ADDITIONAL COMMISSIONER OF INCOME TAX Vs. RAICHAND AMICHAND

JUDGEMENT

(1.) BY this application under S. 256(2) of the IT Act, 1961, hereinafter referred to as "the Act", the Addl. CIT, Madhya Pradesh, Bhopal, has prayed that the I.T. Tribunal, Indore Bench, Indore, be required to state the case and refer to this Court the following questions of law :

(2.) THE material facts giving rise to this application briefly are as follows : For the asst. year 1968 -69, a penalty of Rs. 25,000 was imposed on the assessee -firm by the IAC of Income -tax, by his order dated 22nd January, 1972, under S. 271(1)(c) of the Act. On an appeal before the Tribunal, it was urged on behalf of the assessee that the assessment proceedings for the year 1968 -69 were completed on 9th December, 1969, and in view of the provisions of S. 275 of the Act prescribing the period of limitation, the order of penalty paseed by the IAC on 22nd January, 1972, was illegal. This preliminary objection was upheld by the Tribunal and the impugned order was set aside. The Department submitted an application under S. 256(l) of the Act for making a reference to this Court on the aforesaid questions of law. The application was, however, rejected by the Tribunal on the ground that no question of law arose in the case. The Addl. CIT has, therefore, submitted this application under S. 265(2) of the Act.

(3.) SHRI Mathur, learned counsel for the Department, contended that the question of applicability of the provisions of S. 275 of the Act, as amended by S. 50 of the Taxation Laws (Amendment) Act, 1970, which is a pure question of law, arose out of the order of the Tribunal. It is true that the said question was not raised before the Tribunal at the time of hearing of the appeal. But the said question was implicit in the question of limitation which the Tribunal had considered. Shri Chitale, learned counsel for the assessee, therefore, very fairly conceded that the question as to whether the order of penalty could be held to be illegal in view of the provisions of S. 275 of the Act, as amended by S. 50 of the Taxation Laws (Amendment) Act, 1970, arose in the case. Learned counsel for the Department, however, conceded that the only question of law which arose in this case and which should be referred by the Tribunal is as follows :