1979 (12) TMI 6 - HC - Income Tax

Summary

Issues:
1. Interpretation of penalty provisions under section 271(1)(c) of the Income-tax Act, 1961.
2. Determining the applicability of penalty provisions based on the timing of the return of income filed by the assessee.
3. Assessment of penalty for concealment of income in relation to the original assessment proceedings versus subsequent return filings.

Detailed Analysis:
The judgment in this case revolves around the interpretation of penalty provisions under section 271(1)(c) of the Income-tax Act, 1961. The Income-tax Appellate Tribunal referred a question of law to the High Court regarding the justification of canceling a penalty levied under section 271(1)(c) based on the timing of the return of income filed by the assessee. The Tribunal held that the default was attributable to the return of income filed in the original assessment proceedings for the assessment year 1965-66, thus ruling out the applicability of the amended provisions of section 271(1)(c) from April 1, 1968.

The facts of the case outline that the assessee initially disclosed a total income of Rs. 8,200 in the original return filed before the completion of assessment. Subsequently, the income was assessed at a higher amount, leading to penalty proceedings under section 271(1)(c) initiated by the Income-tax Officer (ITO). The penalty was imposed by the Income-tax Appellate Commissioner (IAC) based on the concealment of income in a return filed after April 1, 1968, which triggered the application of the amended provisions of section 271(1)(c).

The High Court referred to precedents such as Addl. CIT v. Balwantsingh Sulakhanmal and Addl. CIT v. Ratanchand Sewakram to establish that penalty proceedings initiated in connection with a return filed in response to a notice under section 148 of the Act should be attributed to the return filed post-April 1, 1968. Therefore, the default leading to penalty imposition should be determined based on the law in force at the time of the wrongful act, which, in this case, warranted the application of the amended provisions of section 271(1)(c).

Conclusively, the High Court held that the default of the assessee was not attributable to the return filed in the original assessment proceedings but to the subsequent return filed after April 1, 1968. Consequently, the Tribunal was deemed unjustified in canceling the penalty under the amended provisions of section 271(1)(c) of the Act. The court answered the referred question in the negative, ruling against the assessee, and directed each party to bear their own costs in this reference.