Concealment penalty under the statutory Explanation to section 271(1) applies when the return is filed after its commencement.

Where a return was filed after the Explanation to section 271(1) of the Income-tax Act, 1961 came into force, concealment penalty was governed by that statutory Explanation and not by the earlier rule in Anwar Ali. The Delhi HC noted that later Supreme Court authority in Jeevan Lal Sah had clarified that Anwar Ali was no longer good law in such cases. On that basis, the Tribunal was held not legally correct in cancelling the penalty, and the reference was answered against the assessee.

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Issues: (i) Whether the Tribunal was correct in cancelling the penalty levied under section 271(1)(c) of the Income-tax Act, 1961. (ii) Whether the principle in Anwar Ali continued to apply despite the Explanation to section 271(1), where the return was filed after the Explanation came into force.

Issue (i): Cancellation of penalty depended on the applicability of the statutory Explanation to the concealment penalty provision and the effect of the return filed in response to notice under section 148.

Analysis: The assessment year in question was governed by the Income-tax Act, 1961, and the return was filed after the insertion of the Explanation to section 271(1). In that situation, the statutory Explanation governed the penalty proceedings. The later decision of the Supreme Court in Jeevan Lal Sah had clarified that the rule stated in Anwar Ali was no longer good law in such cases.

Conclusion: The Tribunal was not legally correct in cancelling the penalty, and the answer to this issue is against the assessee.

Issue (ii): Whether the principle in Anwar Ali applied notwithstanding the Explanation to section 271(1).

Analysis: Since the return was filed after the Explanation had come into force, the case was controlled by the amended statutory position rather than by the earlier rule in Anwar Ali.

Conclusion: The principle in Anwar Ali did not apply, and this issue is answered in favour of the Revenue.

Final Conclusion: The reference was answered against the assessee, and the Revenue succeeded on the referred questions.

Ratio Decidendi: Where a return is filed after the Explanation to section 271(1) of the Income-tax Act, 1961 has come into force, penalty for concealment is governed by the statutory Explanation and not by the earlier rule in Anwar Ali.

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