COMMISSIONER INCOME TAX GUJARAT Vs. HIRALAL MOHANLAL SHAH

JUDGEMENT

(1.) This Reference raises a short but interesting question of law relating to the Construction of secs. 271(1) and 297(2)(g) of the Income-tax Act 1961 (hereinafter referred to as the new Act). The assessee who is assessed in the statuts of an individual returned a total income of Rs. 8 383 for the assessment year 1960-61 the relevant accoUnt year being Samvat Year 2015. The return was admittedly filed by the assessee before 1st April 1962 being the date of commencement of the new Act. The income-tax Officer did not accept the figure of total income returned by the assessee and determined the total income to be Rs. 33 307 by an assessment order made on 24th November 1952 after the commencement of the new Act. The Income-tax Officer was satisfied in the Course of the assessment proceeding that the assessee had concealed particulars of his income or deliberately furnished inaCcurate particulars of such income and he therefore made a note to the following effect at the end of the assessment order:

(2.) Now the order of penalty was made by the inspecting Assistant Commissioner under sec. 274(2) read with sec. 271(1)(c) of the new Act and it is therefore clear that unless sec. 271(1)(c) applies in the present case the order of penalty cannot be sustained. The order of penalty cannot be justified under sec. 28(1) of the old Act since under that provision no penalty could be imposed by an Inspecting Assistant Commissioner and consequently the validity of the order of penalty must depend ultimately on the applicability of sec. 271(1)(c). Could on the facts and circumstances of the case penalty be imposed on the assessee under sec. 271(1)(c)? The question calls for an examination of the relevant provisions of the new Act.

(3.) The new Act came into force on 1st April 1962. Prior to the coming into force of the new Act sec. 28(1) of the old Act provided for imposition of penalty and that section omitting portions immaterial was in the following terms:-