1. These four appeals are by the Revenue against the order deleting the penalties levied by the AO under Sections 271(1)(c), 273(2)(b), 271B and 271(1)(a) of the Act on the ground that the orders of penalty were barred by limitation.
3. The assessee's contention is that, the time-limit for passing order of penalty has expired on 31st Jan., 1992, being 6 months from the end of the month in which the proceedings, were initiated on 2nd July, 1991. The extended period of limitation in the case of filing of the appeal, it is submitted, was not available to the Department as the first time-limit of 6 months had already expired on 21st Jan., 1992 and the appeal was filed belatedly much after the date on 22nd March, 1993, and that too was not admitted and dismissed as barred by limitation by CIT(A) on 22nd May, 1996, learned counsel of the assessee submitted that the time-limit having already expired could not be revived by the subsequent act of filing an appeal by the assessee under Section 246 and a reference to the two Calcutta High Court decisions in the case of Bhaghath Kanona v. CIT (1980) 122 ITR 728 (Cal) and Patna High Court in the case of CIT v. Jankidas Mohanlal (1987) 163 ITR 756 (Pat) was made.
4. The time-limit for imposing penalty is prescribed in Section 275 of the Act, which is material to decide the issue under consideration, is reproduced as under: "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 CIT(A) under Section 246 or Section 246A or an appeal to the Tribunal under Section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the CIT(A) or, as the case may be, the Tribunal is received by the Chief CIT, CIT whichever period expires later; (b) in a case where the relevant assessment or other order is the subject-matter of revision under Section 263, after the expiry of six months from the end of the month in which such order of revision is passed.
(c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the exposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later." 5. Learned Departmental Representative contended that since the assessment was the subject-matter of appeal under Section 246 of the Act, the time-limit as prescribed under Clause (c) would apply and, therefore, the order having been passed on 22nd May, 1996, the period of limitation of 6 months from the end of the month in which the order was passed expired on 30th Sept., 1996, and therefore, the penalties imposition on 30th Sept., 1996, was within time. It is further submitted that the provisions of Section 275 would not be applicable for levy of penalty under Section 271B because this proceeding requires not to be initiated in the course of any other proceedings.
6. Even otherwise, it was submitted that the appeals filed by the assessee were not admitted and dismissed as time barred and, therefore, they could not be said to be the subject-matter of appeal in view of the decisions in the cases of Chiranjilal Daga v. CIT (1978) 113 ITR 363 (Mad), Radhey Shyam v. CIT (1984) 146 ITR 374 (All), Jagmohandas Gokaldas v. CWT (1963) 50 ITR 578 (Bom); and Krishna Flow Mills Ltd. v.CIT (1965) 55 ITR 259 (Mys) and the CBDT Circular No. 367, dt. 26th July, 1985. and also to the aforesaid order of the CIT(A). He further submitted that the distinction laid down by the learned Departmental Representative for the penalty under Section 271B is not supported, inasmuch as the provisions of Section 275 apply for imposition of penalty under this Chapter viz., Chapter XX and Section 271B also falls thereunder.
7. We have heard the parties and considered the rival submissions.
Provision of Section 275(1)(a) comes into play where the relevant assessment order was the subject-matter of appeal under Section 246 and where the appeal against assessment order has been dismissed as barred by limitation, the said order cannot be said to be the subject-matter of appeal in view of the decisions of the Madras and Allahabad High Courts and the Board Circular referred to above. Clause (a), therefore, would not come into play. It is Clause (c) which would come into play in the present case and that provides that no penalty can be levied after the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated are completed or six months from the end of the month in which the action for imposition of penalty was initiated, whichever period expired later. Penalty proceedings were initiated on or before 2nd July, 1991, when the assessment was completed and, therefore, the last date for imposition of penalty would be 31st Jan.,1992, being later of the two terminous i.e., 31st March, 1992, being the end of the financial year and 31st Jan., 1992, the expiry of six months from the end of the assessment made on 2nd July, 1991. This is so far as the penalty under Sections 271(1)(c), 273(2)(b) and 271(1)(a) are concerned.
8. As regards the levy of penalty under Section 271B, in our opinion, the provision of Section 275 would also be applicable because of the opening words "no order imposing a penalty under this Chapter" cover Section 271B also and the time-limit would be governed by Clause (c) of the Act. As stated by the AO in the order for penalty under Section 271B, the proceedings were initiated during the course of assessment proceedings i.e., 2nd July, 1991 by issuing notice under Section 271B on that very date i.e. 22nd July, 1991. The claim by the Revenue that these proceedings are not to be initiated in the course of any other proceedings and, therefore, Section 275 would not be applicable, has no force, because of the specific provision contained in Clause (c) of (c) of Section 275(1) of the Act. This contention of the Revenue would have been valid insofar as the applicability of Clause (a) or (b) of Section 275(1) is concerned but not where Clause (c) applies and as we have held above, in the present case itself Clause (c) applies which speaks the levy of penalty on 30th Sept., 1996, under Section 271B is also barred by limitation.