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1978 (4) TMI 2 - HC - Income TaxPenalty proceedings under section 271(1)(c) - assessee had concealed the particulars of certain income - Whether the amendment to section 271(1)(c), which is effective from April 1, 1968, is applicable in this case for assessment year 1965-66 by virtue of the fact that the return of income was filed after April 1, 1968 - held that Law as on the date of satisfaction of assessing authority or as on the date of the order of penalty is not relevant.
Issues Involved:
1. Applicability of the amendment to section 271(1)(c) of the Income-tax Act, 1961, effective from April 1, 1968, to returns filed after that date for assessment years prior to 1968-69. Detailed Analysis: Issue 1: Applicability of the Amendment to Section 271(1)(c) for Returns Filed After April 1, 1968 Facts and Background: - The assessees in the two cases are different entities. - In ITRC No. 31 of 1974, the assessee filed a return on July 31, 1968, for the assessment year 1965-66. The Income-tax Officer initiated penalty proceedings under section 271(1)(c) for concealment of income and referred the matter to the Inspecting Assistant Commissioner, who imposed a penalty of Rs. 6,000 under the amended provisions effective from April 1, 1968. - In ITRC No. 73 of 1974, the assessee filed a return on July 10, 1968, for the assessment year 1962-63. The Inspecting Assistant Commissioner imposed a penalty of Rs. 3,51,682 under the amended provisions effective from April 1, 1968. Legal Question: - Whether the amendment to section 271(1)(c), effective from April 1, 1968, applies to returns filed after that date for assessment years prior to 1968-69. Tribunal's Decision: - The Tribunal held that the penalty leviable should be in accordance with the law in force at the commencement of the relevant assessment year, not the amended provisions effective from April 1, 1968. High Court's Analysis: - The court examined the history of the law relating to the imposition of penalties under the Income-tax Act, 1961, and its amendments. - It was noted that the offence of concealment is committed when the return is filed, not at the commencement of the assessment year. - The court referred to several precedents, including the Supreme Court's decisions in C. A. Abraham v. Income-tax Officer and Jain Brothers v. Union of India, which clarified that penalty proceedings are penal in nature and should be governed by the law in force on the date of the offence. Precedents Considered: - Commissioner of Income-tax v. Anwar Ali: Clarified that penalty proceedings are penal in nature and not merely an additional tax. - Commissioner of Income-tax v. Bhan Singh Boota Singh: Held that penalty is governed by the law in force on the date the return is filed. - Commissioner of Income-tax v. K. Ahamed: Applied the Explanation introduced by the Finance Act of 1964 to returns filed after its commencement. - Commissioner of Income-tax v. Dataram Satpal: Held that the date of filing the return is crucial for determining the applicability of the penalty provisions. - Addl. Commissioner of Income-tax v. Medisetty Ramarao: Confirmed that the law applicable for penalty is that in force on the date of the return. Conclusion: - The High Court concluded that the act of concealment occurs when the return is filed, and the penalty should be imposed according to the law in force on that date. - Therefore, the amendment to section 271(1)(c) effective from April 1, 1968, applies to returns filed after that date, even if the assessment year is prior to 1968-69. Final Judgment: - The questions referred to the court were answered in favor of the department, confirming that the amended provisions of section 271(1)(c) effective from April 1, 1968, are applicable to returns filed after that date. - The Tribunal's view that the penalty should be based on the law at the commencement of the assessment year was deemed erroneous. Further Directions: - In I.T.R.C. No. 73 of 1974, the Tribunal was directed to determine the extent of concealment, as it had not addressed this issue earlier due to its decision on the applicability of the amended provisions.
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