1977 (10) TMI 76 - AT - Income Tax

Summary

Issues:
Penalties under section 271(1)(c) of the Income Tax Act for concealment of income based on amended provisions applied after assessments were reopened under section 148. Applicability of penalty provisions based on the law at the time of filing returns versus the law at the time of penalty imposition.

Analysis:
The appeals before the Appellate Tribunal ITAT NEW DELHI involved penalties imposed under section 271(1)(c) of the Income Tax Act for concealment of income in the assessment years 1961-62, 1965-66, 1966-67, and 1967-68. The penalties were levied after the assessments were reopened under section 148, with amounts ranging from Rs. 7,050 to Rs. 14,000. The original assessments were completed before the amended provisions of section 271(1)(c) came into effect, and the income assessed was subsequently revised upon reopening the assessments.

The crucial issue in this case was the applicability of penalty provisions based on the law at the time of filing returns versus the law at the time of penalty imposition. The taxpayer argued that the law in force when the returns were filed should govern the levy of penalties, as the offense of concealment was committed when the returns were filed. Various decisions were cited to support this view, emphasizing the importance of applying the law existing at the time of the offense. However, there were conflicting opinions, with the Orissa High Court holding that the relevant date for penalty imposition was when the assessing officer determined the concealment, not when the returns were filed.

The majority opinion favored applying penalty provisions based on the law in force at the time of penalty imposition, unless retrospective application was specified. The Tribunal concurred with this view, concluding that the penalties imposed under the amended law were incorrect and should be set aside. Additionally, the argument that penalties should be based on the law applicable when returns were filed in response to section 148 proceedings was addressed. Citing precedents from the Allahabad High Court, it was clarified that concealment of income related to the original returns filed, even in cases where assessments were reopened.

Ultimately, the Tribunal held that the penalties imposed under the amended provisions of section 271(1)(c) were unjustified in law. Consequently, the penalties were set aside, and the appeals were allowed in favor of the taxpayer.