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Additional Commissioner of Income-tax Vs. Balwantsingh Sulakhanmal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 290 of 1976
Judge
Reported in[1981]127ITR597(MP)
ActsIncome Tax Act, 1961 - Sections 148 and 271(1)
AppellantAdditional Commissioner of Income-tax
RespondentBalwantsingh Sulakhanmal
Appellant AdvocateS.C. Bagdiya, Adv.
Respondent AdvocateR.G.G. Waghmare, Adv.
Excerpt:
- motor vehicles act, 1988[c.a.no.59/1988] section 166; [a.k. patnaik, cj, a.k. gohil & s. samvatsar, jj] application for compensation for personal injury death of injured claimant subsequently for some other reasons held, claim for personal injury will abate on the death of claimant. claim will not survive to his legal representative except as regards claim for pecuniary loss to estate of claimant. - 7. 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 (see addl......of the case, the tribunal was right in law in holding that the default will be attributable to the return filed in the original assessment proceedings even if there was a concealment in the revised return ? 2. whether, on the facts and in the circumstances of the case, the tribunal was right in holding that the law applicable for the imposition of penalty in this case would be as contained in section 271(1)(c) prior to its amendment on april 1, 1968, and thereby directing that the quantum of penalty would be calculated with reference to the amount of tax sought to be avoided ' 2. the material facts giving rise to this reference, as set out in the statement of the case, are as follows : the assessee is an individual and the assessment year in question is 1959-60. a return of his income.....
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 questions of law to this court for its opinion:

' (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the default will be attributable to the return filed in the original assessment proceedings even if there was a concealment in the revised return ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the law applicable for the imposition of penalty in this case would be as contained in Section 271(1)(c) prior to its amendment on April 1, 1968, and thereby directing that the quantum of penalty would be calculated with reference to the amount of tax sought to be avoided '

2. The material facts giving rise to this reference, as set out in the statement of the case, are as follows : The assessee is an individual and the assessment year in question is 1959-60. A return of his income for the said assessment year was filed by the assessee and the assessment was completed. Subsequently, the ITO reopened the assessment for the year 1959-60 and issued a notice under Section 148 of the Act to the assessee. In response to this notice, the assessee filed another return of his income on 21st December, 1969, declaring an income of Rs. 5,000. The ITO, however, added an amount of Rs. 20,000 as the assessee's income from undisclosed sources. On appeal, the learned AAC reduced the addition to Rs. 11,000. Penalty proceedings were initiated against the assessee by the ITO under Section 271(1)(c) of the Act and these proceedings were referred to the IAC for disposal. The IAC imposed a penalty of Rs. 11,000, which amount represented the addition made by the AAC. Against this order, the assessee preferred an appeal before the Tribunal. The Tribunal held that the default of the assessee would be attributable to the return filed in the original assessment proceedings and that the law applicable to the assessment year 1959-60 would be that laid down in Section 271(1)(c) of the Act, prior to its amendment on 1st April, 1968. The Tribunal accordingly reduced the amount of penalty. At the instance of the revenue, the Tribunal has referred the aforesaid questions of law to this court for its opinion.

3. Now, Section 148 of the Act, in pursuance of which notice was issued to the assessec after reopening the assessment for the assessment year 1959-60, reads as under :

' 148. Issue of notice where income has escaped assessment.--(1) Before making the assessment, reassessment or recomputation under Section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under Sub-section (2) of Section 139 ; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section.

(2) The Income-tax Officer shall, before issuing any notice under this section, record his reasons for doing so.'

4. Section 139(2) of the Act, referred to in the aforesaid section, reads as under :

' 139. Return of Income.--(1)...

(2) In the case of any person who, in the Income-tax Officer's opinion, is assessable under this Act, whether on his own total income or on the total income of any other person during the previous year, the Income-tax Officer may, before the end of the relevant assessment year, issue a notice to him and serve the same upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed :

Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing the return, and, notwithstanding that the date is so extended, interest shall be chargeable in accordance with the provisions of Sub-section (8).'

5. In response to the notice under Section 148 of the Act sent by the ITO, the assessee filed a return on 21st December, 1969, declaring an income of Rs. 5,000. Learned counsel for the assessee contended that this return could not be said to be a ' revised return ' as that expression refers to a return filed by an assessee under Section 139(5) of the Act. The fact remains that a return was filed on 21st December, 1969, in which particulars of income were found to have been concealed. Penalty proceedings were initiated on account of the aforesaid wrongful act committed on 21st December, 1969, and that is why the contention raised on behalf of the assessee before the IAC was that the law applicable to the penalty proceedings would be that relevant to the assessment year even though the return filed in response to the notice under Section 148 of the Act was after 1st April, 1968. This contention was rejected by the IAC, who observed as follows :

' The law applicable will be that which is relevant at the point of time when offence is committed. In this case the material point of time will be when the return of income was filed in response to notice Under Section 147/148.'

6. In these circumstances, it is difficult to appreciate the finding of the Tribunal that the default would be attributable to the return filed in the original assessment proceedings. 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.

7. 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 (see Addl. CIT v. Hiralal Munnalal--MCC No. 171 of 1976, decided by this court on 23rd August : [1980]124ITR728(MP) ). In the instant case, the wrongful act took place on 21st December, 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 on 1st April, 1968.

8. For all these reasons, our answers to the two questions referred to us are in the negative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.


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