Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 – Penalty – For concealment of income - Assessment year 1966-67 – Whether where return for assessment year in question had been filed after amendment made to clause (iii) of section 271(1)(c) on 1-4-1968, penalty proceedings arising because of it were liable to be governed by clause (iii) as it stood amended – Held, yes FACTS For the assessment year 1966-67, the difference between the income returned and the income assessed was Rs. 15,000. The ITO initiated penalty proceedings and referred the matter to the IAC. The IAC gave notice to the assessee but the latter failed to appear. The IAC after going through the return and the history of the case held that the assessee had concealed the particulars of his income or furnished inaccurate particulars thereof in terms of the Explanation to section 271(1)(c). On appeal, the Tribunal found that the IAC had invoked the provision of the Explanation to section 271(1)(c) as it stood amended after 1-4-1968; that the amendment could not apply to assessment year prior to the coming into force of the amendment, although the return of income had been filed after the amendment had commenced operation. It ultimately held that the IAC was not justified in levying a penalty equal to the difference between the income assesseed and returned by invoking the Explanation to section 271(1)(c) after its amendment on 1-4-1968. It was further held that the IAC had no jurisdiction since the minimum penalty imposable was less than Rs. 1,000 and the imposition of penalty was, therefore, cancelled. On reference : HELD The Explanation to section 271(1)(c) was never amended. It is clause (iii) of the section itself which was amended with effect from 1-4-1968. Previously clause (iii) provided for a penalty which shall not be less than 20 per cent but not more than one-half of the tax evaded. After the amendment clause (iii) provides for a penalty which shall not be less than, but which shall not exceed twice the amount of the concealed income. The provision in section 274 that only if the minimum penalty imposed is more than Rs. 1,000, the matter shall be decided by the IAC, was repeated. In the case…

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