COMMISSIONER OF INCOME TAX Vs. RUPSA RICE MILL

JUDGEMENT

(1.) THIS is a reference under S. 66(1) of the Indian IT Act, 1922, made by the Tribunal, Patna, referring the following question for the opinion of this Court :

(2.) THE material facts found by the Tribunal are as follows : The assessment proceedings were completed on October 31,1950. Thereupon, a notice under S. 28(3) of the Act was issued to the assessee to show cause why penalty may not be levied for the concealment of some income. "A fresh notice was again issued to him on April 1,1955, and the matter was posted for hearing on April 13,1955. It was again adjourned to April 25, 1955, on which date the ITO merely directed that orders will be passed on receipt of the records. Nothing was done for nearly two years and on January 28,1957, the officer fixed the case for hearing on September 11,1957, and after obtaining the explanation from the assessee levied penalty on January 31,1958. It should be further noted that the assessee did not file any appeal against the order of assessment dated October, 31,1950, which became therefore final long before the penalty proceedings were disposed of. The learned Tribunal held that there was unconscionable delay in passing order on the penalty proceedings. It relied on some observations in Mohd. Atiq vs. ITO (1962) 46 ITR 452 (All) and thought that mere unconscionable delay in completing the penalty proceedings may render the penalty order bad, though the Tribunal was also conscious of the fact that no special time limit was prescribed in the Act for passing an order of penalty, Ultimately, the Tribunal passed the following order :

(3.) FROM the aforesaid passage it will be clear that the learned judge held the order of penalty to be bad because the Department had not established beyond reasonable doubt that there was a default committed by the assessee in filing returns. He has nowhere stated that the order was bad solely because of the unconscionable delay. It is well settled that a rule of limitation must be expressly provided in a statute and cannot be inferred merely on account of unreasonable delay. Once it is conceded that in the Indian IT Act, 1922(which provides for special rules of limitations for the various proceedings under that Act) there is no express provision prescribing the period within which an order of penalty should be passed, no such order can be held to be bad in law merely because of the inordinate delay. Mr. D. Mohanty for the Department rightly invited my attention to an earlier decision of the Lahore High Court in Vir Bhan Bansi Lal vs. CIT (1938) 6 ITR 616 (Lah) where the learned Judge held on a construction of S. 28 of the Act that no period of limitation can be even impliedly inferred from the other provisions contained in that section.