1977 (12) TMI 36 - AT - Income Tax

Summary

Issues:
1. Appeal against imposition of penalty under s. 273(c) of the Income Tax Act, 1961.
2. Validity of penalty imposed when the offense was committed before the provision for penalty came into force.
3. Permissibility of raising an additional ground at a late stage.
4. Interpretation of provisions related to advance tax and penalty under s. 273(c).
5. Application of penalty provisions at the time of the offense.

Analysis:

The case involves an appeal against the imposition of a penalty under section 273(c) of the Income Tax Act, 1961. The appellant contested that the penalty was void as the provision for the penalty was not in force at the time of the offense. The appellant raised this additional ground during a de-novo hearing before the tribunal. The tribunal allowed the appellant to raise this ground, considering it covered the subject matter of the appeal, which was purely on a legal ground.

The crux of the issue lies in the interpretation of the provisions related to advance tax and penalty under section 273(c). The tribunal analyzed the timeline of the amendments introduced by the Finance Act 1969, particularly focusing on the introduction of section 212(3A) and section 273(c). It was noted that while section 212(3A) came into effect from April 1, 1969, section 273(c) specifically came into force from April 1, 1970. The tribunal emphasized that the penalty that can be imposed is the penalty provided at the time of the offense, not at the time of conviction, as established in various legal precedents.

The appellant argued that since both provisions were introduced in the same Finance Act, it should apply to the default connected with advance tax for the relevant assessment year. However, the tribunal held that the law applicable at the time of the offense governs the imposition of penalty. As the offense was committed on March 15, 1970, and section 273(c) was not in force at that time, the tribunal accepted the appellant's contention that the penalty could not be imposed under section 273(c) for the offense committed on that date.

Ultimately, the tribunal allowed the appeal on the grounds that the penalty was not applicable due to the absence of the provision at the time of the offense. The tribunal did not delve into the aspect of reasonable cause, as the appeal was allowed based on the absence of a penalty provision at the time of the offense.