Law:

Section:

Section 275 of the Income-tax Act, 1961 - Penalty - Bar of limitation for imposition - Assessment year 1972-73 - Tribunal by order dated 27-6-1980 allowed certain relief to assessee - ITO reframed assessment under section 143/251 - Subsequently, on 27-1-1986, ITO passed order giving effect to order of Tribunal dated 27-6-1980 and also levied penalty upon assessee on 7-3-1986 - Commissioner (Appeals) held that penalty proceedings should have been completed within six months from end of month in which order of Tribunal was received by Commissioner in accordance with section 275(a) i.e., before January or February 1981, and cancelled penalty - Whether since on 27-1-1986, no assessment order had been passed and only income had been recalculated to give effect to order of Tribunal granting relief to assessee, limitation could not be counted from 27-1-1986 and, therefore, there was no error in view taken by Commissioner - Held, yes FACTS The assessee filed two returns of income for the assessment year 1972-73 in respect of two periods. The ITO completed single assessment in respect of both the periods on 25-3-1975. The Tribunal by order dated 27-6-1980 allowed certain relief to the assessee and restored matter back to the Commissioner (Appeals) who set aside the original assessment order passed by ITO. Thereafter on 11-3-1983, the ITO reframed the assessment under section 143/251 and issued notice under section 271(1)(c) to the assessee. On 27-1-1986, the ITO passed an order giving effect to the order of the Tribunal dated 27-6-1980. Subsequently, the ITO on 7-3-1986 levied certain penalty upon the assessee under section 271(1)(c). On appeal, the Commissioner (Appeals) held that penalty proceedings should have been completed within six months from the end of the month in which the order of Tribunal was received by the Commissioner in accordance with section 275(a) which would have expired at the end of January or February, 1981 as against which proceedings had been completed by the Assessing Officer on 7-3-1986 and, accordingly, cancelled the penalty. On revenue's appeal, the Tribunal upheld the action of the Commissioner (Appeals) and held that even the penalty…

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