Shantilal Gadia vs Commissioner of Income Tax

Sohani, J.—By this reference u/s 256(1) of the T.T. Act, 1961 (hereinafter ieferred to as " the Act") the Income Tax Appellate Tribunal, Indore Bench, has referred the following questions of law to this court for its opinion :

"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in upholding the quantum of penalty levied by the ITO on the basis of Jaw applicable u/s 271(1)(c) prior to its amendment on April 1, 1976 ?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the default of concealment of income from contract receipts had been committed at the time the original returns were filed ? "

The material facts giving rise to this reference are as follows :

The assessee is assessed in the status of an individual. For the assessment years 1974-75 and 1975-76 the assessee filed returns but did not disclose his contract receipts from the public works department. On the basis of information received, the ITO issued notices u/s 148 of the Act. The assessee filed revised returns and the ITO after passing the orders of reassessment initiated penalty proceedings u/s 271(1)(c) of the Act. After taking into consideration the explanation of the assessee, the ITO held that the assessee was guilty of concealment and accordingly levied penalty of Rs. 15,000 for the assessment year 1974-75 and Rs. 20,000 for the assessment year 1975-76. On appeal the AAC reduced the amount of penalty. On further appeal, the Tribunal confirmed the order passed by the AAC. Aggrieved by that order the assessee sought a reference and it is at the instance of the assessee that the aforesaid questions of law have been referred to this court for its opinion.

It is now well-settled that when penalty is imposed for the concealment of particulars of income it is the law in force on the date when the concealment takes place which is relevant [See Brij Mohan Vs. Commissioner of Income Tax , New Delhi, ]. The original returns in which the assessee had concealed his contract receipts were filed by the assessee prior to April 1, 1976. Under these circumstances the Tribunal was justified in law in holding that the law applicable to the facts of the case was that which was in force prior to the amendment of Section 271(1)(c) of the Act, which came into force on April 1, 1976.

As regards the second question, the assessee had failed to disclose the amount of contract receipts in the original returns filed by the assessee. The default of concealment bad, therefore, taken place when the original returns were filed. The Tribunal was, therefore justified in law in holding that the default of concealment of income from contract receipts was committed at the time of filing the original return.

Our answers to the questions referred to this court are, therefore, in the affirmative and against the assessee.

In the circumstances of the case, parties shall bear their own costs of this reference.