TMI Blog1992 (3) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... rcent of the tax which would have been avoided as a result of the concealment. The Finance Act, 1968, amended section 271(1)(c) with effect from April 1, 1968. In addition to other changes (which are not relevant for our purposes), it changed the measure of the penalty. The penalty was now made dependent upon the amount of income concealed and not on the amount of tax sought to be avoided. The minimum penalty was now to be 100 per cent. of the income concealed and the maximum penalty could go up to 200 per cent. of the income concealed. This amendment has substantially stepped up the amount of penalty that could be levied in cases of concealment. It is the applicability of this amendment which is in issue in these appeals. The respondent, Onkar Saran and Sons, is a Hindu undivided family. For the assessment years 1961-62 and 1962-63, it filed returns of income showing total incomes of Rs. 18,935 and Rs. 24,943 respectively. The exact dates of these returns are not available on record. Assessments were made on the assessee determining its total income at Rs. 28,513 for the assessment year 1961-62 and at Rs. 28,463 for the assessment year 1962-63. The assessment orders are dated Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to determine the amount of penalty and not the amended provisions which came into force with effect from April 1, 1968. It, therefore, directed that the amounts of penalty should be reduced to 20 per cent. of the tax payable on the amounts of "capital gains" included in the assessments and not disclosed in the returns. This conclusion of the Tribunal was upheld by the High Court on a reference but on a slightly different line of reasoning. The High Court took the view that the law applicable in regard to the imposition of penalty would be not the law as on the 1st April of the relevant assessment year (as held by the Tribunal) but the law prevailing on the dates when the original returns were filed. In this case, as mentioned earlier, the returns originally had been filed some time in 1962 and 1963. The High Court, therefore, held that the Tribunal's conclusion to scale down the penalty on the basis of the tax sought to be avoided was correct. In doing this, the High Court followed its earlier decision in the case of CIT v. Ram Achal Ram Sewak [1977] 106 ITR 144 (All). The High Court having refused to grant a certificate of fitness to appeal to this court, the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and Co. (Hind) P. Ltd. v. CIT [1990] 182 ITR 189 (Bom). The contrary view has, however, been taken in the following cases: CIT (Addl.) v. Balwantsingh Sulakhanmal [1981] 127 ITR 597 (MP) ; CIT (Addl.) v. Ratanchand Sewakram [1985] 151 ITR 112 (MP) ; CIT (Addl.) v. Gopaldas Amarnomal [1985] 151 ITR 114 (MP); CIT (Addl.) v. Brijmohan Jaiswal [1983] 139 ITR 568 (MP) and CIT v. Bihar Cotton Mills Ltd. [1988] 170 ITR 290 (Patna). It would, therefore, appear that the decisions of majority of the High Courts support the contention raised on behalf of the assessee that, even in a case where a return filed under section 148 involves an element of concealment, the law applicable for imposition of penalty will be the law as in force at the time of the filing of the original return for the assessment year in question and not the law as it stands on the dates on which returns in response to the notice under section 148 are filed. We have heard both counsel and also have been taken through the various decisions cited before us. We are of the opinion that the view taken by the majority of the High Courts is the more acceptable and more practical view. We do not wish to reiterate the reasonin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok business than had been estimated before and this was accepted. The Income-tax Officer initiated penalty proceedings again and levied a penalty with reference to the difference between the income originally returned and the income finally reassessed. If the arguments of Sri Ahuja were correct, there could have been no penalty at all imposed on such reassessment as there was no concealment in the reassessment proceedings. This court, however, upheld the imposition of the penalty with reference to the original return but it was observed that, if a penalty had been levied earlier in the course of the original assessment proceedings, that penalty order should be recalled and substituted by the new penalty order. The decision of the Madras High Court in Govindarajulu Iyer (C. V.) v. CIT [1948] 16 ITR 391, which was approved by the Supreme Court in Malbary (N. A.) and Bros.' case [1964] 51 ITR 295 also establishes the proposition that, even in the course of reassessment proceedings, a penalty could be imposed with reference to the concealment in the original assessment proceedings. (2) Recent decisions of this court in V. Jaganmohan Rao's case [1970] 75 ITR 373 (SC), and other cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on the basis of the consideration that the measure of penalty with effect from April 1, 1968, has been changed over to the quantum of income concealed and that, by accepting the assessee's interpretation, we will be allowing an assessee to get away with a smaller penalty merely because the original returns had been filed before April 1, 1968. While this may no doubt be the position between 1968 and 1975, the situation will be different with effect from April 1, 1976. With effect from that date, the measure of penalty will be the one that prevailed prior to April 1, 1968, namely, on the basis of the amount of tax sought to be evaded. In other words, from April 1, 1976, one will find the Revenue and the assessee taking stands exactly contrary to the ones which they are taking at present. The view which we are now taking and which appears to favour the assessee at present would turn out to their disadvantage and to the advantage of the department in the context of the subsequent amendment with effect from April 1, 1976. For the reasons mentioned above, we are of the opinion that the view taken by the High Court is correct. The appeals, therefore, fail and are dismissed. We, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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