Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1965-66 - Whether wrongful act of concealment of income is committed on date on which return is filed and penalty for such wrongful act is liable to be imposed in accordance with law in force on date of filing of such return - Held, yes FACTS The return of the assessee-firm for relevant assessment year was field on 31-12-1965 which was purported to have been signed by 'T' even though he died much earlier. Another return was submitted on 23-1-1969, disclosing certain total income which was duly signed by one 'A', another partner of the assessee-firm. The ITO, on the basis of the seized books of accounts and vouchers which disclosed different figures of sales, computed the total sales of the assessee and adopted a net profit rate of 5 per cent thereon. After completion of the assessment, the ITO initiated penalty proceedings and referred the same to the IAC. The IAC held that the assessee was guilty of concealment of income and imposed a penalty. On appeal, the Tribunal, held that the assessee was guilty of concealment under section 271(1)(c). However, as regards the quantum of penalty, the Tribunal held that the amendment to section 271(1), which came into force with effect from 1-4-1968, was not retrospective in its operation and the assessment year involved being 1965-66, the law which was in force in that assessment year would be applicable. Therefore, the quantum of penalty would be with reference to the tax to be avoided in accordance with the law in force in the assessment year 1965-66. On reference : HELD It is well settled that it is the law in force on the date on which the wrongful act is committed which would determine the penalty. The wrongful act of concealment of income or particulars of income would be committed on the date on which the return is filed and the penalty for such wrongful act is liable to be imposed in accordance with the law in force on the date of filing of such return. The law in force in the assessment year in relation to which the penalty is imposable is not relevant. However, the Tribunal took a view that the penalty was…

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