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TMI Blog1988 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... tion also has to be answered on the same facts. The common question of law in I.T. References Nos. 2 to 9 of 1980 referred by the Tribunal at the instance of the assessee under section 256(1) of the Act for all these assessment years are the following, namely: "1. Whether, on the facts and in the circumstances of the case, in respect of the assessment years 1955-56, 1956-57, 1957-58, 1958-59, 1959-60, 1960-61, 1961-62 and 1964-65, legally any penalty under the provisions of section 271(1) (c) of the Act could be levied ? 2. Whether, on the facts and in the circumstances of the case, the Inspecting Assistant Commissioner had legally taken action under section 271(1)(c) of the Income-tax Act, 1961, when the first assessment was made under section 23(3) of the Act of 1922 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the quantum of penalty for concealment of income in the return submitted prior to April 1, 1962, could be determined by applying the law as it stood after April 1, 1962, and not before that date ? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reassessment was made in all these cases on September 26, 1969. Income-tax References Nos. 9 of 1980, 4 of 1980, 7 of 1980, 3 of 1980 and 5 of 1980 relate to the assessment years 1955-56, 1956-57, 1957-58, 1958-59, respectively, and fall in one category. The last category comprises IT. References Nos. 6 of 1980 and 2 of 1980 relating to the assessment years 1960-61 and 1961-62, respectively, for which the return was filed prior to the coming into force of the 1961 Act on April 1, 1962, and the original assessment was completed thereafter on different dates prior to April 1, 1964, when the Explanation was inserted in section 271 ( 1) (c) of the Act. The reassessment in these cases also was made on the same date, namely, September 26, 1969. We are making this division at the behest of learned counsel for the assessee who has advanced his arguments on this basis. The effect, if any, of such a division for the purpose of considering the arguments shall be considered later. The material facts are these: As earlier stated, the assessment years covered by these nine references are 1955-56, 1956-57, 1957-58, 1958-59, 1959-60, 1960-61, 1961-62 and 1964-65. The accounting year of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to Rs. 14,15,000 may be assessed as income in the hands of the assessee. It was also said in the application that the assessee was desirous of making settlement under section 271(4A) of the Act. A prayer was made to the Commissioner of Income-tax for a direction to the Income-tax Officer to complete the reassessment proceedings initiated against the assessee in respect of the hundi transactions in this manner. This application of the assessee-firm was rejected by the Commissioner of Income-tax, vide his letter dated July 28, 1965. The assessee, then wrote again to the Commissioner on August 22, 1965 and also moved an application dated August 24, 1965/September 7, 1965 to the Chairman, Central Board of Direct Taxes, New Delhi. A grievance was made by the assessee in the application to the Central Board of Direct Taxes against the rejection of its application by the Commissioner. It appears that the Central Board of Direct Taxes, directed the Commissioner to consider the assessee's application for settlement. Consequently, the assessee moved a fresh application on April 25, 1969, to the Commissioner. It was specifically stated in this application of the assessee that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of these years is governed by the provisions of the Indian Income-tax Act, 1922, and not the Income-tax Act, 1961. 2. Even if section 297(2)(g) of the 1961 Act applies, it is section 271(1)(c) as initially enacted when the 1961 Act came into force on April 1, 1962 which applies and not the Explanation inserted therein with effect from April 1, 1964. 3. For the assessment years 1960-61 and 1961-62 in respect of which the original assessments were completed after April 1, 1962, but prior to April 1, 1964, it is section 271(1)(c) as initially enacted on April 1, 1962, when the 1961 Act came into force which applies by virtue of section 297(2)(g) and not the Explanation inserted in section 271(1)(c) with effect from April 1, 1964. 4. It is the date of filing the original return which is determinative of the law to be applied and since the original return was filed for the assessment years 1955-56 to 1961-62 prior to the coming into force of the 1961 Act on April 1, 1962, the provisions of the 1961 Act cannot be applied. 5. The question of penalty has to be decided according to the principles enunciated in CIT v. Anwar Ali [1970] 76 ITR 696 (SC) without the aid of the Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (g) shows that applicability of the 1922 Act according to clause (f) and of the 1961 Act according to clause (g) depends on the fact of completion of the assessment either prior to April 1, 1962, or subsequent to it. In other words, imposition of penalty is governed by the 1922 Act according to clause (f) if the assessment is completed before April 1, 1962, and by the 1961 Act if the assessment, though for the year ending on March 31, 1962, or any earlier year, is completed on or after April 1, 1962. The contention of learned counsel for the assessee is that the word "assessment" in these two clauses must be construed as the original assessment and not the final assessment or the reassessment for any year. On this basis, he argues that for the assessment years l955-56 to 1959-60, the original assessments Were completed prior to April 1, 1962, and, therefore, according to clause (f), the penalty proceedings must be governed by the 1922 Act notwithstanding the fact that the reassessments for all these years were completed on September 26, 1969, as result of reopening of the assessments. We are unable to accept this contention of learned counsel for the assessee for the obvious reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Maya Rant Punj v. CIT [1986] 157 ITR 330 (SC) and it was held that "the crucial date, therefore, for purposes of penalty is the date of completion of assessment and the satisfaction of the authority that proceeding for levy of penalty be initiated". The matter has been placed beyond any possible doubt in Maya Rani Punj's case [1986] 157 ITR 330 (SC) by stating one of the conclusions as follows (at p. 337) : "On the ratio of Jain Brothers' case [1970] 77 ITR 107 (SC), the following conclusions are reached : (a) Though the default occurred in September, 1961, the date relevant for the purpose of initiating proceedings for imposition of penalty is when, following the assessment made, the Income-tax Officer decided to initiate penalty proceedings." The assessee was required to file the return in Maya Rani's case [1986] 157 ITR 330 (SC) by September, 1961, and, therefore, the default occurred then, but for the purpose of imposition of penalty it was pointed out that the crucial date was that "when, following the assessment made, the Income-tax Officer decided to initiate penalty proceedings". Applying the settled test indicated by these decisions of the Supreme Court, the cruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the Supreme Court decision in Jain Brothers' case [1970] 77 ITR 107, the same conclusion was reached on similar facts. The Patna High Court in CIT v. Parmanand Advani [1979] 119 ITR 464 and the Orissa High Court in CIT v. K. C. Behera [1976] 103 ITR 479, also take the same view. Learned counsel for the assessee relied on Hajee K. Assainar v. CIT [1971] 81 ITR 423 (Ker). In our opinion, this decision has to be read along with the Supreme Court decision in Jain Brothers' case [1970] 77 ITR 107 and so read, the facts thereof indicate that the Kerala decision does not take a contrary view. In the Kerala case [1971] 81 ITR 423 the reassessment was completed prior to April 1, 1964, revealing concealment and in this situation it was held that the Explanation inserted in section 271(1)(c) with effect from April 1, 1964, after completion of the reassessment proceedings giving rise to the penalty proceedings, did not apply. On the above conclusion reached by us, nothing significant remains for consideration. The argument of learned counsel for the assessee based on Anwar Ali's case [1970] 76 ITR 696 is also of no practical significance in the facts of the present case. In Anwar Ali' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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