Law: Income Tax Act, 1961

Section: 271,274

Income-tax----Penalty---Concealment of income---Jurisdiction to levy penalty---Law applicable to assessment---Effect of amendment of S.274 with effect from 1-4-1971---Return filed in December, 1969, and reassessment completed in July, 1974---Quantum of penalty less than Rs.25,000---Jurisdiction to levy penalty had to be determined with reference to the date of assessment--¬I.T.O. had jurisdiction to levy penalty---Indian Income Tax Act, 1961, Ss.271(c) & 274. Proceedings for imposition of penalty can be initiated only after an assessment order has been made which finds such concealment or furnishing of inaccurate particulars. Who, at this point of time, has the authority to impose the penalty is what is relevant. Whoever this authority may be, he is obliged to impose such penalty as was permissible under the law in that behalf on the date on which the offence of concealment was committed, that is to say on the date of the offending return. For the assessment year 1965-66, the assessee filed a return on December 8, 1969, and the assessment was completed on March 20, 1970. Penalty proceedings for concealment of income in that return were initiated. Subsequently, reassessment proceedings were started and Rs.10,000 was added as income from other sources by reassessment, dated July 22, 1974. Then penalty proceedings for concealment of this sum were initiated under section 271(1)(c) of the Act. The Income-tax Officer himself levied the penalty. The Tribunal cancelled the penalty on the ground that the Income¬tax Officer did not have jurisdiction to levy the penalty. On a reference: Held, that the reassessment was completed on July 22, 1974. Thereafter, penalty proceedings were initiated under section 271(1)(c) of the Act. The penalty was levied at Rs.10,000. Section 274(2) of the Income Tax Act, 1961, was amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971. Under the amended provision, the Income¬tax Officer could levy a penalty of up to Rs.25,000. In the present case, the penalty levied was Rs.10,000. Therefore, the Income-tax Officer was perfectly justified in levying the penalty of Rs.10,000 in the present case. Varkey Chacko v.…

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