All these appeals by assessee are against common order of CIT(A)-X, Kolkata dt. 5th May, 2003 passed for asst. yrs. 1970-71 to 1974-75. Since common issues are involved, they are being disposed of together for sake of convenience. For all years, identical grounds are raised, which read as under: "1. That learned CIT(A) arbitrarily and illegally confirmed penalty failing to appreciate that at time of passing order penalty became time-barred. order of CIT(A) as well as AO are liable to be reversed and penalty order be quashed. That, even otherwise CIT(A) failed to realize that AO had no jurisdiction to pass penalty order as matter was sub-judice before Hon ble Settlement Commission and who did not pass any order giving effect to order of apex Court. order of penalty being ab initio void is liable to be cancelled. That, on facts and in circumstances of case CIT(A) as well as AO erred in passing penalty order imposing penalty. orders of CIT(A) and AO are liable to be reversed and penalty order be cancelled. That appellant may be permitted to present additional grounds of appeal both on questions of law and fact at time of hearing of appeal." facts of all years under consideration are identical. Therefore, we shall discuss here in detail facts for asst. yr. 1970-71. For year under consideration (i.e. asst. yr. 1970-71), assessee filed original return on 5th Oct., 1970 declaring total income of Rs. 15,57,747 which was assessed at Rs. 16,01,427. Notice under s. 148 was issued on 23rd June, 1975. In response to notice under s. 148, assessee filed return of income on 3rd July, 1975 declaring total income of Rs. 20,33,264. additional income offered in return filed in response to notice under s. 148 was Rs. 4,66,790. assessment was completed under s. 143(3)/147 on 14th Sept., 1976 at income of Rs. 19,27,107. In order of reassessment, AO found that assessee had made payment of taxes amounting to Rs. 4,65,790 which was not debited in books of account. He therefore, came to conclusion that it was suppressed income of assessee which was utilized for payment of income-tax without recording same in books of account. Accordingly, he made addition of Rs. 4,65,790 as concealed income of assessee vide order under s. 143(3) r/w s. 147. He also initiated penalty proceeding under s. 271(1)(c). assessee had filed application under s. 245C(1) for asst. yr. 1975- 7 6 before Settlement Commission on 24th June, 1977. Settlement Commission vide order under s. 245D(1) dt. 21st July, 1977 allowed application to be proceeded with. During course of proceedings before Settlement Commission for asst. yr. 1975-76, assessee submitted letter dt. 16th Jan., 1979 and claimed that for proper settlement of assessee s case it would be necessary to take into consideration assessments for asst. yrs. 1970-71 to 1974-75 also. It was submitted by assessee before Settlement Commission that assessee is desirous of having complete settlement of all pending income-tax problems including penalty proceedings which are pending before ITO for asst. yrs. 1970-71 to 1974-75. Settlement Commission vide order dt. 1st March, 1979 passed under s. 245D(4) waived penalty under s. 271(1)(c) for all years. Revenue filed appeal before Hon ble apex Court against order of Settlement Commission dt. 1st March, 1979 vide Civil Appeal Nos. 102 to 105 of 1979. Hon ble apex Court vide order dt. 11th March, 1996 allowed Revenue s appeal and held that Settlement Commission was not justified in waiving penalty under s. 271(1)(c) of IT Act for asst. yrs. 1970-71 to 1974-75. order of apex Court was received by CIT on 24th April, 1996 and thereafter was forwarded by him to AO. AO vide letter dt. 9th May, 1996 asked assessee to explain as to why penalty should not be levied under s. 271(1)(c). hearing was fixed on 20th May, 1996. assessee vide letter dt. 18th May, 1996 sought adjournment. Thereafter matter was fixed for hearing on 31st July, 1996. assessee submitted reply dt. 28th Aug., 1996 and after considering same, AO vide his order dt. 30th Aug., 1996 levied penalty of Rs. 4,65,290. CIT(A) sustained penalty levied by AO. Hence this appeal by assessee. At time of hearing before us, learned counsel for assessee argued at length. He stated that penalty imposed by AO is barred by limitation. As per s. 275, cl. (c), no order imposing penalty can be passed after expiry of financial year in which proceedings, in course of which action for imposition of penalty has been initiated, are completed. As per Expln. (ii), while computing period of limitation any period during which immunity granted under s. 245H remained in force, is to be excluded. He stated that penalty proceedings were initiated in assessment order dt. 14th Sept., 1976. Two years from end of relevant financial year would expire on 31st March, 1979. That Settlement Commission passed order waiving penalty on 1st March, 1979 and Hon ble apex Court set aside said o r d