1992 (12) TMI 8 - HC - Income Tax

Summary

Issues Involved:
1. Computation of concealed income and reduction of penalty u/s 271(1)(c) of the Income-tax Act, 1961.
2. Applicability of the law for imposing penalty based on the date of the assessment order versus the date of furnishing the return.

Summary of Judgment:

Issue 1: Computation of Concealed Income and Reduction of Penalty u/s 271(1)(c)
- The assessee, a medical practitioner, filed a return showing an income of Rs. 21,736, including Rs. 18,000 from private practice. The assessment increased this to Rs. 25,000 due to lack of accounts.
- Proceedings u/s 147 revealed undisclosed income of Rs. 60,571 from consultation fees. The Income-tax Officer estimated the income at Rs. 65,571, allowing Rs. 6,000 for expenses.
- The Appellate Assistant Commissioner confirmed the gross receipts but allowed Rs. 12,000 for expenses.
- Penalty proceedings were initiated, and the Inspecting Assistant Commissioner found concealed income of Rs. 25,071, considering Rs. 60,571 from the Posts and Telegraphs Department and Rs. 2,500 from other departments, allowing Rs. 20,000 for expenses.
- The Tribunal reduced the concealed income to Rs. 5,000 and the penalty to Rs. 7,500, giving the benefit of doubt due to the non-availability of original evidence.
- The High Court held that the Tribunal misdirected itself in reducing the concealed income and penalty, emphasizing that the burden of proof shifted to the assessee due to the 1964 amendment in section 271(1)(c).

Issue 2: Applicability of Law for Imposing Penalty
- The Tribunal held that the penalty should be based on the law as of the date of the assessment order, not the date of the return.
- The High Court clarified that the law applicable for penalty is the one prevailing on the date of filing the original return, as established by the Supreme Court in CIT v. Onkar Saran and Sons [1992] 195 ITR 1.
- The High Court concluded that the Tribunal erred in applying the law based on the assessment order date and should have considered the law as of the original return date.

Conclusion:
- The High Court answered the reference by stating that the Tribunal was not justified in reducing the concealed income and penalty and that the penalty should be imposed based on the law as of the original return date.