Law:

Section:

Section 271(1)(c) of the income-tax act, 1961 [as amended by the finance act, 1968 with effect from 1-4-1968]-Penalty-For concealment of particulars of income-Assessment year 1964-65-Return filed on 24-4-1968-Share income from one firm not disclosed-IAC levied penalty by to the extent of "concealed income" applying provision as amended-Tribunal upheld levy of penalty but reduced penalty because concealed income reduced-Whether tribunal was right in law in applying amended provisions-Held, yes Facts The assessee is a partner in two firms, namely, ABC and XYZ. He filed a return of his total income for the assessment year 1964-65 on 24-4-1968. While he disclosed his share income of Rs. 460 in ABC, no share income from XYZ was shown. The assessee's default in complying with a notice under section 143(2) entailed a best assessment under section 144 on a total income of Rs. 12,118 including share income of Rs. 1,462 from ABC and Rs. 3,456 from XYZ. The ITO also instituted penalty proceedings under section 271(1)(iii) [as it stood after amendment by the Finance Act, 1968 with effect from 1-4-1968]. On appeal, the AAC determined the concealed income at Rs. 7,357. The IAC imposed a penalty in the like sum of Rs. 7,357. On appeal before the Tribunal, the assessee contended that the amended provision could not be invoked as the law, as it stood in the assessment year 1964-65, was operative. While rejecting this contention, the Tribunal reduced the penalty to Rs. 2,955 taking the view that the assessee was guilty of concealing share income from XYZ. On direct reference by the Tribunal, in view of conflicting judicial opinions, under section 257. Held 1.The assessment of the total income and the computation of tax liability is a proceeding which, for that purpose, is governed by entirely different considerations from a proceeding for penalty imposed for concealment of income. And this is so notwithstanding that the income concealed is the income assessed to tax. In the case of assessment of income and the determination of consequent tax liability, the relevant law is the law which rules during the assessment year in respect of which the total income is assessed and the tax…

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