e r of Settlement Commission on 11th March,1996. Therefore, immunity under s. 245H remained in force from 1st March, 1979 to 11th March, 1996. This period is to be excluded as per Expln. (ii) of s. 275 while determining period of limitation. After excluding this period, AO was required to pass order before 11th April, 1996. Since penalty order has been passed on 31st Aug., 1996, same is barred by limitation. He stated that first notice given by AO after order of apex Court was dt. 9th May, 1996 and even this notice was after period of limitation. He, therefore, stated that penalty imposed by AO is barred by limitation and, accordingly, should be quashed. learned Departmental Representative, on other hand, argued at length. He stated that s. 275 prescribes period of limitation under several circumstances. However, facts and circumstances of assessee s case do not fall within any of categories prescribed under s. 275. Therefore, so far as case under appeal is concerned, it has to be held that no period of limitation is prescribed under s. 275 and, therefore, penalty should be imposed within reasonable time. That order of apex Court is received by CIT on 24th April, 1996 and penalty has been imposed on 30th Aug., 1996. Thus, penalty has been imposed within reasonable time after order of Hon ble apex Court and, therefore, same cannot be said to be barred by limitation. He further submitted that if assessee s contention is accepted that assessee s case falls within cl. (c) of s. 275, then immunity under s. 245H started from date on which Settlement Commission admitted assessee s petition under s. 245D(1) and immunity continued till order of Hon ble apex Court was received by Revenue, i.e. CIT. After excluding above period of immunity, order passed by AO under s. 271(1)(c) is well within period of limitation under s. 275(c). To support his contention that relevant date upto which immunity continued is date of receipt of order of Hon ble apex Court by CIT, he referred to s. 260A wherein it is provided that judgment of High Court or Supreme Court shall be sent under seal of Court and signature of Registrar. He also referred to Supreme Court Rules to support his contention that relevant date would be date of receipt of order and not date of pronouncement of order. He also contended that AO cannot act without receiving order, because AO is supposed to act as per direction of Hon ble apex Court. exact direction can be ascertained only by reading judgment. AO cannot act on basis of pronouncement of judgment in open Court. Therefore, it is logical to hold that immunity would continue till order of apex Court is received by Revenue. He also referred to s. 268 wherein it is prescribed that time taken for obtaining copy of order shall be excluded while computing period of limitation. He also stated that there is similar provision in s. 12, sub-s. (2) of Limitation Act. He, therefore, stated that while computing period of limitation prescribed under s. 275(c), time taken by Revenue for obtaining copy of decision of apex Court is to be excluded. He further stated that as per Expln. (i) to s. 275, time taken for giving opportunity to assessee for rehearing under s. 129 is to be excluded. That as per s. 129, where there is change of incumbent of office, time taken in giving opportunity to assessee for rehearing is to be excluded. When after order of Hon ble apex Court subsequent AO issued notice under s. 271(1)(c) dt. 9th May, 1996, assessee vide letter dt. 18th May, 1996 requested for three months time to get relevant files as matter was more than 20 years old. As per assessee s request, hearing was adjourned and finally assessee filed reply on 23rd Aug., 1996 and AO passed order on 30th Aug., 1996. Therefore, as per Expln. (i) to s. 275, time taken for giving opportunity to assessee for rehearing should also be excluded while computing period of limitation. He, therefore, stated that order passed by AO is well within period of limitation and same should be upheld. In rejoinder, it is submitted by learned counsel for assessee that cl. (b) of s. 275 is residuary clause and it will cover all cases which are not covered by cl. (a) of s. 275. Therefore, assessee s case will fall in cl. (b) of s. 275 and learned Departmental Representative is not correct in submitting that no period of limitation is prescribed under s. 275 for passing order of penalty in given case. With regard to s. 260, it is submitted by learned counsel that this section is applicable for reference made under s. 256(1) or s. 257, because in such case Tribunal has to pass consequential order. Therefore, provision of service of judgment under sub-s. (1) of s. 260 will have no application for considering period of limitation under s. 275. With regard to applicability of decision of Hon ble apex Court, it is pointed out by learned counsel that decision of apex Court becomes effective as soon as it is