COMMISSIONER OF INCOME TAX BHOPAL Vs. TAWARFE MOTILAL

JUDGEMENT

(1.) The only point raised before the High court by learned counsel for the assessee (the respondent before us) was that S. 68 of the income Tax Act, 1961 was attracted by reason of S. 297 (2 (d) (ii) of that Act and that therefore, the penalty imposed could not be levied for the assessment year 1958-59. It was contended that although Section 297 (2 (d) (ii) of the Act permitted the application of the provisions of the income Tax Act, 1961, S. 68 must be deemed to be a procedural provision and therefore, the application of S. 68 invalidated the imposition of penalties for the aforesaid assessment year. In this appeal, learned counsel for the appellant contends that the view taken by the high court is erroneous and S. 68 of the Income Tax Act, 1961 must be regarded as a substantive provision and not a procedural provision. Reliance has been placed by learned counsel for the appellant on damodar Hansraj v. Commissioner of Income Tax, Bhogilal Vlrchand v. Commissioner of Income Tax, commissioner OF INCOME TAX v. Dharamchand Anandkumar, commissioner OF INCOME TAX v. R. Dalmia and commissioner OF INCOME TAX v. Bihar Cotton Mills ltd. We are in agreement with the declaration of law made by the High courts in these cases and we hold that S. 68 of the Income Tax Act must be regarded as a substantive provision. That being so, S. 68 could not be invoked and therefore, this appeal must be allowed. The appeal is allowed, the judgment of the High court dated 30/08/1974 is set aside and the answer returned by the High court to the second question referred to is reversed. The question is answered in the affirmative in favour of the revenue and against the assessee.

(2.) The appeal is disposed of accordingly. There is no order as to costs.