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Commissioner of Income-tax Vs. K. Ahamed - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberIncome-tax Reference No. 16 of 1971
Judge
Reported in[1974]95ITR599(Ker)
ActsFinance Act, 1964; Income Tax Act, 1961 - Sections 271(1)
AppellantCommissioner of Income-tax
RespondentK. Ahamed
Appellant Advocate P.A. Francis and; P.K. Ravindranatha Menon, Advs.
Respondent Advocate T.L. Viswanatha Iyer and; E.R. Venkiteswaran, Advs.
Cases ReferredHajee K. Assainar v. Commissioner of Income
Excerpt:
.....- amount of income disclosed by return was only rs. 13746 and assessment was completed fixing total income at rs. 65570 - income returned was less than 80% of total income assessed - explanation to section 271 (1) (c ) directly attracted - it must be presumed that assessee had furnished inaccurate particulars of his income. - - of the total income (hereinafter in this explanation referred to as the correct income) as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has .been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or..........of sub-section (1) of section 271 and an explanation was added which is in these terms:' where the total income returned by any person is less than eighty per cent. of the total income (hereinafter in this explanation referred to as the correct income) as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has .been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilfull neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this.....
Judgment:

Govindan Nair, Actg. C.J.

6. This tax referred case has come up before the Full Bench on an order of reference by a Division Bench dated 28th November, 1972. The reference was made because of the conflict between the decisions in I.T.R. No. 38 of 1970 and I.T.R. No. 71 of 1968.

7. The question is:

' Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the Explanation to Section 271(1)(c) of the Income-tax Act, 1961, is not applicable to this case ?'

8. By the amendments introduced by the Finance Act, 1964, the word 'deliberately' has been omitted from Clause (c) of Sub-section (1) of Section 271 and an Explanation was added which is in these terms:

' Where the total income returned by any person is less than eighty per cent. of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under Section 143 or Section 144 or Section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has .been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilfull neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of Clause (c) of this sub-section.'

9. The year of assessment with which we are concerned is 1963-64. It is admitted that the return filed by the assessee for the year is the one dated September 8, 1966. The amount of income disclosed by the return was only Rs. 13,746. The assessment was completed fixing the total income at Rs. 65,570. The income returned was, therefore, less than 80 per cent. of the total income assessed. The Explanation to Section 271(1)(c) was thus directly attracted. This means that it must be presumed that the assessee had furnished inaccurate particulars of his income, unless he established that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. The act of furnishing inaccurate particulars had taken place after the amendments were introduced to the section. Imposition of penalty by the Inspecting Assistant Commissionerwas, therefore, justified. The Tribunal held that the amended section would not apply because the year of assessment (1963-64) ended before the amendments were effected. It was further observed that to apply the section would be to give retrospective operation to the section as amended.

10. The year of assessment has nothing to do with the question of liability arising under Section 271(1)(c) of the Income-tax Act, 1961. And to apply the section as amended to an act committed after the amendment is not to give the section retrospective effect. The only question is whether the elements of the section had been satisfied when the act was committed. This is what a Division Bench of this court said in I.T.R. No. 71 of 1968. In that case, the concealment had taken place before the section was amended. However, in another Division Bench decision in I.T.R. No. 38 of 1970 the view was taken that the amendments introduced by the Finance Act, 1964, which came into force on April 1, 1964, will not apply in relation to the assessment year 1963-64. This view, as has been mentioned in the order of reference, does not appear to be correct. The view taken in I.T.R. No. 71 of 1968 is in accordance with the decision of another Division Bench decision of this court in Hajee K. Assainar v. Commissioner of Income-tax and the decision of the Punjab and Haryana High Court in Commissioner of Income-tax v. Bhan Singh Boota Singh, [1974] 95 I.T.R. 562 (Punj).

11. On general principles too, it is the view taken in I.T.R. No. 71 of 1968 that should prevail. The principle in such cases had been laid down by Sri Lionel Leach, Chief Justice of the Madras High Court, in Commissioner of Income-tax v. Vedlapatla Veera Venkataramiah, [1943] 11 I.T.R. 308 (Mad.). Whether an act or omission is an offence must be determined with reference to the law at the time of the commission of the act or omission.

12. In the light of the above, we overrule the decision in I.T.R. No. 38 of 1970. The correct principle is that laid down in the decision in I.T.R. No. 71 of 1968.

13. We, therefore, answer the question that has been referred to us in the negative, that is, in favour of the department and against the assessee. We direct the parties to bear their respective costs.

14. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Appellate Tribunal, Cochin Bench.


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