pronounced. As per Supreme Court Rules, it is optional for parties to get copy of order by making necessary application. With regard to contention of learned Departmental Representative that time allowed by AO as per request of assessee during penalty proceedings is to be excluded, it is contended by learned counsel that after decision of apex Court, penalty notice issued by AO on 9th May, 1996 had already become barred by limitation. Therefore, thereafter even if hearing was adjourned at request of assessee, it will not bring penalty order within period of limitation. In view of above, it is reiterated by learned counsel that penalty order was barred by limitation. We have carefully considered arguments of both sides and perused material placed before us. question before us is whether penalty orders passed by AO are barred by limitation. It is contended by learned Departmental Representative that s. 275 prescribes period of limitation. sub- clauses of this section provide certain conditions under which period of limitation as per relevant sub-clause would be applicable. As per learned limitation as per relevant sub-clause would be applicable. As per learned Departmental Representative facts of assessee s case do not fall within any of sub-clauses of s. 275 and, therefore, period of limitation prescribed under s. 275 cannot be applicable to cases under appeal. learned counsel for assessee, on other hand, claimed that s. 275 would be applicable. assessment years under consideration before us are 1970-71 to 1974-75. penalty proceedings were initiated vide assessment order dt. 14th Sept., 1976. Sec. 275, as it stood at relevant time, reads as under: "275. Bar of limitation for imposing penalties. No order imposing penalty under chapter shall be passed (a) in case where relevant assessment or other order is subject- matter of appeal to AAC under s. 246 or appeal to Tribunal under sub-s. (2) of s. 253, after expiration of period of (i) two years from end of financial year in which proceedings in course of which action for imposition of penalty has been initiated, are completed, or (ii) six months from end of month in which order of AAC or, as case may be, Tribunal is received by CIT, whichever period expires later, (b) in any other case, after expiration of two years from end of financial year in which proceedings, in course of which action for imposition of penalty has been initiated, are completed. Explanation. In computing period of limitation for purpose of this section, (i) time taken in giving opportunity to assessee to be reheard under proviso to s. 129; (ii) any period during which immunity granted under s. 245H remained in force; and (iii) any period during which proceeding under this chapter for levy of penalty is stayed by order or injunction of any Court, shall be excluded." From above, we find that cl. (a) of s. 275 covers cases where relevant assessment was subject-matter of appeal to AAC or to Tribunal. However, in case under consideration before us, no appeal was filed to AAC or to Tribunal against assessment order passed by AO o n 14th Sept., 1976 in which penalty proceedings under s. 271(1)(c) were initiated. Therefore, cl. (a) of s. 275 would not be applicable. Clause (b) is residuary clause and it is applicable in all those cases where cl. (a) is not applicable. Therefore, in case of assessee, cl. (b) would be applicable and AO is debarred from passing penalty order after expiration of two years from end of financial year in which proceeding for imposition of penalty has been initiated. However, as per Explanation, certain period is to be excluded while computing period of limitation. As per Expln. (ii) of s. 275, period during which immunity granted under s. 245H by Settlement Commission remained in force is to be excluded while computing period of limitation. Now question would arise with regard to date on which immunity was granted under s. 245H by Settlement Commission and date upto which immunity remained in force. contention of Revenue is that period of limitation starts by passing of order under s. 245D(1) by Settlement Commission, because as soon as Settlement Commission passes order under s. 245D(1), Settlement Commission has exclusive jurisdiction upon assessee and, therefore, AO cannot pass any order levying penalty under s. 271(1)(c) upon assessee. In principle, we agree with this contention of learned Departmental Representative. However, question is whether any order under s. 245D(1) was passed by Settlement Commission for asst. yrs. 1970-71 t o 1974-75? assessee had filed application under s. 245C before Settlement Commission for asst. yr. 1975-76. order under s. 245D(1) was also for asst. yr. 1975-76. Therefore, Settlement Commission has exclusive jurisdiction to deal with all matters relating to asst. yr. 1975-76. During course of settlement proceedings for asst. yr. 1975-76, assessee requested for reopening and