Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1966-67 and 1967-68 - Whether where assessee placed no material, to show that failure to return correct income, did not arise from any fraud or gross or wilful neglect on his part - Tribunal was justified, in holding that provisions of section 271(1)(c) were attracted - Held, yes - Whether since returns for both assessment years were filed on 9-4-1968, penalty was to be computed in accordance with law as amended from 1-4-1968 - Held, yes FACTS On 9-4-1968, the assessee filed return of his income for the relevant assessment years. The assessee failed to comply with several notices served on him, from time to time, to prove his return. The Income-tax Officer observed that the assessee was not co-operative and, therefore, completed the assessment under section 144 to the best of his , in each of the two years. He came to the conclusion, that the assessee did not furnish accurate particulars of his income from business, nor the returns were accompanied by balance sheet. Further, there was no denying the fact, that properly closed and adjusted books of account were never maintained. Such particulars, as were furnished along with the returns could not, therefore, be called as accurate on any logical or rational principle. Inasmuch as the returns for both the years, were filed on 9-4-1968, i.e., after the substitution of new clause (iii) in section 271(1)(c), by the Finance Act, 1968, w.e.f. 1-4-1968, the IAC held that penalty had to be computed by reference to the amount of income concealed. The Tribunal, affirmed the view of the IAC that the assessee was liable for penalty under section 271(1)(c), read with the Explanation there to, for each of the two years. It, however, reduced the quantum of penalty to 20 per cent of the tax sought to be avoided on the hypothesis that the amendment by the Finance Act, 1968, which came into effect from 1-4-1968, was not retrospective in operation. On reference : HELD In the instant case, the assessee placed no material to show that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on…

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