Commissioner of Income Tax (Central), Madras vs M. Nagappa

Venkatarmaih, J.—The common question of law which is referred to us in these three cases u/s 256(1) of the income tax Act, 1961 (hereafter referred to as "the Act"), by the Income Tax Appellate Tribunal, Bangalore referred Bench, is as follows :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in cancelling the penalty levied u/s 271(1)(c) in the assessee''s case on the ground that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty after October 23, 1971 ?" The assesses is the firm of M/s. M. Nagappa, Bangal ore, and the assessment

There is dispute that these cases fall under clause (b) of the new section 275. Under the new section it was open to the Inspecting Assistant Commissioner of Income Tax to impose the penalties in on or before March 31,1972, the last date of the financial year in which the assessment proceedings were completed being March 31,1970. Section 275 which provides for the outer limit of time within which penalty can be imposed under Chapter XXI of the Act is a procedural section. It is well settled that there is no vested right as regards procedural law. As regards matters of procedure which include rules of limitation the legislature can make changes and those changes apply to all pending actions. It is also well settled that any action which is barred by time under any existing law would not revive by subsequent amendment of the existing law extending the period of limitations unless the amending law either by express words or by necessary implication authorises action being taken in such a case after the amendment.

In the instant case, however, on April 1,1971, the power of the Inspecting Assistant Commissioner to impose penalty u/s 275 of the Act as it stood previously had not come to an end. That section having been substituted by a new section which provided for an extended period of limitation it has to be held that it was open to the Inspecting Assistant Commissioner to exercise his power until the expiry of the extended period prescribed under the new section. This is also the view taken by a Full Bench of the Andhra Pradesh High Court in The Additional Commissioner of Income Tax, Andhra Pradesh, Hyderabad Vs. Watan Mechanical and Turning Works, Hyderabad, , Overruling its earlier decision in Additional Commissioner of Income Tax Vs. Rajkamal Hotel and Bar, The same view has been taken by the High Court of Orissa in Commissioner of Income Tax Vs. Bhikari Charan Panda, and Commissioner of Income Tax Vs. Soubhagya Manjari Devi, . The Gujarat High Court also has taken the same viw in Commissioner of Income Tax Vs. Royal Motor Car Co,

In the cases before us, the Inspecting Assistant Commissioner could impose penalties till March 31,1972. Hence the penalties which were imposed on February 28,1972, in these cases are levied in time.

In the result, the question referred to us in each of the above cases is answered in the negative and against the assessee.