settlement of earlier assessment years, i.e. asst. yrs. 1970-71 to 1974-75. It would be evident from following observation at pp. 14 and 15 of order of Settlement Commission: "On 1st Jan., 1979 fresh notices of hearing were issued to parties fixing case for 27th Jan., 1979. In meantime, on 19th Jan., 1979, assessee submitted another letter dt. 16th Jan., 1979 which reads as follows: In our petition, statement of facts and submissions before Commission during hearings we had submitted to you that it is necessary to take into consideration assessment for asst. yrs. 1970-71 to 1974-75 (both years inclusive), for proper settlement of our above settlement application. During hearing before Settlement Commission, question was put to us as to whether disclosure made by us was completed in all respects. Out of abundant precaution, we have once again checked matter. While we find that there is no further disclosure necessary, we find that certain capital expenditure has been claimed as revenue expenditure. We would like to set right said matter. We had purchased scaffolding pipes, clamps and other equipment during asst. yrs. 1970-71 to 1974-75 as per details given in Annex. I. These items were earlier charged to revenue due to our misunderstanding of provisions of law. We are confident that Commission will favourably consider our above additional disclosure and grant us full immunity, since we have fully established our bona fide before Commission. We shall be glad to produce our books of account for your inspection as and when directed. As earlier submitted, we are desirous of having complete settlement of all our pending income-tax problems including penalty proceedings which are pending before ITO for above assessment years. We now request you to settle fully all our income-tax problems. " From above, it is evident that assessee vide letter dt. 16th Jan., 1979 requested for settlement of asst. yrs. 1970-71 to 1974-75 also. At p. 23 of order, Settlement Commission held as under: "This brings us to next point, viz., whether assessments for earlier years should be reopened by Commission." Further, at p. 28 in para 40, Settlement Commission held as under: "In circumstances, it is our considered view that, for reasons recorded earlier on facts before us, for proper disposal of this case, it is necessary and expedient to reopen assessment proceedings completed by ITO/AAC for asst. yrs. 1970-71 to 1974-75, we reopen these. We may also observe that not only are we competent to reopen assessment proceedings for said five years; but we feel it is incumbent on us to do so on facts of case in order to ensure effective settlement of case before us as is enjoined by law on us." Thus, in order under s. 245D(4) dt. 1st March, 1979, Settlement Commission first considered question whether earlier years should be reopened by Commission or not and on being satisfied that earlier years are required to be reopened, they reopened assessment proceedings of earlier years. Thereafter at p. 29, para 42 of order, Settlement Commission observed as under: "Having decided to reopen completed assessment proceedings for asst. yr. 1970-71 to asst. yr. 1974-75, we may next deal with point whether t h e commission is now competent in law to assume jurisdiction over other proceedings e.g. various penalty proceedings, proceedings before CIT under s. 273A etc. relating to these years." At p. 68, para 113 of order, Settlement Commission observed as under: "In view of what has been stated by us above, we hold that, as result of our reopening completed assessment proceedings for asst. yrs. 1970-71 to 1974-75, we are competent in law to assume jurisdiction of other proceedings e.g. penalty proceedings, proceedings before CIT under s. 273A, etc. etc. relating to these years. We would even go further and hold that 273A, etc. etc. relating to these years. We would even go further and hold that we are enjoined by law to pass necessary orders in respect of these related proceedings." Thus, in order dt. 1st March, 1979, Settlement Commission first raised question whether they are competent to assume jurisdiction over penalty proceedings relating to asst. yrs. 1970-71 to 1974-75 and came to conclusion that they are competent to assume jurisdiction to penalty proceedings for those years. At p. 79, para 129 of order, they held as under: "Having regard, therefore, to all circumstances of case, we hold that complete waiver of penalty is called for and is fully justified in this case in terms of sub-s. (4) of s. 273A as to do otherwise would cause genuine hardship to applicant. By virtue of powers vested in us under s. 273A(4) r/w s. 245F(1)/F(2), we, therefore, completely waive penalty under s. 271(1)(c) for all years in this case." From order of Settlement Commission it is evident that no separate application under s. 245C was given by assessee for asst. yrs. 1970-71 to 1974-75. application under s. 245C