TMI Blog1995 (4) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... pronotes, etc., were seized. The Income-tax Officer initiated penalty proceedings under section 271(1)(c) of the Act and found that the assessee had concealed the income in the original return filed on September 29, 1970, and levied a penalty of Rs. 20,000. The assessee appealed before the Appellate Assistant Commissioner. The Commissioner in his order held as follows : " There is no dispute that the appellant did not disclose the correct particulars of his income in the return filed on September 29, 1970, for the assessment year 1970-71. Even if the appellant is found to have not disclosed or disclosed by instalments the true income relating to the assessment year 1970-71 in the subsequent proceedings for reassessments, he must be penalised for concealment under section 271(1)(c) of the Act only by reference to the return originally filed on September 29, 1970. The law that would apply to such penalty proceedings will be the law that was in force on September 29, 1970. Under section 274(2) of the Act as it stood prior to its amendment with effect from April 1, 1971, the Income-tax Officer could deal with penalties under section 271(1)(c) of the Act only where the maximum pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of which the particulars had been concealed did not exceed the sum of Rs. 25,000. He imposed on the assessee penalty of Rs. 4,000. The assessee filed a revision before the Additional Commissioner of Income-tax, Madras. The revision petition was dismissed. Against the revisional order, the assessee filed a writ petition in this court and contended that the proceeding initiated by the Income-tax Officer, for imposition of penalty was without jurisdiction. A Bench of this court accepted the said contention saying that the question was not res integra' but was already covered by the decision in CGT v. C. Muthutkumararaswamy Mudaliar [1975] 98 ITR 540 (Mad). It also referred to a judgment of the Punjab High Court in CIT v. Bhan Singh Boota Singh [1974] 95 ITR 562. The case in CGT v. C. Muthukumaraswamy Mudaliar [1975] 98 ITR 540 (Mad) had arisen under the Gift-tax Act, 1958. In that case, the penalty proceedings were initiated against the assessee under section 17(1)(a) of the Gift-tax Act on the ground that the assessee had without reasonable cause failed to file the return within the prescribed time-limit which expired on June 30, 1962. By amendment effected in section 17(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue of quantum of penalty to be levied in proceedings under section 17(1)(a) of the Gift-tax Act and section 271(1)(c) read with section 274(2) of the Act as amended by Act 42 of 1970, with reference only to the quantum of penalty and reiterated the principle that the quantum of penalty to which a person can be subjected in connection with the commission of an offence is to be determined with reference to the law governing the matter as it stood on the date of the commission of the concerned offence. The competence or jurisdiction to impose penalty or to initiate penalty proceedings is different from the power or the limit of jurisdiction as to the imposition of penalty, in the sense, the change in the authority and empowerment to initiate penalty proceedings accordingly cannot be governed by something which will perforce continue the authority which has ceased to exist or has undergone a change only for the purpose of dealing with such cases in which the offence or infringement is committed before the change in the law in this behalf, but the action is started and penalty imposed after the enforcement of the amended law. The Kerala High Court in the case of CIT v. Varkey Chacko ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his court in the case of Continental Commnercial Corporation [1975] 100 ITR 170 (Mad) and the Kerala High Court in the case of Varkey Charko [1982] 136 ITR 733, we would have chosen to consider whether the obvious mistake of law in reading the earlier judgment of this court in the case of C. Muthukumaraswamy Mudaliar [1975] 98 ITR 540 and the Punjab High Court in the case of Bhan Singh Boota Singh [1974] 95 ITR 562 should be held per incuriam or the conflict should be resolved by a larger Bench. The Kerala High Court's judgment has since been affirmed by the Supreme Court in the case of Varkey Chacko v. CIT [1993] 203 ITR 885. Affirming the judgment of the Kerala High Court, the Supreme Court has observed as follows : " A penalty for concealment of particulars of income or for furnishing inaccurate particulars of income can be imposed only when the assessing authority is satisfied that there has been such concealment or furnishing of inaccurate particulars. A penalty proceeding, therefore, can be initiated only after an assessment order has been made which finds such concealment or furnishing of inaccurate particulars. Who, at this point of time, has the authority to impose the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the total income of any other person in respect of which he is assessable under the Act during the previous year exceeded the maximum amount which is not chargeable to income-tax to furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. The Income-tax Officer is given power of making enquiry before assessment under section 142 of the Act and calling upon the assessee to produce, or cause to be produced, such accounts or documents as he may require or to furnish in writing and verified in the prescribed manner information in such form and on such points or matters including a statement of all assets and liabilities of the assessee, whether included in the accounts or not. The Income-tax Officer may, without requiring the presence of the assessee or the production by him of any evidence in support of the return, make an assessment of the total income or loss of the assessee under section 143 of the Act, and in cases where a return has been made under section 139 of the Act and an assessment has been made under sub-section (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return and not disclosing substantial income and inaccurately any particular earning or omitting altogether any return with respect to any kind of income is covered by this provision. There is no reason, in our opinion, to restrict the rule of this provision Which is intended to punish those who concealed their income or disclosed inaccurate particulars with respect to any source of income. This, however, cannot rule out the possibility of omission, which is not intentional or failure to disclose certain income for any genuine reason. The case of the assessee in the penalty proceedings is stated in the order of the Appellate Assistant Commissioner in these words : " Shri K. R. Sarangapani, C. A., the appellant's learned representative submitted that the appellant did not conceal the particulars of his income even in the original return filed on September 29, 1970. The seized materials did not positively indicate any undisclosed transactions of the appellant. Taking into account the pronotes where complete details were available like the name of the lender, amounts lent, date of loan, name of the borrower, etc., the appellant arrived at the amount advanced between the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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