Retrospective penalty provisions cannot be applied to prior transactions unless the statute clearly allows it.

A later amendment inserting a specific penalty provision was held not to apply to transactions completed before its insertion. The Court followed its earlier view that penal liability cannot be imposed retrospectively unless the statute clearly authorises such application. On that basis, the penalty was held unsustainable for the prior period, and the issue was decided in favour of the assessee and against the Revenue.

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Issues: Whether penalty could be imposed for an offence committed before the insertion of the specific penal provision.

Analysis: The appeal turned on the effect of a later amendment inserting the specific penalty clause. The transactions had occurred prior to the amendment, and the Court followed its earlier view that where the relevant period did not attract penal liability, penalty cannot be levied by relying on a provision brought into force later. Penal provisions are not applied retrospectively unless the statute clearly so provides.

Conclusion: The penalty was not sustainable, and the issue was decided against the Revenue and in favour of the assessee.

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