TaxTMI 
TaxTMI 
2011 (9) TMI 133
X X X X Extracts X X X X
X X X X Extracts X X X X
....t Appeal are as follows: (a) The Assessee, which is a Company, operates in the business of shares and securities. The present Appeal deals with the Assessment year 2001-02. (b) On 29th October, 2001 the Assessee filed its return of income declaring income to the tune of Rs. 3,84,75,860/- for the year under consideration and the same was assessed under the provisions of the Income Tax Act, 1961(hereinafter referred to as „the Act‟). (c) During the relevant assessment year the Assessee had received dividend income of Rs. 3,11,85,522/- from various other companies. (d) While dealing with the tax assessment of the Assessee, the Assessing Officer noticed that the Assessee had claimed exemption of an expenditure of&nbs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0th April, 2010 which is impugned before us by the Revenue. The ITAT quashed the penalty order imposed on the Assessee only on the ground that it was imposed beyond the period of limitation as prescribed under Section 275(1)(a) of the Act. 3. Before adverting to the rival submissions made on behalf of the parties it would be relevant to extract the necessary provisions as below: "275.(1) No order imposing a penalty under this Chapter shall be passed- (a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....namely, appeal from the assessment order before the CIT(A), appeal from the order of the CIT(A) to the ITAT and a further appeal to the High Court from the order of the ITAT. Therefore, it is logical to interpret that the period of six months provided for imposition of penalties starts running after the successive appeals from an assessment order has been finally decided by the CIT(A) or, as the case may be, the ITAT. Thirdly, it was argued that the proviso extends the period of imposing penalty from six months to one year within the receipt of the order by the Commissioner if the CIT(A) has passed the order after 1st June, 2003. Consequently, the said proviso only deals with the orders passed by the CIT(A) and does not provide for an order....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er appeal had been preferred to ITAT against the orders of the CIT(A) and that therefore the limitation period for the levy of penalty will be as provided for in Section 275(1)(a) i.e. six months from the end of the month in which the order of the ITAT is received by the Commissioner. The Madras High Court whilst considering the said issue came to the following conclusion:- "A reading of the abovesaid provision makes it clear that the interpretation placed by learned counsel for the petitioner on the said provision is acceptable. There is no dispute in this case that the petitioner has filed an appeal before the Tribunal and the same is pending. In such a case, the limitation period for the levy of penalty will be as provided for under sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation to the principal matter to which it stands as a proviso.‟ Therefore, it is to be construed harmoniously with the main enactment." There may be cases in which the language of the statute may be so clear that a proviso may be construed as a substantive clause. But whether a proviso is construed as restricting the main provision or as a substantive clause, it cannot be divorced from the provision to which it stands as a proviso. It must be construed harmoniously with the main enactment. So construed, we have already stated earlier the result that flows from such a construction." 9. Also in S.C. Cambatta and Co. Ltd. v. Commissioner of Income Tax, (1952) 21 ITR 121 (Bombay), the proper construction and interpretation of a proviso ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... In this behalf it is necessary to remember that a proviso is merely a subsidiary to main Section and must be construed in the light of the Section itself. It has to be construed harmoniously with the main provision. This conclusion is fortified by the decision of the learned Judge in Rayala Corporation (supra), where it was held that in case where an appeal is pending before the Tribunal the limitation period for levy of penalty can only be as provided for under Section 275(1)(a), i.e., six months from the end of the month in which the order of the Tribunal is received by the Commissioner. Insofar as the submission with regard to the Section being read in consonance with Section 275(1A) is concerned, we are of the opinion that the latter ....