TaxTMI 
TaxTMI 
2002 (8) TMI 36
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....hese penalties. The Appellate Assistant Commissioner, however, found that the admitted taxes for the, assessment years had not been paid up to June 2, 1978, when the appeals were presented by the assessee before him. The Appellate Assistant Commissioner also found that there were no extenuating circumstances for non-payment of taxes on the admitted income and, therefore, he rejected the appeals without admitting the same in terms of section 249(4). The matters were taken to the Appellate Tribunal which found that since the provisions of section 249(4) came into effect from October 1, 1975, the same could not apply to the appeals relating to the assessment years 1973-74 and 1974-75 as that section could not apply retrospectively. The Tribunal, therefore, set aside the order of the Appellate Assistant Commissioner and restored the appeals for disposal on the merits. The Department has now come before us on the basis of the referred question. In view of the importance of the question and in view of the fact that nobody was representing the assessee before us, we appointed learned counsel Mr. P. P. S. Janarthana Raja, as amicus curiae. Learned standing counsel for the Department,....
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....ording to learned counsel, the lis, therefore, started only on March 12, 1976, or, as the case may be, when the assessment was made and both those dates being after the amendment came into force, the amendment would be applicable. In short, the contention is that the year of assessment even if it is prior to the amendment is irrelevant particularly because the lis came into effect after the amendment was made applicable by the Legislature. As against this, learned counsel Mr. P.P.S. Janarthana Raja, appearing as amicus curiae, raised a novel argument. In the first place, he pointed out that this was a provision in the nature of a penal provision and, therefore, could not be held to be retrospective in operation. Mr. Raja further points out that the appeals were only against the penalty and the appeals against the penalty could not be refused to be admitted for non-Payment of taxes as they were distinct and separate from the assessment. Learned counsel contends that for the purposes of the admissibility of appeals, appeals against assessments have to be treated distinctly and separately vis-a-vis appeals against penalty and merely because the tax due under the return has not been....
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....from the dates given above that in this case the lis in the sense explained above arose before the date of amendment of the section. Further, even if the lis is to be taken as arising only on the date of assessment, there was a possibility of such a lis arising as soon as proceedings started with the filing of the return or, at any rate, when the authority called for evidence and started the hearing and the right of appeal must be taken to have been in existence even at those dates. For the purposes of the accrual of the right of appeal the critical and relevant date is the date of initiation of the proceedings and not the decision itself." The lis, in our case, even if it is taken to have commenced on the date of filing of the returns, would be from March 12, 1976, when the returns were actually filed and that would be clearly after the amendment came into force, i.e., October 1, 1975. The Tribunal has clearly missed this aspect as it has nowhere realised that the lis had not started since the returns themselves came to be filed after October 1, 1975, even if that date is taken to be the starting date for the commencement of the lis. Therefore, it is obvious that this case woul....
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....requirement cannot be said merely to regulate the exercise of the appellant's pre-existing right but in truth whittles down the right itself and cannot be regarded as a mere rule of procedure." Relying on these observations, we have no doubts that even in the present case the amendment has the effect of interfering with or bringing clouds on or fettering the right of appeal which was pre-existing. Therefore, there would be no question of holding that the amendment, being of procedural nature, is retrospective in operation. Further, as we have pointed out already, the apex court has also laid down in no uncertain terms that the law which would be applicable would be the law available on the date when the lis between the parties commenced in order to appreciate as to whether the right of appeal has been affected or not. In this case also, the lis was held to have commenced from the date of filing of the returns or as the case may be when the returns were taken up for assessment. If that be so then it will have to be held that this case would be of no consequence to the assessee as, admittedly, the lis, in our case, has started after the amendments have come into force, i.e., earli....
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....ember 28, 1961, but it was not so filed; nor was any extension asked for. It was filed with a delay of seven months, on May 3, 1962, i.e., after the 1961 Act came into force. Proceedings under section 271(1)(a) of the 1961 Act were initiated and penalty was imposed as per 1961 Act. Examining the correctness and extent of the penalty, the Supreme Court reiterated the law laid down in Jain Brothers' case [1970] 77 ITR 107, and held that another contrary decision of the Supreme Court in CWT v. Suresh Seth [1981] 129 ITR 328 was not correctly decided. The Supreme Court again reiterated that in Jain Brothers' case [1970] 77 ITR 107, it is pointed out that the question of imposition of penalty would arise only after the assessment of tax was made. It would really not be necessary for us to discuss these two cases here because, admittedly, in the present case, the returns themselves have been filed after the amendments have come into force; the assessment have also obviously taken place after the amendments and, therefore, the right of appeal would be governed by the amended law as the same has arisen only after the commencement of the lis. It is interesting to note that while in Hoo sein....
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....re made on that basis which would be much after the amendments. The lis thus having started after the amendment that would be the relevant and the deciding period for holding as to which law applies. The Tribunal has obviously taken an incorrect view that the application of the amendment would depend upon the year of assessment. In our view, the year of assessment would be irrelevant. What would be relevant would be the starting point of the lis between the department and the assessee. The main thrust of the argument of Mr. Janarthana Raja was, however, that since the appeals pertained to the subject of penalty they could not be annihilated on the ground that the admitted tax liability was not paid. He pointed out that though the opening words of the section cover the appeals even against the penalty, the section should be read down and restricted only to the appeals against the assessment. In our view, such interpretation is not possible. Mr. Janarthana Raja, relying on the two decisions in T. Govindappa Setty v. ITO (1998) 231 ITR 892 (Karn) and CIT v. Rama Body Builders [2001] 250 ITR 825 (Delhi) contended that the section should be liberally construed. It is true that in Ram....