Law:

Section:

Section 271(1)(c)(iii ) [as amended with effect from 1-4-1968], read with section 274(2) [as amended with effect from 1-4-1971 and since deleted with effect from 1-4-1976], of the income-tax act, 1961-Penalty-For concealment of income-Assessment year 1965-66-Two returns filed on 9-8-1968 and 12-8-1968 declaring income at Rs. 600 and at nil, respectively-ITO made assessment on 6-8-1969 at Rs. 11, 700 reduced to Rs. 8,150 in appeal-On reference by ITO, IAC levied penalty under section 274(2) on 12-7-1971-Whether IAC ceased to have jurisdiction to impose penalty in view of amendment coming into force on 1-4-1971-Held, on facts, no-Whether quantum of penalty imposable was equal to concealed income in accordance with amended section 271(1)(c)( iii) as it stood on 1-4-1968-Held, yes Facts For the assessment year 1965-66, the assessee filed two returns : first return on 9-8-1968 declaring salary income at Rs. 600 and another return on 12-8-1968 showing nil income. The ITO made the assessment on 6-8-1969 at Rs. 11,700 on the ground that the assessee was a partner in the firm. On appeal, the assessee's income from the firm was reduced to Rs. 8,150. By an order, dated 12-7-1971, the IAC acting under section 274(2), imposed a penalty of Rs. 9,000 under section 271(1)(c)( iii) [as amended with effect from 1-4-1968]. On further appeal, the Tribunal held (i) that, after amendment of section 274(2) with effect from 1-4-1971, the IAC ceased to have jurisdiction to impose penalty in cases where concealed income was less than Rs. 25,000 ; and (ii) that the quantum of penalty should be determined in accordance with section 271(1)(c)(iii ) as it stood in the relevant assessment year and the amendment made with effect from 1-4-1968 was not applicable. On reference: Held 1. Duty to disclose particulars of income arises when the assessee furnishes his return under section 139(1) . If the assessee conceals the particulars of his income in that return, he incurs the penalty under section 271(1)(c) and the quantum of penalty must depend upon the law in force when the penalty is incurred. In the instant case, the assessee filed his return on 9-8-1968. It is the substantive law existing…

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