Commissioner of Income-tax Vs. Anand Water Meter Mfg. Co. - Court Judgment

Excerpt:
- sections 80 (2) & 89 & punjab motor vehicles rules, 1989, rules 85 & 80: [t.s. thakur, cj, jasbir singh & surya kant, jj] appeal against orders of state or regional transport authority imitation held, a stipulation regarding the period of limitation available for invoking the remedy shall have to be strictly construed. that is because any provision by way of limitation is in the nature of a restraint on the remedy provided under the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply communication of a copy of the written order itself, a party who knows about the making of an order cannot ignore the same and allow grass to grow under its feet and do nothing except waiting for a formal communication of the order or to choose a tenuous plea that even though he knew about the order, he was waiting for its formal communication to seek redress against the same in appeal. if a party does not know about the making of the order either actually or constructively it may claim that the period of limitation would start running from the date it acquires knowledge of the making of an order but one cannot understand how a party, who has acquired knowledge of the making an order either directly or constructively can ignore the same and belatedly seek redress just because the authority making the order had made a default in formally communicating the order to him. allowing a party to do so would amount to placing a premium on the lack of diligence of a party, who is remiss in seeking a remedy that was available to it. therefore, knowledge whether actual or construction of the order passed by the state or regional transport authority should result in commencement of the period of limitation. thus,. in cases where the state or regional transport authority has not communicated the order of refusal passed to the persons concerned, the period of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order. - the tribunal accepted the appeal and recorded a finding that disallowance of certain expenditure, claimed in good faith, cannot be the basis for the levy of penalty under section 271(1)(c) of the act. it is well established that in penalty proceedings the mens rea is the essential ingredient and in view of the fact that the assessee disclosed this amount of income but claimed it as a reserve for bonus, would clearly show that there was no concealment.b. s. dhillon, j.1. in this petition under section 256(2) of the i.t. act, 1961 (hereinafter referred to as 'the act'), the commissioner of income-tax, amritsar-i, has prayed that the income-tax appellate tribunal, amritsar bench (hereinafter referred to as the tribunal), be directed to refer the following two questions of law to this court for decision:'(1) whether, on the facts and in the circumstances of the case, the tribunal has misdirected itself in holding that the claim made by the asses-see on account of bonus reserve did not arise from any fraud or any gross or wilful neglect on his part ?(2) whether, on the facts and in the circumstances of the case, the tribunal was justified in- law in deleting the penalty imposed under section 271(1)(c) of the act ?'2. the assessee is a registered firm carrying on business of manufacturing and sale of water meters and components. in the assessment order for the year 1967-68, the ito made the following additions towards the total income of the assessee :(1) rs. 1,394 towards car expenses on account of personal use of car by the partners of the firm,(2) rs. 500 out of travelling expenses on account of fooding expenses of partners while on tour.(3) rs. 1,008 out of repair account on account of capital expenditure relating to the electric fans.(4) rs. 25,111 'reserve for bonus.'3. the ito also initiated penalty proceedings and he referred the case to the iac under section 274(2) of the act. the iac, after hearing the assessee, imposed a penalty of rs, 24,925 in terms of the explanation to section 271(1)(c) of the act, this order was assailed by the assessee before the tribunal. the tribunal accepted the appeal and recorded a finding that disallowance of certain expenditure, claimed in good faith, cannot be the basis for the levy of penalty under section 271(1)(c) of the act. aggrieved by this order, the revenue filed a petition before the tribunal to refer the above-mentioned two questions of law for the opinion of this court. this petition has been dismissed by the tribunal holding that the above-mentioned questions are not questions of law as the finding recorded by the tribunal is based on the material placed on the record and the findings recorded are essentially findings of fact.4. we have carefully gone through the order of the tribunal dated 20th july, 1974, copy of which is annex. 'b', and all other relevant material on the record and we have no reason to take a different view than the one taken by the tribunal. the revenue accepted the position regarding items nos. 1 to 3 referred to in the earlier part of the judgment that the said items were a claim bona fide made which was disallowed by the ito and thus no penalty proceedings could be taken. as regards item no. 4, the reserve for bonus, it is not disputed that this amount was shown in the balance-sheet attached with the return and thus there was no concealment of that amount on the part of the assessee. the bona fide claim was asserted for the reserve for bonus which was disallowed by the ito. it is well established that in penalty proceedings the mens rea is the essential ingredient and in view of the fact that the assessee disclosed this amount of income but claimed it as a reserve for bonus, would clearly show that there was no concealment. we are, therefore, inclined to agree with the view expressed by the tribunal in the order referred to above.5. for the reasons recorded above, this petition is dismissed. however, there will be no order as to costs.