1971 (3) TMI 42 - HC - Income Tax

Return of income for the assessment year 1961-62 was filed beyond the time limits and the assessment was completed after 1st April, 1962 - section 271 of the 1961 Act will apply to the present case because the assessment was completed after 1st of April,1962 - There is no warrant for holding that part of the penalty would be under the 1922 Act and part under the 1961 Act - provision of section 271 of the Act of 1961 will apply mutatis mutandis to proceedings relating to penalty initiated in accordance with section 297(2)(g) of that Act

Summary

Issues:
1. Retrospective application of substantive law of penalties.
2. Application of substantive law for offenses committed before and after a specific date.

Analysis:
The High Court of Punjab and Haryana was presented with two questions of law by the Income-tax Appellate Tribunal, Chandigarh Bench. The first issue was whether the substantive law of penalties could be considered retrospective without a specific statement in the Act rendering it so. The second issue involved determining if the same substantive law applied to offenses committed before and after a particular date. The case pertained to the assessment year 1961-62, where a penalty was imposed under section 271(1)(c) of the Income-tax Act, 1961 due to a default in filing the return on time. The Tribunal, in a peculiar decision, imposed part of the penalty under the 1922 Act and the rest under the 1961 Act, resulting in a reduced penalty compared to the initial imposition.

The Court, after considering arguments from both parties, relied on Supreme Court decisions in similar cases to answer both questions in favor of the department and against the assessee. The assessee contended that although the penalty was leviable under the 1961 Act, its quantum should be determined under the 1922 Act. This argument was based on the interpretation of section 297(2)(g) of the 1961 Act. However, the Court rejected this contention, citing the clear pronouncement of the Supreme Court in previous cases, emphasizing that the provisions of the 1961 Act, including section 271, applied to the present case as the assessment was completed after April 1, 1962.

The Court highlighted the observations made by the Supreme Court in previous judgments, emphasizing that the penalties should be imposed under the 1961 Act for assessments completed post-April 1, 1962. The Court concluded that the Tribunal's decision to split the penalty between the 1922 Act and the 1961 Act was not sustainable in light of the Supreme Court's authoritative decisions. Therefore, the Court held that the penalty should be entirely imposed under the 1961 Act, dismissing the notion of a split penalty between the two Acts. The judgment was delivered in favor of the department, and no costs were awarded.