- (1.) IN the matter of penalty for concealment of income, is the law applicable as on the date of the filing of the original return or when a return is filed in pursuance of notice issued to the assessee under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act" ). This is the main point in issue which arises in this reference.
(2.) IN the original return, filed by the assessee on September 14, 1964, it showed a cash credit in its books of a sum of Rs. 20,000 in the name of Gurdit Singh Swaraj Singh. This was taken to be genuine by the Income-tax Officer and the assessment was framed accordingly. Later, the Income-tax Officer received information that this sum of Rs. 20,000 was in fact income of the assessee. Proceedings under Section 147 of the Act were accordingly initiated and a notice under Section 148 of the Act was issued to the assessee on August 28, 1972. In pursuance thereof, the assessee filed its return on April 24, 1973, and the assessment was thereafter reframed by the Income-tax Officer on July 20, 1973, whereby, it was held that the said sum of Rs. 20,000 constituted the assessee's income from undisclosed sources. Penalty proceedings were, thereafter, initiated against the assessee under Section 271 (l) (c) of the Act and a sum of Rs. 20,000 was eventually imposed as penalty upon the assessee. This was, later, upheld in appeal by the Appellate Assistant Commissioner. This order was, however, upset by the Tribunal holding that on the date on which the original return had been filed, that is, September 14, 1964, the Income-tax Officer was, according to law, then in force, only competent to deal with penalty cases where the penalty imposable did not exceed Rs. 1,000. In other words, the Income-tax Officer was not competent to levy penalty in cases where the minimum penalty imposable exceeded Rs. 1,000. It is in this factual background that the following questions of law have been referred for the opinion of this court: " (1) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the levy of penalty is to be regulated by the law as in force at the time of the filing of the original return of income ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that no offence of concealment of income or furnishing inaccurate particulars thereof was committed by the assessee at the time of filing the return of income pursuant to the notice under Section 148 ? (3) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the Income-tax Officer acted without jurisdiction in levying the penalty in this case ?"
(3.) THE answer here is provided by the judgment of the Full Bench of our court in CIT v. Ram Singh Harmohan Singh [1980] 121 ITR 381, where, it was held that the offence of concealment of income attracting the penalty provisions under Section 271 (l) (c) of the Act is committed, when the original return is filed and penalty has thus to be levied on the basis of the law existing at that time. Applying this ratio to the facts here, it is apparent that the penalty could only be imposed as per the law obtaining on September 14, 1964, on which date the Income-tax Officer was not vested with the jurisdiction to deal with cases where a penalty exceeding Rs. 1,000 was imposable. This being so, the Tribunal was clearly right in holding to this effect. All the three questions must thus be answered in the affirmative in favour of the assessee and against the Revenue.;