1. The following question has been referred to us for determination in this reference and the said question reads as follows :
'Whether, on the facts and in the circumstances of the case, the measure of penalty leviable for the assessment year 1961-62 under section 271(1)(c) of the Income-tax Act, 1961, in this case was according to the law as it stood on April 1, 1961, or according to the law as it stood amended with effect from April 1, 1968 ?'
2. The assessment year with which we are concerned is the assessment year 1961-62, the corresponding accounting period being the year ending March 31, 1961. Pursuant to a notice issued by the Income-tax Officer under section 148 of the Income-tax Act 1961, the assessee filed a 'nil' return of income. The business of the assessee was manufacture of plastic and wax models which were purchased by the Government and certain other institutions for advertisement for the purposes of family planning. On investigation of facts, the Income-tax Officer estimated that the assessee had a turnover of Rs. 60,000 and estimated the total income of the assessee at Rs. 21,000. On January 18, 1969, the Income-tax Officer made the assessment as aforesaid under section 143(3) of the Income-tax Act, 1961. On an appeal by the assessee, the Appellate Assistant Commissioner reduced the estimate of profits to 30 per cent. and determined the total income at Rs. 17,091. The Inspecting Assistant Commissioner levied a penalty on the assessee of Rs. 17,091 under the provisions of section 271(1)(c) of the Income-tax Act, 1961, read with the Explanation thereto. It is common ground that up to March 31, 1968, the minimum quantum of penalty which could be levied in a case of concealment of particulars of income by an assessee falling within section 271(1)(c) was 20 per cent. of the tax sought to be avoided. From April 1, 1968, clause (iii) of sub-section (1) of section 271 was amended by the Finance Act, 1968, and the minimum penalty was fixed at not less than the amount of concealment. The Inspecting Assistant Commissioner levied penalty as aforesaid under the provisions of section 271(1)(c) as amended from April 1, 1968. On appeal by the assessee to the Income-tax Appellate Tribunal, the Tribunal upheld the penalty but reduced the quantum of penalty to Rs. 1,500 on the ground that the minimum penalty was to be calculated according to the provisions of clause (c) of sub-section (1) of section 271 as they stood before April 1, 1968. It is from this decision of the Tribunal that the aforesaid question has been referred to us.
3. It is not disputed before us that in view of the decision of the Supreme Court in Brij Mohan v. CIT : 120ITR1(SC) , the penalty in this case will have to be calculated in accordance with the provisions of the said clause (c) as amended with effect from April 1, 1968. It may be mentioned that by the said decision, the Supreme Court held that when penalty is imposed for the concealment of particulars of income, it is the law ruling at the date on which the act of concealment takes place which is relevant. It is wholly immaterial that the income concealed was to be assessed in relation to the assessment year in the past.
4. In view of what we have pointed out above, the question referred to us will have to be answered as follows :
'On the facts and in the circumstances of the case, the measure of penalty leviable for the assessment year 1961-62 under section 271(1)(c) of the Income-tax Act, 1961, must be according to the law as it stood amended with effect from 1st April, 1968.'
5. Mr. Mehta, learned counsel for the assessee, stated that although he could not dispute that the question must be answered as aforesaid, in this case the amount of penalty should be reduced, as the case was one which deserves sympathetic consideration. He pointed out that the total income which was found to be concealed was only Rs. 17,091 and that the entire tax payable on this amount came to Rs. 1,489, as pointed out by the Tribunal. It was submitted by him that this case is that of a small assessee and the penalty imposed is very heavy. We are afraid that in our advisory jurisdiction, it is not open to us to take into account considerations of sympathy such as the one urged by Mr. Mehta. Such question may be borne in mind by the income-tax authorities concerned when the matter goes back to the Tribunal.
6. Considering all the facts and circumstances of the case, there will be no order as to the costs of this reference.