MOHAMMAD ATIQ Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is a writ petition under article 226 of the Constitution.

(2.) THE material facts were, that the petitioner was a partner in the firm, Eastern Trading Company, carrying on business at Kanpur. THEre were two other partners also along with him in this firm, namely, Rahmatulla Khan and Rahim Baksh. It appears that an ex parte assessment was made against the firm for the assessment year 1944-45. This was by order dated January 27, 1945. On January 29, 1945, i.e., two days after the making of the assessment order, a notice under section 28(1)(b) was issued to the firm proposing to impose a penalty and requiring the firm to sow cause. It appears that in response to this notice one of the partners of the firm appeared before the Income-tax Officer and produced before him a certificate of posting. It was stated on the basis of the said certificate of posting, that a return had been posted but it appeared that for some reason or other the return may have been lost. An affidavit was also filed in support of the statement made by that partner. Meanwhile an application under section 27 of the Income-tax Act was made for setting aside the ex parte assessment. That application having been dismissed, an appeal was filed against the order of dismissal, but the appeal was also dismissed. This was on the 7th May, 1946. THE business of the firm was discontinued in June, 1945, and the firm was also dissolved. THE last assessment of the firm was made for the assessment yea, 1946-47, and the same was completed on the 12th September, 1950. THE matter was allowed to continue to remain in abeyance for many years, after that date, also, and it was only on May 25, 1957, when a notice was issued in the name of the firm that penalty proceedings against it, initiated by the notice dated Jauary 29, 1945, were still pending. THE date of issue of this notice is not mentioned in it, but it was served on the petitioner. It appears that subsequently several other similar notices were issued, the last of which was on August 18, 1958. In this notice dated August 18, 1958, the name of the petitioner was also mentioned in addition to the name of the firm. It appears both from the averments in the petition as well as from the averments in the counter-affidavit and the statements contained in the penalty order that the petitioner asked for several adjournments which were granted to him for filing reply to the notices served upon him. On December 4, 1958, the petitioner filed a reply in which he took numerous objections to the imposition of a penalty. It may be stated that the tax assessed on the firm had been duly paid. THE case of the petitioner was that a return was sent under a certificate of posting, but for some reason or the other it might not have reached the Income-tax Officer. After the receipt of this written reply of the petitioner, the Income-tax Officer again does not appear to have done anything in the matter. THE petitioner, apprehending that a penalty order may be passed against him without his written reply being considered, moved this court on January 13, 1959, for the issue of a writ of prohibition, restraining the Income-tax Officer from proceeding further with the matter of imposing penalty. It is stated that a copy of the proposed writ petition was served upon the learned standing counsel for the income-tax department on December 24, 1958. Learned counsel for the petitioner has submitted that presumably the copy served on the learned standing counsel was despatched by this standing counsel to the Income-tax Officer. This writ petition was returned to the petitioner, because the court is said to have taken the view that it is possible that, after the lapse of all these years, the Income-tax Officer may stay his hands and discharge the notice regarding the imposition of penalty, and this court required the petitioner to go and enquire from the Income-tax Officer himself, how his reply to the notice had been dealt with. In consequence of these observations, the petitioner took back this petition. On January 15, 1959, the petitioner made an application to the Income-tax Officer for inspection of the file. THE Income-tax Officer has stated that on January 17, 1959, an order was passed on this application, for the issue of a challan for depositing the inspection fee. THE petitioner states that four days later, on January 19, 1959, he again visited the Income-tax Officer in order to enquire as to what orders had been passed on his application dated January 15, 1959. On that date he was served with copes of the penalty order and the notice of demand, which were both dated January 15, 1959. It has already been noticed that January 15, 1959, was the date on which the petitioner had made an application for inspection of the record. Under the penalty order, a penalty of Rs. 5,000 was imposed upon the petitioner. THEreupon, on January 27, 1959, the petitioner filed this wit petition for the relief, which has already been stated in the beginning of this judgment.

(3.) THE third ground which the Income-tax Officer has taken in support of his order is that the personal assessment of the petitioner was made under section 23(4) and a penalty had also been imposed. THE petitioner did not file any application under section 27 for the cancellation of that assessment and also did not go up in appeal against the penalty order. From this the Income-tax Officer has concluded that the petitioner is a habitual defaulter. I do not see how the facts and circumstances of the personal assessment of the petitioner have any relevancy at all to the facts and circumstances of the assessment of the firm of which he was a partner. In any view of the matter, the penalty was not being imposed upon the petitioner for his being a habitual defaulter. THE penalty was being imposed for failure to comply with the notices under sections 22(2) and 22(4) of the Income-tax Act and, therefore, to my mind, he himself in his personal assessment having been assessed under section 23(4) or penalty having been imposed, was a wholly extraneous consideration. Certainly it did not lend any support to the ground on which the penalty was imposed. If anything, allowing such an extraneous consideration to influence his mind vitiated the order. It is somewhat amusing to note that the only other reason, which the Income-tax Officer has given in his orders is that it took the petitioner about eleven years form the date of the issue of the original notice to file a reply. It was not right for the Income-tax Officer to blame the petitioner for lapse of time. From the dates which have been stated in the earlier portion of this judgment, it is quite clear that it was the Income-tax Officer himself, who allowed the matter to become old and state. Learned counsel for the petitioner has urged that if this penalty order is maintained, his partners having become untraceable, it will not be possible for him to claim contribution from them and he will have to bear the entire burden of penalty. Whether his partners have become untraceable or not is not very material but what is material is whether penal proceedings should be allowed to fructify in respect of a matter, which is about fourteen years old. It is true that no period of limitation is provided for limitation is provided, proceedings should be taken within a reasonable time. I do not see how it can be said that this long lapse of fourteen years is reasonable time. To my mind, it is not merely unreasonable; it is fantastic.