Retrospective application of tax penalty proviso rejected for a pre-1991 default under the Income-tax Act.

The newly inserted proviso to section 272A(2) of the Income-tax Act, 1961, introduced by the Finance (No. 2) Act, 1991 with effect from 1 October 1991, did not apply to a default relating to assessment year 1989-90 because no express retrospective operation was provided. Section 272A(2) was treated as a charging provision, not a merely procedural one, so it could not be applied to an earlier failure to file the return due by 30 April 1989. The Tribunal erred in applying the proviso to the pre-1991 default.

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Issues: Whether the newly inserted proviso to section 272A(2) of the Income-tax Act, 1961, inserted by the Finance (No. 2) Act, 1991 with effect from 1 October 1991, applied to a default relating to assessment year 1989-90.

Analysis: The default concerned the requirement to file the return by 30 April 1989 for the period ending 31 March 1989. The proviso introduced in 1991 was not given retrospective effect, and in the absence of any such express retrospective operation it could not govern an earlier default. Section 272A(2) was treated as a charging provision and not a mere procedural provision, so the Tribunal erred in applying it to a pre-1991 default.

Conclusion: The proviso did not apply to the assessee's default for assessment year 1989-90.

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