TMI Blog1972 (4) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty of Rs. 10,500 levied under the Explanation to section 271(1)(c) ? " The assessee is Messrs. Bhan Singh Buta Singh of Amritsar. They are commission agents of goats and sheep. In the assessment year 1963-64, the assessee filed a return showing his income as Rs. 60,166. This return was filed on 9th April, 1964. By then section 271, as amended, was in the field, for this section had been made applicable with effect from 1st April, 1964. The total income of the assessee was computed by the Income-tax Officer at Rs. 1,27,820. The Income-tax Officer added back an amount of Rs. 41,420 which was claimed by the assessee as bad debts for the reason that the assessee had neither adduced any evidence to indicate the nature of the debt nor to establish that the debt had become bad. The Income-tax Officer further added an amount of Rs. 18,000 on account of cash credit in the account of Shri Sujan Singh Sadana as assessee's income from undisclosed sources. The Income-tax Officer started penalty proceedings under section 271(1)(c). Inasmuch as the minimum penalty that was imposable was more than Rs. 1,000 he referred the case to the Inspecting Assistant Commissioner of Income-tax. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence to the assessment involved." At the instance of the department, the Tribunal has referred the question of law as already set out for our opinion. Mr. Awasthy, learned counsel for the department, has contended that on the clear and plain language of section 271(1)(c), read with the Explanation, the penalty imposed by the Inspecting Assistant Commissioner of Income-tax was valid and could not have been deleted by the Tribunal. The relevant part of section 271 is in the following terms : "271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner, in the course of any proceedings under this Act, is satisfied that any person-... (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,-... (iii) in the cases referred to in clause (c) in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished. Explanation.-Where the total income returned by any person is less than eighty per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings under this Act, is satisfied that any person-... (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he or it may direct that such person shall pay by way of penalty, in the case referred to in clause (a), in addition to the amount of the income-tax and super-tax, if any, payable by him, a sum not exceeding one and a half times that amount, and in the cases referred to in clauses (b) and (c), in addition to any tax payable by him, a sum not exceeding one and a half times the amount of the income-tax and super-tax if any, which would have been avoided if the income as returned by such person had been accepted as the correct income: Provided that- (a) no penalty for failure to furnish the return of his total income shall be imposed on an assessee, whose total income is less than three thousand five hundred rupees unless he has been served with a notice under sub-section (2) of section 22; (b) where a person has failed to comply with a notice under sub-section (2) of section 22 or section 34 and proves that he has no income liable to tax, the penalty imposable under this sub-section shall be a penalty no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars of his income." In this very decision, it was also observed: If the omission is deliberate, then in respect of the original return the provisions of section 28(1)(c) apply, because that sub-section provides that the Income-tax Officer, if he is satisfied that the assessee 'has concealed the particulars of his income or deliberately furnished inaccurate particulars of his income' he may be subjected to a penalty." These authorities support the view we have taken that it is the return that is filed which has to be seen to determine whether there has been concealment or not, or in other words, whether the provisions of section 28, as in those cases, and section 271 as in the present case, can be invoked. It is no doubt true that in the matter of assessment of income, the law, as it prevails on the first day of the assessment year, will be applicable. But that would not be the position in the case of imposition of penalty. Their Lordships of the Supreme Court in Commissioner of Income-tax v. Anwar Ali, made it plain that the penalty proceedings for certain purposes could not be equated with the assessment proceedings. The relevant observations of their Lordships are as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been held that the imposition of penalty is intermixed with the substantive right of taxation, and, therefore, what the amendment affects is a vested right. In our opinion, the correct view of the matter is the one taken by the Allahabad High Court and, in any event, it is not necessary to go to that length because on the plain reading of the provision and the decisions already referred to, what is to be looked at is the return and it is on the basis of that return that certain consequences follow. If there is a false return the penalty provisions become operative, otherwise not, and the question whether the return is false or not falls for determination when the return is filed. In the present case the return was filed on the 9th of April, 1964, when section 271, as it stands amended, was on the statute book and, therefore, effect had to be given to that provision. For the reasons recorded above, we answer the question referred to us in the negative, i.e., in favour of the department and against the assessee. In view of the fact that the assessee has been fairly penalised, we would make no order as to costs. Question answered in the negative. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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