1987 (1) TMI 29 - HC - Income Tax

Summary

Issues:
1. Applicability of amendments to sections 271(1)(c)(iii) and 274(2) of the Income-tax Act, 1961.
2. Jurisdiction of the Income-tax Officer to impose penalty based on the provisions in effect at the time of assessment.

Detailed Analysis:
The judgment by the High Court of BOMBAY pertains to a reference under section 256(1) of the Income-tax Act, 1961, initiated by the Revenue. The case involves questions regarding the applicability of amendments to sections 271(1)(c)(iii) and 274(2) of the Act. The assessment year in question is 1959-60, where a reassessment was conducted due to undisclosed income discovered during a search in December 1964. The Income-tax Officer imposed a penalty on the assessee under sections 271(1)(a) and 271(1)(c) for late filing of return and concealing income, respectively. The penalty was challenged by the assessee before the Income-tax Appellate Tribunal, which ruled in favor of the assessee, leading to the reference before the High Court.

Regarding the first question on the applicability of the amendment to section 271(1)(c)(iii) from April 1, 1968, the court heard arguments from both parties. The counsel for the respondent conceded in favor of the Revenue, and the court answered the first question in the affirmative and in favor of the Revenue.

On the second issue concerning the jurisdiction of the Income-tax Officer to levy a penalty based on the provisions in effect at the time of assessment, the court relied on a Division Bench judgment of the same court. The court observed that the relevant date for determining the authority to impose a penalty is when the Income-tax Officer decided on the penalty, which in this case was February 24, 1970. As per the amended section 274(2) effective from April 1, 1971, the jurisdiction to impose a penalty was with the Inspecting Assistant Commissioner if the concealed income exceeded Rs. 25,000. The court, bound by the Division Bench judgment, answered the second question in the negative and in favor of the Revenue.

In conclusion, the High Court answered the first question affirmatively and in favor of the Revenue, while the second question was answered negatively and in favor of the Revenue. The assessee was directed to pay the costs of the reference to the Revenue.