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Section 271(1)(c) of the Income-tax Act, 1961 [as amended by the finance act, 1968 with effect from 1-04-1968] Penalty For concealment of income Assessment year 1963-64 - Assessee filed on 21-04-1967 original return under section 139(1) and repeated same income in second return filed on 19-02-1969 pursuant to a notice under section 148 - ITO included in taxable income cash credits aggregating Rs. 64,075 - IAC levied penalty of Rs. 38,592 on 15-03-1971 with reference to second return under section 271(1)(c)(iii) as operative from 1-04-1968 Assessed income partly reduced by tribunal in appeal Tribunal further reduced penalty holding that pre-amended provisions before 1-04-1968 would apply qua original return - Whether tribunal was right in law - Held, yes Facts For the assessment year 1963-64, the assessee-firm filed on 21-04-1967 its original return under section 139(1). In pursuance of ITO's notice under section 148, it filed on 19-02-1969 a verbatim copy of the original return. The ITO computed its total income after including the following amounts as cash credits: Rupees ACMR a.Principal 42,000 b.Interest 2,075 44,075 20,000 BMS 64,075 On appeal, the AAC reduced the addition of the principal amount in the account of ACMR to Rs. 17,000 but maintained other additions. For this concealment, the IAC imposed on 15-03-1971 a penalty of Rs. 38,592 under the provisions of section 271(1)(c)( iii), as operative on 1-04-1968, assuming the commission of the offence in question on 19-02-1969 when the second return was filed. On appeal, the Tribunal reduced the amount of penalty on the grounds that (i) no penalty was imposable qua cash credit of Rs. 17,000 in the account of ACMR, which amount was deleted by it on quantum appeal; and (ii ) the penalty provisions of section 271(1)(c)( iii), as existing prior to 1-04-1968, were applicable qua the second addition of Rs. 20,000 as the offence of concealment was committed when the original return of income had been filed on 21-04-1967. On reference by the revenue: Held By majority per G.C. Mittal, S.S Sandhawalia, CJ. concurring and Tewatia, J. dissenting. 1. The provisions of section 271 (1)( c) were amended twice - one with…

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