Law:

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Section 273(b) [as it stood prior to 1-6-1978]of the Income-tax Act, 1961 - Penalty - False estimate of or failure to gay advance tax - For assessment year 1976-77 ITO levied penalty on assessee under section 273(b) on 20-3-1979 - Assessee challenged penalty contending that on 20-3-1979 when ITO imposed penalty, section 273(1)(b) and not section 373(b) was there and hence imposition of penalty under section 273(b) was not valid - Whether assessee's objection was valid - Held, no Facts For the assessment year 1976-77, the ITO imposed penalty on the assessee under section 273(b). The penalty order was passed on 20-3-1979. The Tribunal upheld the imposition of penalty. On reference, the assessee contended that at the relevant time when the penalty was levied on 20-3-1979 there was no provision like section 273(b) as following amendments effective from 1-6-1978, section 273(b) had been remembered as section 273(1)(b) and therefore penalty could not be levied. Held The contention that at the time when the order under section 273(b) was passed, the section was numbered as section 273(1)(b) and that section 212(3) was renumbered as section 209A(1) did not affect the power of the ITO to levy penalty. That apart, that the assessment year involved was 1976-77. The law that was applicable for the assessment year 1976-77 is the one that was in force at the beginning of the assessment year, viz., on 1-4-1976. In such circumstances, the ITO was justified in applying the provisions of law as were in force for the assessment year 1976-77 without taking note of the amendments which came into effect from 1-6-1978 even though the order of penalty was passed on 20-3-1979. The ITO's order of levying penalty was, therefore, valid. M.S.N. Murthy for the Respondent. JUDGMENT Anjaneyulu, J. - This is a reference at the instance of the assessee under section 256(1) of the Income-tax Act, 1961 ('the Act). The Tribunal referred the following question for consideration of the Court in connection with the assessment year 1976-77: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the penalty imposed under section 273(b) of the Income-tax…

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