SUBODH KUMAR BHARGAVA Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) IN this appeal under Section 260A of the Income-tax Act, 1961 (hereinafter referred to as 'the said Act'), the following substantial question of law had been framed for our consideration :-

(2.) THE assessee filed his return of income on 22.06.2000. The said return was processed under Section 143(1) on 14.03.2002. It was not subjected to assessment under Section 143(3) of the said Act. Subsequently, on 31.07.2003, the Assistant Commissioner of Income-tax, Circle 23(1), New Delhi issued a show cause notice under Section 274 of the said Act read with Section 271B thereof. The said show cause notice indicated that the assessee had filed the return of income for the assessment year 2000-01 on 22.06.2000 and that, from the return it was apparent that the assessee had, without reasonable cause, failed to get his accounts audited or to obtain a report of such audit as per the provisions of Section 44AB of the said Act and to furnish the same within the stipulated period of time. Consequently, by virtue of the said notice, the assessee was asked to show cause as to why an order imposing penalty on him should not be made under Section 271B of the said Act. A reply was filed by the assessee on 19.01.2004 whereby the assessee contested the penalty proceedings both on merits as well as on the ground of limitation. In this appeal, we are not concerned with the findings returned by the authorities below on merits which have gone against the assessee. We are only concerned with the point of limitation which has been raised by the assessee.

(3.) BY the order dated 17.02.2004, the said Assistant Commissioner of Income-tax rejected the pleas taken by the assessee and imposed a penalty of Rs 27,835/- on the assessee under Section 271B of the said Act. Being aggrieved by this order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The said appeal was disposed of by an order dated 28.03.2005 dismissing the assessee?s appeal. Before the Commissioner of Income-tax (Appeals), the assessee had contended that the show cause notice was issued on 31.07.2003, whereas the penalty order under Section 275(1)(c) was passed on 17.02.2004 It was contended that this was beyond the period of six months from the end of the month in which the penalty proceedings had been initiated. Since the penalty proceedings had been initiated on 31.07.2003, the penalty order, according to the assessee, could have been passed within six months thereof, i.e., by 31.01.2004 The order was passed later on 17.02.2004 and, therefore, was time barred. This plea of the assessee did not find favour with the Commissioner of Income-tax (Appeals) who, interpreted the provisions of Section 275(1)(c) in the manner that the proceedings had been initiated on 31.07.2003 and, therefore, the penalty order could be passed within six months thereof or upto the end of the financial year in which such proceedings had been initiated, whichever period expired later. According to the Commissioner of Income-tax (Appeals), since the financial year would expire on 31.03.2004, the penalty order passed on 17.02.2004 was within time. The Commissioner of Income-tax (Appeals) confirmed the order passed by the Assistant Commissioner of Income-tax both on the point of limitation as well as on merits.