was only for asst. yr. 1975-76 for which order of admission under s. 245D(1) was passed. During course of settlement proceedings for asst. yr. 1975-76, assessee requested for reopening of earlier assessment years i.e. asst. yrs. 1970-71 to 1974-75 and also requested for waiver of penalties for these years. Settlement Commission in its order under s. 245D dt. 1st March, 1979 first examined whether they have power of reopening of earlier assessment years and whether they have power of assuming jurisdictions to penalty proceedings which were already initiated in those years. After considering submissions of parties, they arrived at conclusion that they have power to reopen earlier assessment years as well as to assume jurisdiction for penalty proceedings already initiated in earlier years and thereafter waived penalties under s. 271(1)(c) for all years. Thus, period of immunity under s. 245H would begin only on passing of order under s. 245D(4) by Settlement Commission on 1st March, 1979 and not earlier, as contended by Revenue. next question is upto which date immunity remained in force, i.e. till date of passing of order by Hon ble apex Court or till date of service of order upon Revenue authorities. Hon ble apex Court vide their order dt. 11th March, 1996 held as under: "The appeals are accordingly allowed and order of Settlement Commission is set aside to extent it has dropped penalty proceedings relating to asst. yrs. 1970-71 to 1974-75 and to extent it has waived penalties for said assessment years. orders and directions made by it shall not affect said penalty proceedings which can now proceed according to law. Settlement Commission shall modify its judgment and order in terms of and in accordance with this judgment." Thus, Hon ble apex Court set aside order of Settlement Commission to extent it dropped penalty proceedings relevant to asst. yrs. 1970-71 to 1974-75. Hon ble apex Court further held that penalty proceedings can now proceed according to law. order was delivered and pronounced on 11th March, 1996 by Hon ble apex Court. In our opinion, as soon as Hon ble apex Court pronounced order on 11th March, 1996, order of Settlement Commission stood set aside and remained no longer operative. Once Hon ble apex Court has set aside order of Settlement Commission, it cannot be said that it remained in force till order of apex Court is served upon Revenue authorities. effectiveness of order does not depend upon its service on parties. learned Departmental Representative has relied upon s. 260(1) in support of his contention that service of order by apex Court is essential. Sec. 260, sub-s. (1) reads as under: "260. (1) High Court or Supreme Court upon hearing any such case shall decide questions of law raised therein, and shall deliver its judgment thereon containing grounds on which such decision is founded, and copy of judgment shall be sent under seal of Court and signature of Registrar to Tribunal which shall pass such orders as are necessary to dispose of case in conformably to such judgment." From above, it is clear that s. 260 is applicable in respect of question of law referred to Hon ble apex Court by Tribunal under s. 257. In such cases, upon decision of Hon ble apex Court copy is to be served upon Tribunal which is required to pass consequential order in conformity with decision of Hon ble apex Court. However, in case under consideration before us, there was no reference to Hon ble apex Court under s. 257 of IT Act and Tribunal is not required to pass any consequential order. assessee had filed appeal to Hon ble apex Court against decision of Settlement Commission dt. 1st March, 1979. Hon ble apex Court set aside order of Settlement Commission to extent it has dropped penalty proceedings relating to asst. yrs. 1970-71 to 1974-75. It also held that Settlement Commission shall modify its judgment and order in accordance with decision of apex Court. However, Revenue has not waited till decision of consequential order required to be passed by Settlement Commission. Revenue has acted on decision of Hon ble apex Court wherein apex Court after setting aside order of Settlement Commission has held that penalty proceedings can now proceed according to law. Therefore, provision under s. 260 relating to service of order of Hon ble apex Court upon Tribunal and passing of consequential order by Tribunal would not be applicable for determining period of limitation for penalty orders passed by AO in consequence to decision of Hon ble apex Court dt. 11th March, 1996. learned Departmental Representative has also relied upon s. 268 of IT Act which reads as under: "268. In computing period of limitation prescribed for appeal or application under this Act, day on which order complained of was served and, if assessee was not furnished with copy of order when notice of order was served upon him, time requisite for obtaining copy of such order, shall be