COMMISSIONER OF INCOME TAX Vs. NAGAPPA M

JUDGEMENT

(1.) THE common question of law which is referred to us in these three cases under s. 256(1) of the IT Act, 1961 (hereinafter referred to as "the Act"), by the Tribunal, Bangalore Bench, is as follows :

(2.) THE assesse is the firm of M/s M. Nagappa, Bangalore, and the asst. yrs. 1965-66, 1966-67 and 1967-68. THE ITO completed the assessment proceedings in respect of the three assessment years in question on 23rd Oct., 1969, and in the course of the said assessment proceedings he also initiated action for levying penalty under s. 271(1)(c) of the Act. As the minimum penalty imposable in each of the above cases was in excess of Rs. 1,000, he referred the cases to the concerned IAC. After hearing the assessee, the IAC imposed the penalty in each of these cases on 28th Feb., 1972. THE assessee questioned the validity of the order imposing penalty in each of the above cases before the Tribunal in appeal and the principal ground urged by the assessee before the Tribunal was that as the period of two years from the date of the order of assessment had elapsed, the IAC had no jurisdiction to impose the penalty in view of the provisions of s. 275 of the Act as it stood on the date of the completion of the assessment proceedings. THE Tribunal accepted the said contention and quashed the penalties imposed in all the cases. At the instance of the Department, the Tribunal has referred the above question for our answer.

(3.) IN the instant case, however, on 1st April, 1971, the power of the IAC to impose penalty under s. 275 of the Act as it stood previously had not come to an end. That section having been substituted by a new section which provided for an extended period of limitation it has to be held that it was open to the IAC to exercise his power until the expiry of the extended period prescribed under the new section. This is also the view taken by a Full Bench of the Andhra Pradesh High Court in Addl. CIT vs. Watan Mechanical and Turning Works (1977) 107 ITR 743 (AP) : TC49R.1251 , overruling its earlier decision in Addl. CIT vs. Rajkamal Hotel and Bar (1977) 107 ITR 737 (AP). The same view has been taken by the High Court of Orissa in CIT vs. Bhikari Charan Panda (1976) 104 ITR 73 (Ori) : TC49R.1248 and CIT vs. Soubhagya Manjari Devi 1976 CTR (Ori) 221 : (1976) 105 ITR 82 (Ori) : TC49R.1249. The Gujarat High Court also has taken the same view in CIT vs. Royal Motor Car Co. (1977) 107 ITR 753 (Guj) : TC49R.1151.