BHARAT CONSTRUCTION COMPANY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) APPELLANT firm is engaged in contract of building construction. It declared its income on estimate basis as it had not maintained any account books and was assessed by respondent ITO, vide assessment order dt. 30th May, 1986. While doing so respondent also stated in the order "penalty proceedings have also been initiated". He, thereafter, issued fresh notice under S. 271A of IT Act on 11th Nov., 1987, proposing levy of penalty on the assessee for not maintaining account books. He eventually passed order dt. 28th Dec., 1988, imposing a penalty of Rs. 2,500 on this head. He, however, later issued second notice dt. 11th Sept., 1989 to assessee under S. 271B of the Act for its failure to have its accounts audited.

(2.) THE assessee has challenged this notice in the present petition on the ground that it was barred by limitation prescribed under S. 275(b) of un-amended IT Act. The case set up is that under this provision no penalty proceedings could be commenced nor penalty order passed after the expiry of two years from the end of financial year in which proceedings, in the course of which action for imposition of penalty had been initiated were completed.

(3.) THIS is repelled and specified by the respondent by placing reliance on the provisions of S. 275 (b). According to him this provision prescribes a time limitation within which penalty proceedings must be concluded and not the stage after which penalty proceedings cannot be commenced. It is accordingly submitted that S. 275(b) does not prescribe any limitation requirement for commencement of penalty proceedings which are distinct from the assessment proceedings. It is explained that under S. 271B, the assessee's failure to get his accounts audited under S. 44AB renders such assessee liable for penalty.