excluded." From above it is evident that s. 268 is applicable for computing period of limitation prescribed for filing appeal. However, in case under consideration before us, we are considering period of limitation available to AO under s. 275 for levying penalty under s. 271(1)(c) and not with regard to filing of any appeal by any party. Therefore, s. 268 would not be applicable. In computing period of limitation under s. 275, time to be excluded is period during which immunity granted under s. 245H by Settlement Commission remained in force. In our opinion, by no stretch of imagination it can be said that immunity granted by Settlement Commission remained in force after passing of order by Hon ble apex Court; whereby order of Settlement Commission was set aside. learned Departmental Representative has also vehemently contended that AO, who has to pass penalty order, is at Kolkata while Hon ble apex Court has pronounced decision in Supreme Court at Delhi. How AO can give effect to decision pronounced by Supreme Court without having copy of decision with him? We agree with this contention of learned Departmental Representative that it may be difficult for AO to give effect to order of Hon ble apex Court without having copy thereof. However, question before us is not of practical difficulties to AO but is of period of limitation as per provisions of IT Act. Sec. 275 provides period of limitation within which AO has to impose penalty. If AO has not been able to impose penalty within such period of limitation due to certain practical difficulties, period of limitation cannot be extended. If penalty is not levied within time prescribed under s. 275, it is barred by limitation and existence of reasonable cause for failure of AO to levy penalty within period of limitation would be irrelevant. learned Departmental Representative has also contended that time taken for giving opportunity to assessee for rehearing under s. 129 is t o be excluded. In principle, we agree with this contention of learned Departmental Representative. However, we find that AO, after decision of Hon ble apex Court, has issued notice on assessee on 9th May, 1996. By this period, penalty proceedings had already become barred by limitation as under: (i) Penalty proceedings under s. 271(1)(c) were initiated on 14th Sept., 1976 in assessment order passed under ss. 143(3)/147. (ii) Two years from end of financial year 1975-76 would be over on 31st March, 1979. Settlement Commission vide order dt. 1st March, 1979 waived penalty imposable for year under consideration. (iii) On 1st March, 1979, 30 days were left for penalties to be barred by limitation (1st March, 1979 to 31st March, 1979). (iv) immunity granted by Settlement Commission under s. 245H remained in force upto 11th March, 1996, i.e. date of order of Hon ble apex Court. (v) Therefore, penalty was to be levied within 30 days from 11th March, 1996, i.e. by 11th April, 1996. (vi) penalty notice issued on 9th May, 1996 was after period when penalty has already become barred by limitation. Therefore, any time requested by assessee during course of penalty proceedings and allowed by AO on such request would be immaterial, because penalty proceedings have already become barred by limitation on 12th April, 1996 and, therefore, any incident taking place thereafter is irrelevant. In view of above, we hold that penalties levied by AO for asst. yr. 1970-71 is barred by limitation and, therefore, same cannot be sustained. Before we part with matter, we may mention that both parties have argued for and against merit of levy of penalty. However, as we have held that penalty has become barred by limitation, we do not consider it necessary to express any opinion about justification or otherwise of merit of penalty imposed under s. 271(1)(c) of Act. We cancel penalty for asst. yr. 1970-71 being barred by limitation. facts of all other years, i.e. asst. yrs. 1971-72 to 1974-75, are identical to facts for asst. yr. 1970-71. In all years penalty proceedings were initiated in assessment order passed during financial year 1976-77. Therefore, two years therefrom ended on 31st March, 1979. Settlement Commission vide common order dt. 1st March, 1979 waived Settlement Commission vide common order dt. 1st March, 1979 waived penalty for all years. Hon ble apex Court vide common order for all years dt. 11th March, 1996 set aside order of Settlement Commission. Therefore, penalty was to be levied within 30 days therefrom, i.e. by 11th April, 1996. AO issued penalty notice on 9th May, 1996 and levied penalty on 28th Aug., 1996 which was barred by limitation. For detailed discussions made above in this order from paras 8 to 14, we hold that levy of penalties for asst. yrs. 1971-72 to 1974-75 are barred by limitation. Accordingly same are cancelled. In result, assessee s appeals are allowed. *** PAHARPUR COOLING TOWERS LTD. v. DEPUTY COMMISSIONER OF INCOME TAX