TaxTMI 
TaxTMI 
2016 (11) TMI 370
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....nal was correct in law in holding that the penalty order passed by the learned Assessing Officer on 30.10.1990 was within the period of limitation laid down in Section 275 of I.T Act, 1961?" 2. Since both these cases relate to Assessment Years 1988-1989 and 1989-1990, involve similar questions, they have been heard together, and are being decided by this common judgment. 3. It is not disputed that notices dated 2.4.1990 and 26.6.1990 were issued to Assessee under section 271B of Act, 1961 requiring to show cause, why penalty be not imposed under the aforesaid provision, in respect of above mentioned Assessment Years for failure of Assessee in getting its accounts audited under section 44AB of Act. 4. Assessee replied notices vide letter dated 30.7.1990. Explanation furnished by Assessee did not find favour with Assessing Officer and accordingly it passed penalty order imposing penalty of Rs. 24,768/- and Rs. 27,990/- vide order dated 30.10.1990. 5. In appeal, Commissioner of Income Tax(Appeals) (hereinafter referred to as ''CIT(A)' cancelled penalty for both the years on the ground that assessment for both years processed by Assessing Officer under section 1....
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....r shall apply. 11. Shri S.D.Singh, learned Senior Counsel submitted that both clauses in sub section (c) of Section 275(1) have to be read together and thus will be attracted to a case where penalty proceedings have been initiated during the process of assessment and limitation is end of financial year in which assessment proceeding is completed or six months whichever is later. This submission in our view is apparently misconceived and nothing but a complete misreading of Section 275(1)(c). 12. As we have already said, words "whichever period expires later" contemplates two periods of limitation. According to us, one is when action for "imposition of penalty" is initiated, the end of financial year of such proceeding when completed, and, secondly, when action for "imposition of penalty is initiated", it is six months there from, and, then whichever period expires later. For example, if penalty proceeding is initiated during the period of assessment, it is expiry of financial period in which the assessement proceedings are completed. Second, if notice for penalty is not issued during the course of assessment proceedings, instead thereafter, then it is six months from the date....
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....clauses (a), (b) or (c) are specified, have to exist, since that is a condition for exercise of jurisdiction. Referring to Section 275(1) of Act, 1961, Court in Commissioner of Income Tax, U.P versus Bankey Lal Hira Lal (Supra), held that Section in its essential content is a provision prescribing period of limitation for making a penalty order. It is not a provision prescribing point of commencement of penalty proceedings. It is concerned with the order which concludes penalty proceedings. It further held, when it refers to "completion of proceedings in the course of which the penalty proceeding is commenced", in substance it identifies the former proceeding for the purpose of defining point of time from which period of limitation for making penalty order must be computed. This Court specifically noticed a Bombay High Court Judgement in Shakti Offset Works versus Inspecting Assistant Commissioner of Income Tax (1967) 64 I.T.R 637, which took a similar view to what has been canvassed before us by Shri Singh, learned Senior Counsel but disagreed and dissented therewith. Bombay High Court took the view that initiation of penalty proceeding cannot be held over until after the completi....
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.... action for imposition of penalty has been initiated can be understood as the proceedings relating to imposition of penalty. It said that financial year in the first part of Section 275(1)(c) must be understood as the financial year where assessment order is made in the course of which proceedings for penalty could be initiated. Therein assessment order was made on 25.2.1994, hence, Court held that limitation contemplated in the first part expired on 31.3.1994. If the first part is not appplied, then comes the second part, Court said that a notice for imposition of penalty if issued under section 271, it would be period of six months there from which will cover the second part. In that case, notice was issued under section 271, for imposition of penalty on 8.6.1994 and penalty order was passed on 31.12.1994. Court held that order of penalty is within the period of six months under second part, hence within limitation, and upheld the same. 17. We are in respectful agreement with the aforesaid view which is clearly applicable in the case in hand also. 18. Similar view has been taken by Delhi High Court also in Subodh Kumar Bhargava versus Commissioner of Income Tax (2009) 309 I....
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....ection 275(1) (c), the end of the period of limitation would be September 30, 2007. This would be so because the action for imposition of penalty was initiated on March 15,2007, implying thereby that the end of the month would be on March 31,2007. The period of six months from such date would end on September 30,2007. Thus, in this example, we are faced with two dates on which limitation would end. But, because of the expression " whichever period expires later", the period of limitation would have to be taken as September 30,2007, which is relatable to the date on which action for imposition of penalty was initaited and not to the date on which the proceedings, in the course of which action was initiated, are completed. Example 2: Let us assume that action for imposition of penalty is initiated on April 15,2007, in the course of proceedings which are completed on May 25,2007. Under the first part of section 275(1)(c), the period of limitation for passing an order imposing penalty would end on March 31,2008, being the end of the financial year in which the proceedings, in the course of which action for imposition of the penalty had been initiated, are completed. H....
