Concessional penalty relief under the Taxation Concessions Order extends to the whole penalty absent any territorial limitation.

Paragraph 3 of the Dadar and Nagar Haveli and Goa, Daman and Diu (Taxation Concessions) Order, 1964 covered the assessee as a person within clause (ii) of sub-paragraph (1), and the factual basis supported that classification. Paragraph 17 was treated as an independent relaxation provision for assessees within paragraph 3, clause (i)(a) or clause (ii), permitting a penalty below the statutory minimum, subject only to the express exclusion for assessment years commencing on or after 1 April 1967. The relaxation was also not confined to penalty referable only to income connected with the former Portuguese territory; it extended to the penalty as a whole, including income received or deemed to be received in Bombay.

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Issues: (i) Whether the assessee fell within the class of persons covered by paragraph 3 of the Dadar and Nagar Haveli and Goa, Daman and Diu (Taxation Concessions) Order, 1964; (ii) Whether paragraph 17 of the said Order entitled the assessee to relaxation from the minimum penalty under the Income-tax Act, 1961; (iii) Whether the relaxation under paragraph 17 extended to penalty computed with reference to income received or deemed to be received in Bombay.

Issue (i): Whether the assessee fell within the class of persons covered by paragraph 3 of the Dadar and Nagar Haveli and Goa, Daman and Diu (Taxation Concessions) Order, 1964.

Analysis: The assessee was held to be a person covered by clause (ii) of sub-paragraph (1) of paragraph 3. The earlier reference in the assessee's own quantum matter had proceeded on that footing, and the factual material supported the same conclusion.

Conclusion: The issue was answered in the affirmative and in favour of the assessee.

Issue (ii): Whether paragraph 17 of the said Order entitled the assessee to relaxation from the minimum penalty under the Income-tax Act, 1961.

Analysis: Paragraph 17 was construed as a standalone relaxation provision for assessees referred to in paragraph 3, clause (i)(a) or clause (ii), authorising the imposition of a penalty below the statutory minimum. The only express restriction was the proviso excluding assessment years commencing on or after 1 April 1967. As the relevant assessment year was 1963-64, the relaxation applied.

Conclusion: The issue was answered in the affirmative and in favour of the assessee.

Issue (iii): Whether the relaxation under paragraph 17 extended to penalty computed with reference to income received or deemed to be received in Bombay.

Analysis: The text of paragraph 17 contained no limitation confining the relaxation to penalty referable only to income arising in the erstwhile Portuguese territory. The court declined to read into the provision a restriction that was not expressed, and held that the relaxation extended to the entire penalty.

Conclusion: The issue was answered in the affirmative and the relaxation was held to apply to the whole penalty, including the portion referable to Bombay income.

Final Conclusion: The reference was disposed of by holding that the assessee was entitled to the concessional penalty regime under paragraph 17, and that the concession was not confined to income connected with the erstwhile Portuguese territory.

Ratio Decidendi: Where a concessional provision authorises relaxation from statutory penalty for a specified class of assessees and contains no express territorial limitation, the court will not read such a restriction into it, and the relaxation applies to the penalty as a whole subject only to the express proviso.

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