Per Shri A. K. Das, Judicial Member - By these three appeals, the department challenges the order of the Commissioner (Appeals), dated 10-2-1982 by which he sets aside the penalties imposed on the assessee for the assessment years 1974-75 to 1976-77. The appeals are opposed by the assessee.
2. On 26-10-1974 the assessee filed return of income for the assessment year 1974-75 for the first time. He declared an income of Rs. 5,200 and assessment under section 143(1) of the Income-Tax Act, 1981 (the Act) was made on the same day, i.e., 26-101974. Again on 25-11-1974 another return showing an income of Rs. 8000 for the assessment year 1974-75 was filed by the assessee. An assessment on the income of Rs. 9,000 under section 143(3) was made on 6-2-1975. Return for the assessment year 1975-76 showing an income of Rs. 8,500 was filed on 31-7-1975 and return for the assessment year 1976-77 showing an income of Rs. 13,000 was filed on 22-7-1976. On 15-9-1976 the assessee again filed revised returns for all these assessment years, namely 1974-75 to 1976-77. In these revised returns he declared an income of Rs. 23,200 for the assessment year 1974-75, Rs. 45,590 for the assessment year 1975-76 and Rs. 15,500 for the assessment year 1976-77. The ITO was of the opinion that the revised returns were filed after certain complaints were received against the assessee by the department and, as such initiated proceedings under section 271(1)(c) of the Act in respect of each of the assessment years for furnishing inaccurate particulars of income and concealment thereof. In reply to the notices the assessee filed an explanation on 23-2-1980. After examination of the matter, the ITO did not accept the explanation submitted by the assessee and imposed penalty of Rs. 30,000 for the assessment year 1974-75, Rs. 60,000 for the assessment year 1975-76 and Rs. 8,500 for the assessment year 1976-77. Against the imposition of the said penalty, the assessee preferred appeals to the Commissioner ((Appeals). The Commissioner (Appeals) held that the revised returns were not filed by the assessee on his own volition before any concealment was detected, that the deposits in the banks were surrendered to buy peace with the department, that penalty cannot be levied in respect of the income computed on estimate and that the inclusion of income from cold drinks shop was highly debatable. In this view of the matter, he cancelled the penalties imposed for each of the assessment years. Being aggrieved by the said order of the Commissioner (Appeals), the department preferred the present appeals to this Tribunal. these are opposed by the assessee.
3. The last date for filing the appeals was 25-4-1984 as impugned order was communicated to the ITO on 24-2-982. But these appeals were actually filed on 3-5-1982. As such, there could not be any dispute that these were filed after the period of limitation was over. For condonation of delay in filing these appeals, the department applications in which it was stated that the appeals could not be filed earlier due to the strike started on 16-4-1982 by the officers and staff of the department which ended only in the afternoon of 16-4-1982 by the Officers and staff of the department which ended only in the afternoon of 26-4-1982. Thereafter, it has been stated, the file was proceeded by the ITO and put up before the Commissioner on 27-4-1982 and fair copy of the Commissioners authorisation was signed on 28-4-1982 and was despatched on 29-4-1982 by the ITO and the appeal papers and condonation applications were prepared on the same date, i.e., 30-4-1982. The certified copy of the Commissioner (Appeals)s order and forwarding letter. etc., were prepared on 1-5-1982 which was Saturday. The appeals were sent to the Tribunal by special messenger on Monday, dated 3-4-1982. These facts are verifiable from the materials on record. On perusal of the materials on record, we are satisfied that each day of delay in presentation of the appeals has been satisfactorily explained by the department. As such, we condone the delay in filing of the appeals.
4. At the outset, it has to be stated that the authorised representatives of the both the parties cited a number of decisions in support of their respective contentions. We have carefully examined these decisions and pass this order after such examination of all the decisions cited before us. But we do not think it necessary to mention each of these decisions in this order. We propose to mention only those decisions which have an important bearing on the points discussed and decided.
5. It was first contended by the departmental representative that the Commissioner (Appeals) in deciding the appeals did not take into consideration the Explanation to section 271(1)(c) as it stood before and after its amendment by the Taxation Laws (Amendment) Act, 1975, with effect from 1-4-1976. According to him, the said Explanation before its amendment applied to the penalty proceedings for the assessment years 1974-75 and 1975-76 and the Explanation after amendment applied to the penalty proceedings for the assessment year 1976-77. He contended that the entire decision of the Commissioner (Appeals) has been vitiated due to non-consideration of the Explanation applicable to the case under appeal and that the matter should be restored to him for re-examination. The authorised representative for the assessee, however, opposed the contention of the departmental representative that the Explanation before amendment was applicable to the penalty proceedings for the assessment years 1974-75 and 1975-76 and contended that the Explanation before amendment will not apply to the proceedings which were started in 1979, but the Explanation after its amendment with effect from 1-4-1976 must apply to these proceedings. In support of his contention, he relied on certain decisions, namely. Saeed Ahmad v. IAC : 79ITR28(All) and CIT v. Parmanand Advani  129 ITR 464.
