate Assistant Commissioner held that the penalty proceedings were initiated way back in 1978 but the penalty was levied only on 28-3-1983 which course of action is not open to the Income-tax Officer in view of the provisions of section 275 of the Act. Thus, he cancelled the penalty. 4. Before us, Shri T.S.R. Anjaneyulu, learned departmental representative, submitted that as the modification order was passed by the Income-tax Officer o....

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....he appeal. As the proceedings for the imposition of penalty would have become barred by limitation by 10-3-1966, the Income-tax Officer issued fresh notice to the assessee on 8-9-1965 and as there was no response, he levied penalty by his order dated 5-3-1966. At that relevant point of time, section 275 was as follows: "No order imposing a penalty under this Chapter shall be passed after the expiration of two years from the date of the completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced. Explanation: In computing the period of limitation for the purpose of this section, the time taken in giving an opportunity to the assessee to be re-heard under the proviso to section ....

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....n obedience to a direction of an appellate authority, the time limit prescribed under section 263(2) would not apply, and that section 263(3) must be regarded as declaratory of the law which was already prevailing and the enactment of ex majori cotila provision in the 1961 Act would, therefore, be a legislative recognition of the legal position obtained as a result of judicial pronouncements qua the 1922 Act. Thus, where there was absolutely no provision in the 1922 Act for the Commissioner to pass orders in pursuance of or in obedience to the directions of the appellate authorities beyond a period of two years from the date of passing of the order of the Income-tax Officer, the courts have held that the specific provision made under 1961 A....

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....initiated, are completed. Explanation: In computing the period of limitation for the purposes of this section, the time taken in giving an opportunity to the assessee to be re-heard under the proviso to section 129 and 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." 8. There is no ambiguity in this section as regards the time limit unlike under the 1922 Act or unlike under section 275 as it stood prior to the amendment by the Taxation Laws (Amendment) Act, 1970. In terms of the amended section 275, no penalty can be imposed after the expiration of two years from the end of the financial year in the course of which action for imposition....