Reassessment penalty concealment is tested against the original return, with penalty law applied as on the date of concealment.

In reassessment-based penalty proceedings, concealment is judged by reference to the original return, not the return filed in response to notice under section 148. Because the assessee had omitted income from two properties in the original returns, the later disclosure in reassessment did not wipe out the earlier non-disclosure, and the issue was decided against the assessee. The penalty under section 271(1)(c) was also held to be governed by the law in force on the date of the original concealment, so it had to be recomputed with reference to the statutory minimum then applicable. The penalty deletions were therefore set aside in substance and the penalties directed to be recalculated accordingly.

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Issues: (i) Whether concealment, in the context of reassessment, is to be determined with reference to the original return and not the return filed in response to notice under section 148; (ii) Whether penalty under section 271(1)(c) was to be quantified according to the law in force on the date of the original concealment.

Issue (i): Whether concealment, in the context of reassessment, is to be determined with reference to the original return and not the return filed in response to notice under section 148.

Analysis: The assessee had failed to disclose income from two properties in the original returns for the relevant assessment years. Although the income was later disclosed in the reassessment returns, concealment in reassessment proceedings had to be judged by reference to the original returns. The later disclosure did not erase the earlier non-disclosure for the years in question.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether penalty under section 271(1)(c) was to be quantified according to the law in force on the date of the original concealment.

Analysis: The concealment was held to have occurred when the original returns were filed. Therefore, the penalty had to be governed by the law applicable on that date, and not by the law prevailing when the reassessment returns were later filed under section 148. On that basis, the minimum penalty exigible was taken at twenty per cent of the tax sought to be evaded.

Conclusion: The issue was decided in favour of the Revenue, subject to limiting the penalty to the statutory minimum then applicable.

Final Conclusion: The penalty deletions were set aside in substance, but the penalties were directed to be recomputed at the minimum rate applicable on the date of the original concealment.

Ratio Decidendi: In reassessment-based penalty proceedings, concealment is judged with reference to the original return, and the applicable penalty law is the law in force on the date when the concealment was committed.

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