6. On a careful consideration of the decisions cited, we are unable to accept the contention of the authorised representative of the assessee. The decision in Saeed Ahmads case (supra) did not decide the questions to the retrospective operation of the amendment. It only dealt with the question regarding ultra vires thereof. The decision of the Patna High Court in the case of Parmanand Advani (supra) cannot be regarded as good in law after the decision of the Supreme Court in the case of Brij Mohan v. CIT : 120ITR1(SC) . In the case of Parmanand Advanis (supra) the Patna High Court of course laid down that :-
'... The Explanation to section 271(1) of the act only prescribes a rule of evidence relating to burden of proof. It is purely procedural in nature. Naturally, therefore, irrespective of the date on which the offence was committed, it would be attracted if the proceeding for punishing the offender was pending on the date when it came into force.' (p. 469)
The Patna High Court came to the said finding on the assumption that the law applicable is the law existing on the date the revised return was filed and negatived the contention on behalf of the assessee that :-
'... the law applicable for the purpose of levying penalty would be the which was in force at the time of the commission of the offence.' (p. 469)
But this view of the Patna High Court that the law applicable for the purpose of levying penalty could not be the one which was in force at the purpose of levying penalty could not be the one which was in force at the time of the commission of the offence has been overruled by the Supreme Court in the case of Brij Mohan (supra) in which it has categorically laid down that when penalty is imposed for the concealment of part of an income, it is the law ruling at the date on which the act of concealment takes place which is relevant and it is wholly immaterial that the income concealed was to be assessed in relation to an assessment year in the past. So, the decision of the Patna High Court in Parmanand Advanis case (supra) cannot be held to be good in law in view of the Supreme Court decision in the case of Brij Mohan (supra). Apart from that, in deciding the effect of the Explanation to section 271(1)(c) before its amendment in 1976, the Kerala High Court laid down in the case of Hajee K. Assainar v. CIT : 81ITR423(Ker) :
'... It is not doubt true that if a statute deals merely with matters of procedure and does not affect the rights of parties the new procedure will, prima facie, apply to all pending as well as future actions. But, where rights and procedure are dealt with together, the intention of the Legislature may well be that the old rights are to be determined by the old procedure and that only the new procedure. If the procedural alteration is closely and inextricably linked with the changes simultaneously introduced in another part of the statute dealing with substantive rights and liabilities, it is not possible to give retrospective operation to the amendment regarding procedure unless the Legislature has indicated such an intention either by express words or by necessary implication. It appears to us to be clear that the two changes introduced in section 271(2) of the Act by the finance Act, 1964, consisting of the deletion of the word deliberately which occurred in clause (c) and the insertion of the Explanation at the end of the said sub-section are very closely interconnected and they form integral parts of one scheme. This is manifest from the fact that the deeming provision contained in the Explanation obviously proceeds on the basis that for the purpose of the latter part of clause (c) of section 271(1)(c) the mere furnishing of inaccurate particulars of income by an assessee is sufficient and that it is not necessary to establish for the purposes of section 271(1)(c) that the assessee has deliberately furnished inaccurate particulars of income. It is, therefore, reasonable to infer that the intention of Parliament is that the Explanation should apply only to cases governed by clause (c) of section 271(1) as it stands after its amendment by the Finance Act. 1964.' (p. 428)
In accordance with this principle of law laid down by the Kerala High Court, the Explanation after it amendment with effect from 1-4-1976 will apply to cases of concealment made on and from 1-4-1976 only and nor before that date. On the other hand, in the case of CIT v. Ram Achal Ram Sewak : 106ITR144(All) the Allahabad High Court laid down that -
'... From a perusal of section 271(1)(c) and the Explanation, we are clearly of the view that the Legislature did not intend the Explanation to be applicable to cases where the return is filed before 1st April, 1964, as the language used by the fiction created by it cannot be appropriately applied to such cases.' (p. 149)
On the strength of these decisions, we agree with the departmental representative that the Explanation before its amendment shall apply to the penalty proceedings for the assessment years 1974-75 and 1975-76 and that the Explanation after its amendment with effect from 1-4-1976 shall apply to the penalty proceedings for the assessment 1976-77.
7. Irrespective of the fact that the Commissioner (Appeals) did not take into consideration the effect of the Explanation (before and after its amendment on 1-4-1976) in deciding the question whether the assessee was guilty of concealment of income or not, we were initially of the opinion that the appeals may be disposed of by us on merits. For these reasons, we permitted the authorised representatives for the parties to address us on merits of the respective cases. But on further thinking, we are of the opinion that we should not decide the cases in merits, as we are the final fact-finding authority and that there should be on the record finding of the Commissioner (Appeals) after considering the effect of the Explanation both before and after its amendment on the facts of the case as contended by the departmental representative. So, with reluctance we have come to the conclusion that the matter in dispute in all the appeals should be restored to the file of the Commissioner (Appeals) for decision afresh. We set aside, the order of the Commissioner (Appeals) and direct him accordingly. during the re-hearing before the Commissioner (Appeals) the parties will be entitled to raise all the points that were urged before us except the point of application of the Explanation before and after its amendment as decided by us.
8. As a result, all the three appeals are allowed.