TMI Blog2000 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent, the assessee, filed its return of income for the assessment year 1989-90. The return was filed on December 29, 1989. It was filed under section 139 of the Income-tax Act, 1961 (for short, the "Act"). Under section 28 of the Act, income mentioned therein is chargeable to income-tax under the head "Profits and gains of business or profession". Clause (iiib) in section 28 was inserted by the Finance Bill of 1990. The Finance Bill which ultimately became the Finance Act received assent of the President of India on May 31, 1990. Clause (iiib) was given retrospective operation with effect from April 1, 1967. Clause (iiib) is as under : "(iiib) cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of the Government of India." Before the insertion of clause (iiib), cash assistance received by any person against exports under any scheme of the Government could not be chargeable to income-tax under the head "Profits and gains of business or profession". The assessee had received in the previous year relevant to the assessment year 1989-90 a sum of Rs. 1,31,41,030 by way of cash assistance. Since clause (iiib) was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds it is something which is most improper and against the settled principles. In Modern Fibotex India Ltd. v. Deputy CIT [1995] 212 ITR 496 (Cal), one of the two issues before the court related to the validity of an intimation under section 143(1)(a) of the Act. For the assessment year 1989-90, the assessee-company received cash compensatory support from the Central Government amounting to about Rs. 8 lakhs. In its return of income, the company claimed the amount received by it on account of cash compensatory support as not taxable. The Assessing Officer assessed the company applying the amended provision of section 28 of the Act thus levying additional tax under section 143(1A) of the Act. The company filed a writ petition in the High Court challenging the very constitutionality of section 143(1)(a) read with section 143(1A) and section 4 and also the intimation sent by the Assessing Officer levying additional tax. The High Court speaking through one of us (Ruma Pal J.) noticed that section 28 of the Act was amended with retrospective effect from April 1, 1967. It said : "An assessee cannot be imputed with clairvoyance. When the return was filed, the assessee could not possibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment would have been made and no intimation would have been sent. An assessee's liability cannot be made to depend upon such a fortuitous circumstance." The High Court allowed the writ petition to the extent that the impugned intimation and adjustment under section 143(1)(a) were set aside and quashed. In Cement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax [1980] 124 ITR 15 (SC), the assessee did not include in its return of turnover the amount of freight included in the price of sugar in the bona fide belief that it was not liable to be included in the taxable turnover. The assessee was imposed with a penalty in view of section 43 of the Madhya Pradesh General Sales Tax Act, 1958, and section 9 of the Central Sales Tax Act, 1956, on the ground that it had furnished false return by not including the amount of freight in the taxable turnover disclosed in the returns. This court said that it was difficult to see how the assessee could be said to have filed "false" returns, when what the assessee did, namely, not including the amount of freight in the taxable turnover, was under a bona fide belief that the amount of freight did not form part of the sale price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat even in a case where a return is filed in response to a notice under section 148 involving an element of concealment, the law applicable would be the law as it stood at the time when the original return was filed for the assessment year in question and not the law as it stood on the date on which the return was filed in response to notice under section 148. The decision of the Calcutta High Court in Modern Fibotex India Ltd.'s case [1995] 212 ITR 496, squarely covers the issue involved in the present appeal. Then we have to see the law on the date of filing of the return. To attract penal provisions there has to be some element of lack of bona fides unless the law specifically provides otherwise. The case before us does not represent even a bona fide mistake. In fact it is not a case where under some mistaken belief the assessee did not disclose the cash compensatory support received by it which he could offer to tax. It is true that income by way of cash compensatory support became taxable retrospectively with effect from April 1, 1967, but that was by amendment of section 28 by the Finance Act of 1990 which amendment could not have been known before the Finance Act came i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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