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Additional Commissioner of Income-tax Vs. Mohandas Sewakram - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 460 of 1976
Judge
Reported in[1984]149ITR435(MP)
ActsIncome Tax Act, 1961 - Sections 148 and 271(1)
AppellantAdditional Commissioner of Income-tax
RespondentMohandas Sewakram
Excerpt:
- - 5. now, penalty is imposed on account of the commission of a wrongful act, and it is well-settled that it is the law in force on the date on which the wrongful act is committed which determines the penalty......the tribunal was justified in holding that since the default is attributable to the return of income filed in the course of original assessment pertaining to the a.y. 1964-65 the amended provisions of section 271(1)(c) with effect from 1-4-1968 are not applicable and, accordingly, cancelling the penalty levied under section 271(1)(c) ' 2. the material facts giving rise to this reference, as set out in the statement of the case, briefly are as follows : the assessee is an individual. the assessment year in question is 1964-65. on the basis of the return of income filed by the ussessee, the order of assessment was passed. subsequently, the ito reopened the assessment for the year 1964-65, and a notice under section 148 of the act was issued to the assessee as the ito had reason to.....
Judgment:

Sohani, J.

1. By this reference under Section 256(1) of the I.T. Act, 1961 (hereinafter called 'the Act'), the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion :

' Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that since the default is attributable to the return of income filed in the course of original assessment pertaining to the A.Y. 1964-65 the amended provisions of Section 271(1)(c) with effect from 1-4-1968 are not applicable and, accordingly, cancelling the penalty levied under Section 271(1)(c) '

2. The material facts giving rise to this reference, as set out in the statement of the case, briefly are as follows : The assessee is an individual. The assessment year in question is 1964-65. On the basis of the return of income filed by the ussessee, the order of assessment was passed. Subsequently, the ITO reopened the assessment for the year 1964-65, and a notice under Section 148 of the Act was issued to the assessee as the ITO had reason to believe that income of the assessee had escaped assessment. In response to this notice, the assessee filed a return on October 30, 1969. In reassessment proceedings, the ITO made additions to the income originally assessed and initiated penalty proceedings against the assessee for having concealed income in the return filed in response to the notice under Section 148 of the Act. The matter was referred to the IAC who found that the assessee had concealed his income. The IAC further held that the penalty liable to be imposed was with reference to the amount of income concealed in the return filed on October 30, 1969. On appeal before the Tribunal, it was contended that the amended provisions of Section 271(1)(d), which came into force from April 1, 1968, would not be attracted as the default on the part of the assessee would be attributable to the return of income filed in the course of original assessment proceedings. This contention was upheld by the Tribunal. Aggrieved by that order, the Revenue submitted an application before the Tribunal for making a reference to this court, That is how, at the instance of the Revenue, the aforesaid question of law has been referred to this court for its opinion.

3. Having heard learned counsel for the parties, we have come to the conclusion that this reference will have to be answered in the negative and against the assessee. A question similar to the one referred by the Tribunal as aforesaid was considered by a Division Bench of this court in Addl. Commr. of Income-lax v. Balwantsingh Sulakhanmal (M.C.C. No. 290 of 1976, decided on 24-9-1979) 0065/1979 : [1981]127ITR597(MP) , wherein it was observed as follows (at p. 600):

' No provision of law has been brought to our notice nor has it been referred to by the Tribunal for holding that even though penalty proceedings are initiated in connection with the return filed in response to a notice under Section 148 of the Act, the default will be attributable to the return filed in the original assessment proceedings. It is true that proceedings for penalty could have been initiated in connection with the return filed in the original assessment proceedings, but the proceedings giving rise to this reference were initiated in connection with the return filed in response to the notice under Section 148 of the Act. The Tribunal, therefore, was not right in holding that the default would be attributable to the return filed in the original assessment proceedings even if there was a concealment in the revised return. '

4. In view of the aforesaid decision, the contention urged on behalf of the assessee that the default would be attributable to the return filed in the original assessment proceedings cannot be upheld.

5. Now, penalty is imposed on account of the commission of a wrongful act, and it is well-settled that it is the law in force on the date on which the wrongful act is committed which determines the penalty. In the instant case, the wrongful act took place on October 30, 1969, when the return in response to the notice under Section 148 of the Act was filed, by the assessee. The Tribunal, therefore, erred in holding that the law applicable for the imposition of penalty in the instant case would be that contained in Section 271(1)(c) prior to its amendment from April 1, 1968.

6. For all these reasons, our answer to the question referred to us is that the Tribunal was not justified in holding that the default was attributable to the return filed in the course of the original assessment proceedings for the assessment year 1964-65 and that the amended provisions of Section 271(1)(c) of the Act were not attracted. Reference answered accordingly. Parties shall bear their own costs of this reference.


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