Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1963-64 - Whether law applicable to penalty proceeding is law as it stands on day on which default is committed - Held, yes - Whether in cases of concealment or of furnishing inaccurate particulars, date of such default will be date on which return is filed irrespective of assessment year to which it relates - Held, yes FACTS For the assessment year 1963-64, the assessee-firm returned a loss. The ITO found that the assessee's books were unreliable inasmuch as the sales had been noted in lump sum at the end of the day and the excise register was not produced before him. He, therefore, estimated the income of the assessee at Rs. 33,200 by applying a flat rate of profit @ 8 per cent to the estimated turnover of Rs. 4,15,000. The ITO also issued a notice under section 274, read with section 271(1)(c). The IAC during penalty proceedings under section 271(1)(c) found that return of income was filed on 13-10-1964, and, therefore, the case was governed by the provisions of section 271, as amended by the Finance Act, 1964. He next observed that the total income as returned by the assessee was less than 80 per cent of the income assessed and the assessee had failed to prove that the disparity in the income returned and assessed was not due to any gross or wilful neglect on his part and therefore, imposed the penalty by his order dated 22-7-1967. The Tribunal observed that though the return had been filed after 1-4-1964, yet the law applicable to the assessment year 1963-64 was that which prevailed on the 1-4-1963. It, therefore, held that the IAC was wrong in invoking the provisions of the amended section 271 and, without the aid of the amendment, penalty could not be imposed as there was no independent proof of concealment. The Tribunal accordingly cancelled the penalty. On reference : HELD One thing is settled that the Income-tax Act as applicable to a particular assessment year is as it stands on the 1st day of April of that assessment year. This principle is applicable only to assessment proceedings for a particular year, namely, the proceedings taken for the levy of…

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