Law:

Section:

Section 271 of the Income-tax Act, 1961 [Corresponding to section 28 of the Indian Income-tax Act, 1922] - Penalty - For failure to furnish returns, comply with notices, concealment of income etc. - Assessment year 1943-44 - Whether when notice regarding penalty is issued after unreasonable lapse of time, it amounts to abuse of power and proceedings can certainly be quashed by writ issued by court - Held, yes FACTS The assessment for the relevant assessment year was completed in the year 1944 and on the same day notice was issued for imposition of penalty on the basis of concealment of income by the petitioner. The petitioner sent a reply to the notice. The department took no action for 12 years. In year 1956 the department issued another notice to the petitioner. The petitioner duly replied to the second notice. Again nothing further was done by the department for another three years. Thereafter the department issued two more notices to the petitioner. On writ petition filed by the assessee, the Single Judge allowed the petition and issued a direction to the income-tax authorities not to impose a penalty on the assessee. On appeal, the department contended that the assessee was not entitled to any writ because he had filed his writ petition with undue delay, that the writ petition should have been dismissed because the assessee had an alternative remedy and that even admitting all the facts alleged by the assessee, the proceedings taken against him under section 28 could not be said to be without jurisdiction. HELD It was true that the petitioner was guilty of a certain amount of delay in filing his writ petition; but as pointed out by the Single Judge, the income-tax authorities had lulled the petitioner into a false sense of security by their continued inaction and, consequently, he did not feel any necessity for coming to this court earlier. In any case, whatever view may be taken, the fact remained that the Single Judge had condoned the delay; and the Court was reluctant to interfere in special appeal with the Single Judge's exercise of discretion in such matters. Similar was the case with the plea of alternative remedy. Even though no period of limitation…

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