R.N. Misra, J.
1. Under directions of this court at the instance of the assessee on an application under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), the Appellate Tribunal has stated a case and referred the following question for opinion of the court:
'Whether in the facts and circumstances of the case, the revenue is right in imposing penalty at the rate of 150 per cent. of the concealed income ?'
2. The year of assessment is 1965-66. Penalty was imposed on the assessee under Section 271(1)(c) of the Act by the Inspecting Assistant Commissioner on the footing that the assessee had failed to explain satisfactorily cash credits to the tune of Rs. 20,500 in its books of account and, therefore, it became liable to be subjected to penalty under Section 271(1)(c) of the Act.
3. Before the Tribunal, the liability to be penalised was disputed and it was also contended that the levy of penalty at the rate of 150 per cent. of the income alleged to have been concealed was without jurisdiction inasmuch as the law then in force had to be applied to the facts of the case. The Tribunal noticed the fact that in the quantum appeal relief in respect of Rs. 10,000 out of the cash credit of Rs. 20,500 had been given and accordingly directed proportionate scaling down of the penalty, but did not interfere with the rate of penalty imposed by the Inspecting Assistant Commissioner.
4. Assessee contends that even if it is liable to penalty under Section 271(1)(c) of the Act, penalty at the rate of 150 per cent. on the concealed income is not imposable. Assessment for this year, as stated to us by learned standing counsel, was completed on December 8, 1967, and along with the assessment, the Income-tax Officer directed initiation of a proceeding under Section 271(1)(c) of the Act. The satisfaction of the Income-tax Officer for imposition of penalty was thus reached in December, 1967, and he reported the matter to the Inspecting Assistant Commissioner as he was of the view that penalty of more than Rs. 1,000 was exigible. Learned standing counsel does not dispute the position that an assessee can be subjected to penalty only in accordance with the law in force in December, 1967. That principle has been settled in this court in the case of Commissioner of Income-tax v. K.C. Behera : 103ITR479(Orissa) . Before amendment was brought to the provision by the Finance Act of 1968, Sub-clause (iii) of Section 271(1)(c) of the Act provided :
'in the cases referred to in Clause (c), in addition to any tax payable by him, a sum which shall not be less than twenty per cent. but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income.'
5. By the Finance Act of 1968, the upper limit of penalty has now been fixed at twice the amount of income in respect of which the particulars have been concealed or inaccurate particulars have been furnished. The Inspecting Assistant Commissioner imposed a penalty of about one and a half times of the concealed income whereas under the law then in force the maximum penalty imposable was one and a half times of the amount of tax which would have been avoided. Mr. Mohanti for the assessee does not lightly dispute the proportion of penalty because it is within the permissible limit and the proportion was a matter of discretion for the statutory authority. In the facts of the case, therefore, the assessee was liable to penalty at one and a half times of the amount of tax that would have been avoided if the income returned by the assessee was accepted as the correct income.
6. Our answer to the question referred, therefore, is:
In the facts and circumstances of the case, the Tribunal was not right in imposing penalty at the rate of 150 per cent. of the concealed income.
7. The assessee shall have costs of the reference. Hearing fee is assessed at rupees one hundred.
8. I agree.