CIT Vs. RAJEEV STEEL CORP

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Delhi Bench 'C' Delhi has referred the following question for opinion of this Court under Section 256(1) of the Income Tax Act:

(2.) The dispute relates to the assessment year 1987-88 which arises out of penalty proceeding initiated against the assess under Section under Section 271-B of the Income Tax Act. The assessee is a registered firm engaged in the business of purchase and sale of iron and steel goods. During the relevant assessment year, it disclosed total sales of Rs. 1,43,48,401/- which exceeded Rs. 40 lakhs as prescribed under Section 44AB of the Income Tax Act. Therefore, the assessee was required to get his accounts audited before the specified date date i.e. 31-7-1987. The assessee got his account books audited on 28-9-1987 instead of 31-7-1987. This led to initiation of penalty proceedings under Section 271-B of the Act. After issuance of show cause notice, the penalty to the tune of Rs. 71,742/- was levied by the Income Tax Officer, Ward -1, Ghaziabad. The Tribunal by its judgment and order dated 2-2-1998 has held that the penalty proceedings are barred by limitation as prescribed by Section 275(1)(c) of the Act. It has been found that the penalty proceedings should be initiated by the end of the year i.e. 31-3-1988 or within six months from the date of the order. In the present case, the original assessment order was passed on 18-2-1988, therefore, the Tribunal held that the issuance of notice on 7-11-1990 is barred by time.

(3.) Sri A.N. Mahajan, learned Standing Counsel for the department submits that the Tribunal has misinterpreted and misconstrued Clause (c) of Sub-section (1) of Section 275 of the Act. He submits that on a true and correct interpretation of the said provision, the order of the Tribunal is unsustainable. On the other hand, Sri Shubham Agrawal, learned Counsel for the assessee supports the order of the Tribunal.