1987 (5) TMI 31 - HC - Income Tax

Summary

Issues:
- Interpretation of penalty rates under section 271(1)(c) of the Income-tax Act, 1961 for assessment years 1966-67 and 1967-68.
- Application of penalty rates effective prior to April 1, 1968.
- Justification of penalty imposition by the Income-tax Officer.
- Decision of the Appellate Assistant Commissioner and the Tribunal regarding penalty rates.
- Comparison with Full Bench decision in CIT v. Dalip Kumar Worah and Supreme Court cases in Jain Brothers v. Union of India and Maya Rani Punj.

Analysis:
The High Court of Patna addressed references under section 256(1) of the Income-tax Act, 1961 concerning penalty rates for the assessment years 1966-67 and 1967-68. The Tribunal questioned whether penalties under section 271(1)(c) should be levied at rates effective before April 1, 1968. The assessee initially filed returns showing lower incomes, later revised after notices under section 148 of the Act. The Income-tax Officer reassessed the incomes and imposed penalties based on rates effective from April 1, 1968. The Appellate Assistant Commissioner reduced the penalties, applying rates prior to April 1, 1968. The Revenue challenged this decision before the Tribunal, which upheld the Appellate Assistant Commissioner's ruling.

The Revenue argued that a Full Bench decision in CIT v. Dalip Kumar Worah, following Supreme Court cases in Jain Brothers v. Union of India and Maya Rani Punj, established that penalty rates should align with the law in force when penalty proceedings were initiated. Consequently, the Income-tax Officer's imposition of penalties based on rates effective from April 1, 1968, was deemed justified. The High Court concurred with the Revenue, ruling in their favor and against the assessee. The references were disposed of without costs due to the absence of representation from the assessee. The judgment was transmitted to the Assistant Registrar, Income-tax Appellate Tribunal, "A" Bench, Patna, as per section 260 of the Act. Judge Uday Sinha concurred with the judgment delivered by Judge B. N. Agarwal.