Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1961-62 - Whether penalty leviable under section 271(1)(c) must be according to law prevailing at date on which act of concealment takes place - Held, yes - Whether, therefore, where income concealed related to assessment year 1961-62, but act of concealment took place i.e. incorrect return was filed after amendment of provision of section 271(1)(c) by Finance Act, 1968, penalty was to be levied in accordance with law as it stood amended with effect from 1-4-1968 - Held, yes FACTS For the relevant assessment year, pursuant to a notice issued by the ITO under section 148, the assessee filed a 'nil' return of income. On investigation of facts, the ITO estimated that the assessee had a turnover of Rs 60,000 and estimated the total income of the assessee at Rs. 21,000. On appeal, the AAC reduced the estimate of profits to 30 per cent and determined the total income at Rs. 17,091. The IAC levied a penalty on the assessee at Rs 17,091 under the provisions of section 271(1)(c), as amended by the Finance Act, 1968. On appeal by the assessee, the Tribunal upheld the penalty but reduced the quantum of penalty to Rs. 1,500 on the ground that the minimum penalty was to be calculated according to the provisions of clause (c) of sub-section (1) of section 271 as they stood before 1-4-1968. On reference : HELD In view of the decision of the Supreme Court in Brij Mohan v. CIT [1979] 120 ITR 1, the penalty in the instant case was to be calculated in accordance with the provisions of the said clause (c) as amended with effect from 1-4-1968. By the said decision, the Supreme Court made it clear that when penalty is imposed for the concealment of particulars of income, it is the law ruling at the date on which the act of concealment takes place which is relevant. It is wholly immaterial that the income concealed was to be assessed in relation to the assessment year in the past. In view of the above, the measure of penalty leviable for the relevant assessment year under section 271(1)(c) must be according to the law as it stood amended with effect from 1-4-1968. Note: The case was…

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