Supreme Court: Penalty based on law at filing, not initiation. Appeal allowed, no costs.

The Supreme Court allowed the appeal, ruling that the penalty for concealment or misstatement should be based on the law in force at the time of filing the return, not when the proceedings were initiated by the Income-tax Officer. The decision was made following the precedent set in CIT v. Onkar Saran and Sons [1992] 195 ITR 1. The appeal was allowed with no costs.

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The Supreme Court allowed the appeal based on the decision in CIT v. Onkar Saran and Sons [1992] 195 ITR 1. The High Court held that the penalty should be based on the law in force when the Income-tax Officer initiated proceedings under section 271(1)(c). However, the Supreme Court ruled that the penalty should be calculated based on the law in force at the time of filing the return containing concealment or misstatement. The appeal was allowed with no costs.

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