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TMI Blog1979 (9) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... f penalties for these years on the basis of income so recomputed ? " The reference has arisen out of penalty proceedings for the assessment years 1965-66 and 1966-67. In the assessment year 1965-66, the assessee was assessed on the basis of his return which was filed on 13th January, 1966. The assessee had not disclosed in the return any income apart from salary. A notice under s. 148 of the I.T. Act, 1961, was issued to the assessee. The assessee filed the return in pursuance of the said notice on 2nd April, 1969. The assessee showed in this return a sum of Rs. 2,000 as professional income. The ITO collected figures from various Government departments to find out how much had been received by the assessee as consultation and other charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been assessed in each year for determining the quantum of penalty and it did not accept the tax assessed in assessment proceedings as the basis for purposes of penalty. The Tribunal reduced the penalty for the year 1965-66 to Rs. 800 and for the year 1966-67 to Rs. 700. On an application made by the department, the questions of law set out above were referred by the Tribunal. It would be convenient if we quote here para. 6 of the Tribunal's order to understand how the Tribunal recomputed the income of the assessee for determining penalty. The said paragraph is as follows : " 6. Let us now come to the quantum of penalty that is warranted on the facts and circumstances of the case. We agree with the learned counsel that penalty proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -66 and Rs. 708 in 1966-67, as per the calculation provided by the learned authorised representative of the assessee. Penalty of Rs. 800 in the first year and Rs. 700 in the second year would, to our minds, meet the ends of justice." Section 271(1)(c) at the relevant time provided that if the ITO or the AAC, in the course of any proceedings under the Act, is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,-- " (iii) ...... in addition to any tax payable by him, a sum which shall not be less than twenty per cent. but which shall not exceed one and a halt times the amount of the tax, if any, which would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avoided. As already stated, the tax which would have been avoided is to be found by deducting from the tax actually assessed the tax which would have been assessed had the return been accepted. The former is fixed by the assessment proceedings and it is only the latter which has to be found is penalty proceedings. It is true that in penalty proceedings it may be open on the question of concealment of income to accept an explanation which may have been rejected in the assessment or to reject an item as not amounting to income which may have been accepted as income in assessment. But that is altogether a different matter. The tax which would have been avoided if the income as returned by the assessee had been accepted as correct can be only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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