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Commissioner of Income-tax Vs. Jyoti Swarup Agarwal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 205 of 1974
Judge
Reported in[1978]113ITR330(All)
ActsIncome Tax Act, 1961 - Sections 271(1)
AppellantCommissioner of Income-tax
RespondentJyoti Swarup Agarwal
Appellant AdvocateA. Gupta, Adv.
Respondent AdvocateO.P. Sapru, Adv.
Cases ReferredHajee K. Assainar v. Commissioner of Income
Excerpt:
- - the inspecting assistant commissioner gave notice to the assesses but the latter failed to appear......particulars thereof in terms of the explanation to section 271(1)(c). the difference between the income returned and the income assessed works out at rs. 15,000. he, therefore, imposed a penalty of rs. 15,000.2. the assessee went up to the tribunal in appeal. the tribunal noticed the facts including the fact that on the quantum side the matter had been taken up in appeal to the tribunal wherein assessable income was reduced to rs. 20,000. the tribunal, however, allowed the appeal on a point of law. the tribunal felt that the inspecting assistant commissioner had invoked the provision of the explanation to section 271(1)(c) as it stood amended, after april 1, 1968. he held that the amendment could not apply to assessment years prior to the coming into force of the amendment, although.....
Judgment:

Satish Chandra, J.

1. For the assessment year 1966-67, the assesses filed a return on 10th of March, I 969, declaring a total income of Rs. 10,250. Since the assessee did not appear, the Income-tax Officer completed the assessment ex parte by estimating the income of Rs. 25,250. He initiated penalty proceedings and referred the matter to the Inspecting Assistant Commissioner. The Inspecting Assistant Commissioner gave notice to the assesses but the latter failed to appear. The inspecting Assistant Commissioner after going through the return and the history of the case held that the assessee had concealed the particulars of his income or furnished inaccurate particulars thereof in terms of the Explanation to Section 271(1)(c). The difference between the income returned and the income assessed works out at Rs. 15,000. He, therefore, imposed a penalty of Rs. 15,000.

2. The assessee went up to the Tribunal in appeal. The Tribunal noticed the facts including the fact that on the quantum side the matter had been taken up in appeal to the Tribunal wherein assessable income was reduced to Rs. 20,000. The Tribunal, however, allowed the appeal on a point of law. The Tribunal felt that the inspecting Assistant Commissioner had invoked the provision of the Explanation to Section 271(1)(c) as it stood amended, after April 1, 1968. He held that the amendment could not apply to assessment years prior to the coming into force of the amendment, although the return of income had been filed after the amendment had commenced operation. For this view he relied upon a decision of Hajee K. Assainar v. Commissioner of Income-tax : [1971]81ITR423(Ker) . It was ultimately held that the inspecting Assistant Commissioner was not justified in levying a penalty equal to the difference between the income assessed and returned by invoking the Explanation to Section 271(1)(c) after its amendment on April 1, 1968, it was further observed that the Inspecting Assistant Commissioner had no jurisdiction since the minimum penalty imposable was less than Rs. 1,000. The imposition of penalty was, therefore, cance11ed.

3. At the instance of the department the Tribunal has referred the following question of law for our opinion :

'Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in cancelling the penalty of Rs. 15,000 imposed by the Inspecting Assistant Commissioner under Section 271(1)(c) read with its Explanation.'

4. To recapitulate, the assessment year in question is 1966-67, the return for which was filed on 10th of March, 1969. The observation of the Tribunal that the inspecting Assistant Commissioner has considered the Explanation as amended on April 1, 1968, does not appear to be correct. The Explanation to Section 271(1)(c) was never amended. It is Clause (iii) of the section itself which was amended with effect from 1st of April, 1968, Previously Clause (iii) provided for a penalty which shall not be less than 20% but not more than one-half of the tax evaded. After the amendment Clause (iii) provides for a penalty which shall not be less than, but which shall not exceed twice, the amount of the concealed income. The provision in Section 274 that only if the minimum penalty imposed is more than Rs. 1,000, the matter shall be decided by the Inspecting Assistant Commissioner, was repeated.

5. The question of law, therefore, is whether the unamended or the amended Clause (iii) of Section 271(1) was applicable to the present case ?

6. In Commissioner of Income-tax v. Data Ram Satpal : [1975]99ITR507(All) a Division Bench of this court held:

'The principle that the law applicable under the Income-tax Act to a particular assessment year is the law prevailing on the first day of April of that year does not apply to penalty proceedings, as penalty proceedings are not part of the assessment proceedings. The law which will apply to penalty proceedings will be the law as it stands on the day on which the default is committed. In cases of concealment or of furnishing inaccurate particulars, the date of such a default will be the date on which the return is filed, irrespective of the assessment year to which it related.'

7. In that case it was held that since the return was filed after April 1, 1964, the Explanation which had been incorporated to Section 271 will govern it. The same principle is, in our opinion, applicable to the amendment made to Clause (iii) of Section 271(1) and Section 274 in 1968. Since the return was filed after that amendment, the penalty proceedings arising because of it were liable to be governed by Clause (iii) as it stood amended.

8. In the result, the answer to the question referred to us is in the negative, in favour of the department and against the assessee. Since no one appeared on behalf of the assessee there will be no order as to costs. We assess the departmental counsel's fee at Rs. 200.


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