Delhi Kanpur Gondia Transport Co. vs Commissioner of Income Tax

R.K. Agrawal, J.—The Income Tax Appellate Tribunal, Allahabad Bench "B", Allahabad, at the instance of the assessee has referred the following question of law u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as ''the Act'') for opinion to this Court:

Whether the Tribunal was legally justified in confirming the penalty u/s 271(1)(c) without taking into consideration the Explanation introduced with effect from 1-4-1976 and specially when the penalty order was passed after 1-4-1976?

The reference relates to the assessment years 1975-76, 1976-77 and 1977-78 in respect of the proceeding for imposition of penalty u/s 271(1)(c) of the Act.

We may mention here that before the Tribunal the applicant in its application filed u/s 256(1), had sought for referring the following three questions of law for opinion to this Court:

Whether on the facts and circumstances of the case, the Tribunal is legally justified in confirming the penalty u/s 271(1)(c)?

Whether in view of the fact that the penalty order has been passed after 1-4-1976 and the Explanation being the rule of evidence, the amended Explanation introduced with effect from 1-4-1976 would apply and accordingly the Tribunal should have considered the Explanation introduced with effect from 1-4-1976?

Whether on the facts and circumstances, the view of the Tribunal that the assessee has deliberately concealed the income, is legally correct?

The Tribunal had only referred the aforementioned question which is a modified form of question No. 2. The other two questions have not been referred.

We have been informed by Sri Ashok Bhatnagar, learned Counsel for the applicant, that he has no information as to whether any application u/s 256(2) of the Act has been filed before this Court requiring the Tribunal to refer the remaining two questions also. We, therefore, proceed to consider the question referred to us.

Briefly stated, the facts giving rise to the present reference are as follows:

The assessee is a partnership firm and was engaged in the business of transportation and forwarding agency. It had filed the return of income for all the three years. A search and seizure had taken place at the Kanpur office as well as Lucknow office on 7-9-1976 where certain documents, namely delivery statements, delivery books, rough cash book etc., were found and seized. During the assessment, it was found that some of the delivery statements were not entered in the cash book and, therefore, some additions were made in the assessment of all the three years. The proceeding for penalty for concealment of income was initiated and after hearing the applicant, the Assessing Officer imposed the penalty which was affirmed by the Commissioner of Income Tax (Appeals) and the Tribunal. Before the Tribunal, it was the case of the assessee applicant that the Explanation to Section 271(1)(c) of the Act, as was inserted by the Finance Act, 1964, with effect from 1-4-1964, which related to the assessment year 1975-76, would be applicable to the case. According to the assessee, the return was revised on 13-3-1976 in which the income was shown at Rs. 3,81,500 and as the returned income was not more than 80 per cent of the assessed income, the onus, as placed in the Explanation to Section 271 of the Act, was not applicable. The Department was to establish that there has been conscious and deliberate concealment of the income on the part of the assessee. Specific submission of the learned Authorised Representative of the assessee before the Tribunal has been noted in paragraph 16 of the order of the Tribunal. Thus, it was the case of the assessee before the Tribunal that the Explanation, as it stood during the assessment year 1975-76 and as was amended by the Finance Act, 1964, would apply. That being the position, the question referred does not arise as at the time of the filing of the application before the Tribunal, a different stand has been taken, which we cannot permit.

Sri Ashok Bhatnagar, learned counsel, has invited the attention to paragraph 15 of the order of the Tribunal wherein it has been stated that before the Tribunal it was contended on behalf of the assessee that for the purpose of imposing of penalty, the law prevailing on the date, when the satisfaction has been recorded by the Income Tax Officer that the income has been concealed by the assessee, should be applied. This argument before the Tribunal related to the substantive law for imposition of penalty. That being the situation, in view of the decision of the Apex Court in the case of Brij Mohan Vs. Commissioner of Income Tax , New Delhi, , the law as applicable on the date of the filing of the return when concealment had taken place, has to be applied.

For the assessment years 1976-77 and 1977-78, there is no dispute that the Explanation, as amended on 1-4-1976, would be applicable.

The question, referred to us, is, therefore, answered in the affirmative, i.e., in favour of the revenue and against the assessee. There shall be no order as to costs.