Commissioner of Income Tax vs Kanhaiyalal Ghatiwala

In this reference, the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as "the Tribunal"), has referred the following question for the consideration of this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the concealment of income occurred on the date when the original return of income was filed and not on the date when the return of income was filed in response to a notice u/s 148 of the Income Tax Act, 1961, and in directing in that view that the penalty u/s 271(1)(c) should be imposed according to the law existing on the date when the return of income was filed originally and not according to the law existing on the date on which the return of income was filed u/s 148, i.e., the law as amended with effect from April 1, 1968 ?"

We find that the Allahabad High Court in Addl. Commissioner of Income Tax Vs. Mewa Lal Sankatha Prasad, has taken the view that for the purpose of levy of penalty for concealment of income u/s 271(1)(c) of the Income Tax Act, 1961, the law applicable would be that prevailing on the date of the filing of the original return and not the date of the filing of a subsequent return in pursuance of a notice u/s 148 of the Income Tax Act, 1961, and that if the original return was filed prior to April 1, 1968, penalty will have to be calculated under the law as it stood prior to that date, even though the return u/s 148 was filed subsequent to that date. The said view is in consonance with the law laid down by the various High Courts in CIT v. A. Rm. A.L.A. Arunachalam Chettiar AIR 1932 Mad 433 , (1939) 7 ITR 613 COMMISSIONER OF Income Tax, HYDERABAD Vs. ANGARA SATYAM., , M. Ayyasami Nadar and Bros., Colombo Vs. Commissioner of Income Tax, Madras, , Vadilal Ichhachand Vs. Commissioner of Income Tax, Bombay North, Kutch and Saurashtra, Ahmedabad, , Dayabhai Girdharbhai Vs. Commissioner of Income Tax, Madhya Pradesh and Bhandara, Nagpur, and (1952) 22 ITR 339 In Brij Mohan Vs. Commissioner of Income Tax , New Delhi, , the Supreme Court has also laid down that penalty is imposed on account of the commission of a wrongful act and it is the law operating on the date on which the Wrongful act was committed which determines the penalty. In view of the aforesaid decisions, the question referred is answered in the affirmative, i.e., against the Revenue and in favour of the assessee, and it is held that the Tribunal was justified in taking the view which it has taken. The reference is answered accordingly. No order as to costs.