1979 (8) TMI 2

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....by the Income-tax Appellate Tribunal under s. 257 of the I. T. Act. The assessee is a partner in two firms, Messrs. Hindustan Pottery Agency and Messrs. New Crockery House. He filed a return of his total income for the assessment year 1964-65 on April 24, 1968. He disclosed an income of Rs. 460 from his share in the profits of Messrs. Hindustan Pottery Agency. He did not disclose the income from his share in Messrs. New Crockery House. In the course of the assessment proceedings, the ITO found that the assessee had received income from Messrs. New Crockery House also. Because of non-compliance by the assessee with a notice issued under s. 143(2) of the Act, the ITO made a best judgment assessment under s. 144 of the Act on a total income....

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.... Income Tax Reference No. 45 of 1971, decided on April 25, 1972 (CIT v. Bhan Singh Boota Singh [1974] 95 ITR 562) which had followed Saeed Ahmed v. IAC[1971] 79 ITR 28 decided by the Allahabad High Court. In the circumstances, it made the present reference directly to this court on the following question of law : " Whether the Tribunal was, in law, right in sustaining the penalty of Rs. 2,955 by applying the provisions of section 271(1)(c)(iii) of the Income- tax Act, 1961, as amended with effect from April 1, 1968 ? " Section 271 of the Income-tax Act provides for penalties in certain cases. Clause (c) of sub-s. (1) of s. 271 speaks of a case where the ITO is satisfied that a person has concealed the particulars of his income or furn....

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....y the law pertaining to that assessment year. We are unable to accept the contention. In our opinion, the assessment of the total income and, the computation of tax liability is a proceeding which, for that purpose, is governed by entirely different considerations from a proceeding for penalty imposed for concealment of income. And this is so notwithstanding that the income concealed is the income assessed to tax. In the case of the assessment of income and the determination of the consequent tax liability, the relevant law is the law which rules during the assessment year in respect of which the total income is assessed and the tax liability determined. The rate of tax is determined by the relevant Finance Act. In the case of a penalty, ho....