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1984 DIGILAW 176 (PAT)

Commissioner Of Income Tax v. Chandrika Singh

1984-04-30

ASHWINI KUMAR SINHA, LALIT MOHAN SHARMA

body1984
Judgment Ashwini Kumar Sinha, J. 1. This is a reference under Sec.256(1) of the I.T. Act, 1961, by the Income-tax Appellate Tribunal, Patna Bench "A", Patna. The following question has been referred for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that in calculating the penalty, the law which was in force on the first day of the assessment year, was to be applied and not the law which had come into force on April 1, 1968 ?" 2. The assessment year in question is 1966-67. The assessee filed the return after April 1, 1968, i.e., after the amendment which came into effect on April 1, 1968, showing an income of Rs. 4,000. The ITO determined the assessees income at Rs. 37,500, but it was ultimately reduced to Rs. 13,500 by the Appellate Tribunal. 3. The IAC was of the view that the assessee had concealed his income and furnished inaccurate particulars of income thereon and, hence, he imposed a penalty of Rs. 17,250. This penalty was imposed on the basis of the difference between the returned income and the assessed income as reduced by the AAC. The IAC held that it was the law after the amendment which was applicable to the facts of the instant case and, hence, the penalty had to be equal to the amount of income concealed and the above penalty was levied. The assessee went before the Tribunal and the Tribunal, on considering the facts of the case, held that the assessee had not been able to discharge the onus which lay upon him under the Explanation to Sec.271(1)(c) of the I.T. Act, 1961 (hereinafter referred to as "the Act"). The Tribunal further held that there was no basis for the estimate of returned income and in the opinion of the Tribunal this was a case where the assessee had filed the return of income knowing it to be much below his real income. The Tribunal, however, held that the quantum of penalty imposed was not correctly calculated. The Tribunal was of the view that the assessment year being 1966-67, the law, which was in force on April 1, .1966, was to be applied and, according to the Tribunal, there was no sanction in law for applying the law which had come into force on April 1, 1968. The Tribunal was of the view that the assessment year being 1966-67, the law, which was in force on April 1, .1966, was to be applied and, according to the Tribunal, there was no sanction in law for applying the law which had come into force on April 1, 1968. In that view of the matter, the Tribunal directed the imposition of penalty at 25%, of the difference between the tax on the returned income and the tax on the finally assessed income. 4. Learned counsel appearing for the Revenue contended that the Tribunal had taken an incorrect view of law in holding that the law which came into force on April 1, 1968, was not applicable to the facts of the instant case and he relied upon the case of Addl. CIT V/s. P.N. Prasad (Tax Case No. 63 of 1974, disposed of on April 16, 1984--[1984] 150 ITR 274). It is well-settled that the penalty is to be imposed on account of the commission of a wrongful act and the law operating on the day on which the wrongful act is committed which determines the penalty. In the instant case, admittedly, the return was filed after April 1, 1968, when the amended law came into force. Thus, the wrongful act was committed on a day on which the amended law was in force. In that view of the matter, the Tribunal took a wrong view of law that, in the instant case, the penalty was to be applied according to law which was in force on the 1st day of the assessment year. 5. This court has earlier also in the case of CIT V/s. Jammuna Prasad Sah (Tax Case No. 81 of 1974, disposed of on July 19, 1983--see p. 226 infra) and in the case of CIT V/s. Monghyr Gun Manufacturing Co-operative Society Ltd. [1984] 147 ITR 649 (Tax Case No. 59 of 1974, disposed of on March 16, 1983) has taken the same view. 6. The learned counsel appearing for the assessee tried to persuade us to accept his submission that the Tribunal had taken a correct view of the law. In my opinion, there is no force in the submission advanced by the learned counsel for the assessee. 6. The learned counsel appearing for the assessee tried to persuade us to accept his submission that the Tribunal had taken a correct view of the law. In my opinion, there is no force in the submission advanced by the learned counsel for the assessee. In view of the consistent view taken by this court on the basis of the aforesaid Supreme Court case in Brij Mohan V/s. CIT [1979] 120 ITR 1, the question referred to this court for opinion has to be answered in the negative and I hold that, on the facts and circumstances of the case, the Tribunal was not correct in holding that in calculating the penalty, the law which was in force on the first day of the assessment year was to be applied and not the law which had come into force on April 1, 1968. 7. The question thus is answered in favour of the Revenue and against the assessee. Hearing fee Rs. 250. Lalit Mohan Sharma, J. 8 I agree.