1980 (2) TMI 13 - HC - Income Tax

Court rules penalty calculation under unamended provision for assessee concealing income

The court ruled in favor of the assessee, determining that the penalty for concealing income should be calculated under the unamended provision of section ... Penalty Issues:1. Whether the penalty for concealing income should be as per the amended provisions of section 271(1)(iii) brought into effect from April 1, 1968Rs.2. Whether the assessee committed multiple offenses of concealment or a single offense based on the facts of the caseRs.Analysis:Issue 1: The case involved determining the penalty for concealing income as per the amended provisions of section 271(1)(iii) of the Income Tax Act. The firm, constituted with fifteen partners, had filed multiple returns for the assessment year 1965-66, showing varying incomes. The Income Tax Officer (ITO) initiated penalty proceedings against the assessee for concealing income in the original and revised returns. The Appellate Tribunal and the Appellate Authority affirmed the concealment but differed on the penalty provision to be applied. The Tribunal held that the penalty should be computed under the unamended provision of section 271(1)(c) as the offense of concealment occurred on September 30, 1965, before the amendment came into effect. The court agreed with the Tribunal's interpretation and directed the penalty to be calculated under the unamended provision.Issue 2: The question arose whether the assessee committed multiple offenses of concealment or a single offense based on the facts of the case. The Tribunal and the court concluded that there was a single offense of concealment committed on September 30, 1965, when the original and revised returns were filed with identical facts. Citing precedents, the court emphasized that the law ruling on the date of the wrongful act determines the penalty. The court highlighted the discretionary nature of imposing penalties, requiring a quasi-criminal proceeding and consideration of relevant circumstances. In this case, the firm was found guilty of concealment on a single count, leading to the penalty being imposed under the unamended provision of section 271(1)(c).In conclusion, the court ruled in favor of the assessee, answering the question in the negative against the revenue. The judgment clarified the application of penalty provisions based on the date of the offense and emphasized the discretionary nature of imposing penalties in quasi-criminal proceedings.