Commissioner of Income Tax vs Popular Medical Hall

In this case, the Income Tax Appellate Tribunal, Patna Bench, Patna, has referred the following questions of law for the opinion of this court in relation to the assessment year 1974-75 :

" (1) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has erred in holding that the penalty should be levied by applying the provisions of Section 271(1)(c)(iii) of the Income Tax Act, 1961, as amended with effect from April 1, 1976 ?

(2) Whether the date of decision of the authority to initiate penalty proceeding would govern the relevant law applicable for quantification of penalty or the law ruling at the date of filing the return on which date the Act of concealment took place ?"

The short facts are that the assessee filed a return of income for the previous year relevant to the assessment year 1974-75 on September 13, 1974. During the course of assessment proceedings, the Assessing Officer found that the assessee has suppressed its income to the tune of Rs. 18,822. Therefore, while making the assessment, the Assessing Officer added the said amount towards the income of the assessee. The Assessing Officer thereafter initiated penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the said Act"). With respect to the aforesaid sum of Rs. 18,822, upon conclusion of the penalty proceedings the original authority imposed minimum penalty of Rs. 18,822 which was equal to the income concealed applying the law prevailing on the date of filing of the return. The appellate authority confirmed the order passed by the original authority imposing the penalty.

On further appeal being taken, the Tribunal modified the order imposing penalty and directed that the penalty shall be levied on the basis of tax upon the concealed income according to the law which was amended with effect from April 1, 1976, as the penalty proceeding was initiated after April 1, 1976. Thereafter, upon an application being filed by the Revenue u/s 256(1) of the said Act, the Tribunal referred the aforesaid questions of law for the opinion of this court.

Learned senior standing counsel appearing on behalf of the Revenue submitted that the Tribunal has modified the order by placing reliance upon a Bench decision of this court in the case of Commissioner of Income Tax Vs. M.N. Chatterjee, , in which, following the decision of the Supreme Court in the case of Maya Rani Punj Vs. Commissioner of Income Tax, Delhi, , and that of a Full Bench of this court in the case of COMMISSIONER OF WEALTH-TAX Vs. DALIP KUMAR WORAH AND ANOTHER., , it has been laid down that in a case where there was concealment of income in the return, the law which was in force on the date of initiation of penalty proceedings shall govern the same. It appears that in none of the aforesaid two cases, it was a case of concealment of income but it was a case of late filing of the return. Therefore, those decisions were not applicable while deciding the case of concealment.

Learned counsel submitted that prior to the decision rendered by this court in the case of Commissioner of Income Tax Vs. M.N. Chatterjee, , the Supreme Court had already decided the matter in the case of Brij Mohan Vs. Commissioner of Income Tax , New Delhi, . That case related to concealment of income. In that case it was categorically laid down that in the case of concealment of income, the law which was in force on the date of filing of the return would be applicable as the concealment of income has been made on the date inaccurate particulars were furnished in the return of income. In the case of Commissioner of Income Tax Vs. M.N. Chatterjee, , the aforesaid decision of the Supreme Court in Brij Mohan Vs. Commissioner of Income Tax , New Delhi, , has not at all been referred to. Therefore, the ratio of the decision in the case of Commissioner of Income Tax Vs. M.N. Chatterjee, , laying down contrary law is per incuriam and consequently the same is not binding upon this Bench.

In the present case, the return was undisputedly filed on September 13, 1974, and the amended law came into force with effect from April 1, 1976. Therefore, we have no difficulty in holding that for calculating penalty, the law which was in force prior to April 1, 1976, shall govern the present one and the Tribunal was not justified in taking the contrary view. Accordingly, the reference is answered in favour of the Revenue and against the assessee.

Let a copy of this order be communicated to the Income Tax Appellate Tribunal, Patna Bench, Patna.