ORDER: ABRAR HUSSAIN NAQVI, J.M.--1. These are two departmental appeals against a registered firm dealing in cigarettes and relate to the assessment years 1974-75 and 1975-76. The department is aggrieved against the deletion of penalty under section 28(2A) for the assessment year 1974-75 at Rs, 1,000 for default of payment of admitted tax alongwith return under section 22-A. For the assessm ent year 1975-76, the penalty has been imposed under section 28 (1-B)(b) for default of payment of advance tax and the penalty imposed is Rs, 4,446. The learned A.A.C. deleted both these penalties on the ground of laches.
2. Brief facts of the case under which these appeals 'have arisen are that default of non-payment of admitted tax along with return in the assessment years 1974-75 and default in making payment of advance tax in the assessm ent years 1975-76 are not denied. The assessment orders for both these assessm ent years were framed on 30th December, 1974 and 27th November, 1975 respectively. The first notice for the assessment year 1974-75 was issued under section 28(3) on 30th December, 1974 which was served on 6th January, 1975. For the assessment year 1975-76, similar notice was issued on 27th November, 1975 for 15th December, 1975 but the assessee did not reply. However, it appears, the relevant assessing authority slept over the matter and finally passed the penalty order on 30th April, 1984 for both the assessment years.
3. Before the learned A.A.C. it was pleaded that although no time limit has been prescribed under the relevant section under which the penalty has been imposed, but at the same time the penalty could be imposed within a reasonable time. Reliance was placed on K.P. Narayamppa Setty & Co. decided by the Indian High Court reported as (1977) 35 Tax 26. In that case delay of nine years for imposing a penalty was considered improper and the penalty was cancelled. The C.B.R. also took notice of this case and issued a Circular No, 10 of 1977 under which it was directed that delay in imposing the penalty should be avoided and penalty proceedings should be finalized within a reasonable time.
4. The learned D.R. however, contended that no limit of time having been fixed by section 28 of the repealed Income-tax Act, the penalty could be imposed at any time. I could not persuade myself to agree with the contention of the learned D.R. This is settled law that where no limitation is provided a Government Agency should perform its function within a reasonable time. When the assessm ents had been completed by the assessing officer as back as in December, 1974 and November, 1975, there was justification to keep the penalty proceedings pending till 1984. If the view of the department is accepted that penalty can be imposed at any time this would lead to chaos. A sword would continue to hang on the assessee's head and the Assessing Officer at his sweet will can impose a penalty at any time as and when he likes. Such an interpretation cannot be allowed to be made. I, therefore, see no reason to interfere in the order of the learned A.A.C., which is maintained. Both the departmental appeals fail and are hereby rejected.