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....te. That would take us to January 31, 2004. Thus, the penalty order could have been passed on any date up to and including January 31,2004. The penalty order came to be passed on February 17, 2004, which would be hit by the bar of limitation." 19. The next decision cited at the Bar is Karan Vir Singh Gossal versus Commissiner of Income Tax & Another(2012) 349 ITR 692(SC). There the question up for consideration before Court was, whether levy of interest under section 234-A/234B of Act 1961 is mandatory or not. Relying on five Judges Bench decision of this court in Commissioner of Income Tax versus Anjum M.H.Ghaswala (2001) 252 ITR 1, Court held that interest under aforesaid provision is mandatory. Having said so, Court further proceeded to hold that there was no need for Assessing Officer to specifically recite in the order of assessment that penalty proceedings should be initiated as contended by Assessee. It further said as under: " The recitation by Assessing Officer directing institution of penal proceedings is not obligatory and penal proceedings could be initiated for such default without a specific direction from the Assessing Officer." 20. The aforesaid judgm....
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....lty. We find that even on this aspect, there is an authority of Supreme Court in Karan Vir Singh Gossal versus Commisisoner of Income Tax and another (Supra) which appears to have gone unnoticed noticed by this Court in the above case. It has proceeded to observe something which is contrary to law laid down by Supreme Court in Karan Vir Singh Gossal versus Commisisoner of Income Tax and another (Supra). Even otherwise, we find that the question of point of limitation under section 275(1)(c) has not been specifically considered Commissioner of Income Tax versus E.C.C. Project Pvt. Ltd.(Supra) therefore, that judgment would have no application for the issue to be considered in this Reference. 25. Next is a Division Bench of this Court in Bhola Nath Carpets Pvt.Ltd. versus Commissioner of Income Tax (2008) 299 ITR 413(All) but therein Court has considered applicability of Section 275(1)(b) and not 275(1)(c) as it has specifically said: "we are not concerned herein with Clause-c of sub section (1) of Secton 275 of Act". 26. Shri Singh, learned Senior Counsel has also placed reliance on Supreme Court judgment in M/s Frick India Ltd....
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....o read something in the provisions of the law, which is not there, or to find out a way of obviating the difficulties in enforcing the law howsoever meritorious the intentions of the Legislature might be. (Para-17) 30. It is settled principle of interpretation, where the words used are clear and unambiguous, Court is bound to construe them in their ordinary sense and it is not the function of Court to add words or expression for supposed assumption of what would have been the intention of the legislature. Court is not entitled to go beyond so as to supply an omission as if to play the role of a political reformer or counsel to the legislature. 31. A Constitution Bench in Dadi Jagannadham Vs. Jammulu Ramulu and others AIR 2001 SC 2699, in para 13, observed as under: "The settled principles of interpretation are that the Court must proceed on the assumption that the legislature did not make a mistake and that it did what it intended to do. The Court must, as far as possible, adopt a construction which will carry out the obvious intention of the legislature. Undoubtedly if there is a defect or an omission in the words used by the legislature, the Court would not go to i....
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....). 35. We are aware that the rules of the interpretation are not rules of written or codified law and are not to be followed like rules enacted by legislature in Interpretation Act as observed in Superintendent and Remembrance of Legal Affairs, West Bengal Vs. Corporation of Calcutta AIR 1967 SC 997. The principles of interpretation serve only as a guide. A casus omissus cannot be supplied by Court. There is no presumption that a casus omissus exists. Court should avoid creating a casus omissus where there is none. It would be appropriate to recollect observations of Devlin, L.J. in Gladstone Vs. Bower (1960) 3 All ER 353 (CA), "The Court will always allow the intention of a statute to override the defects of working but the Court's ability to do so is limited by recognized canons of interpretation. The Court may, for example, prefer an alternative construction, which is less well fitted to the words but better fitted to the intention of the Act. But here, there is no alternative construction; it is simply a case of something being overlooked. We cannot legislate for casus omissus." (emphasis added) 36. Court in Bangalore Water Supply and Sewerage Board ....