SETH LUNIDARAM TIKAMDAS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is the same in all the above cases and, therefore, they are dealt with together The assessee is a firm carrying on banking business. The original assessments for the assessment years 1954 -55 to 1960 -61 were completed accepting the returns filed by the assessee. Subsequently it came to light that the assessee had been indulging in issuing bogus hawalas to some of the traders which had not been taken note of in the assessments, and that, as such, there had been under -assessments. On January 12, 1967, and February 20, 1969, the assessee filed settlement petitions and on the basis of those petitions, the assessment for those seven years had been reopened, and reassessments had been made. As a result of the reassessments, additions have been made to the income as originally assessed

(2.) THEREAFTER , proceedings were initiated by the ITO for levy of penalty under s. 271(1)(c) of the I.T. Act, 1961, and as the minimum penalty imposable exceeded Rs. 1, 000, the cases were referred to the IAC. The IAC held that the appellant is guilty of concealment of income by giving inaccurate particulars of income in its original returns and, in that view, imposed minimum penalty under s. 271(1)(c) for all the assessment years. Aggrieved by the said order imposing penalty, the assessee went in appeal before the Income -tax Appellate Tribunal. Before the Tribunal the assessee contended that the offence of concealment is with reference to the original returns and as the original assessments were completed before April, 1, 1962, the date of commencement of the 1961 Act, the penalty proceedings must have been initiated and penalty levied under the provisions of the 1922 Act, in view of s. 297(2)(f). The stand taken by the revenue before the Tribunal, however, was that as the reassessment proceedings were completed after April 1, 1962, the penalty proceedings have been rightly initiated and penalty levied under the I.T. Act, 1961, in view of s. 297(2)(g)Dealing with the above rival contentions, the Tribunal held that as the reassessment proceedings were completed after April 1, 1962, the original default committed by an assessee in not filing a return or filing a return giving inaccurate particulars of income can be penalised under the 1961 Act, and that the rate of penalty to be imposed will also be at the rate prescribed in the 1961 Act, under s. 271(1)(c) in view of s. 297(2)(g) of the Act. The Tribunal specifically rejected the plea of the assessee that as the original assessments had been made long before April 1, 1962, the date of coming into force of the 1961 Act, s.297(2)(f) alone will apply, and not s. 297(2)(g), on the ground that though the original assessrment had been completed before April 1, 1962, the concealment of income from the original returns filed by the assessee was detected only at the time of the reassessment proceedings, and, therefore, the material date will be the date when the reassessments come to be made for the purpose of determining the application of s. 297(2)(f) and (g). Having held that s. 297(2)(g) has rightly been invoked to initiate proceedings and impose penalty under s. 271(1)(c) in the case of the assessee, the Tribunal felt that the reassessment proceedings made after April 1, 1962, had resulted in an unfortunate situation in which the assessee had to pay a higher penalty under s. 271(1)(c) of the 1961 Act than the one leviable under s. 28(1) of the 1922 Act. Taking note of this hardship, the Tribunal satisfied its judicial conscience by expressing a pious hope that

(3.) THE observations extracted above will indicate that the words of the statute have to be given their full scope and effect, and that if the words of the statute are of sufficient amplitude to cover the infringements that took place before the amendment, their operation cannot be curtailed or restricted so as to apply only to infringements after the amendment on the ground that an amendment is normally prospective. Therefore, the decision in that case does not support the case of the assessee in this case for there was no provision like s. 297(2)(g) of the I.T. Act, in the G.T. Act, and this has been clearly pointed out in the judgment and in fact it is only on that basis that the earlier decision of the Supreme Court in Jain Brothers v. Union of India has been distinguishedCWT v. Sundarapandian arose under the W.T. Act, wherein the decision in CGT v. C. Muthukumaraswamy Mudaliar has been followed. There also there was a change in the law brought about by an amendment to the W.T. Act. A question arose whether the amended provision under s. 18(1)(a) will apply to a contravention that had taken place before the amendment. The Division Bench observed that the penalty has to be imposed as per the law in force on the date of the contravention or commission of the default, and not on the basis of the amended law which came into force after the commission of the default. While amending s. 18(1)(a) by cl. 24(c) of the Finance Act, 1969, the Legislature has not introduced a provision similar to the one contained in s. 297(2)(g) of the I.T. Act. Therefore, the court had no occasion to deal with the scope and ambit of s. 297(2)(f) or (g) of the Act. In an unreported judgment of another Division Bench of this court in T.C. No. 255 of 1975 the decisions in CGT v. C. Muthukumaraswamy Mudaliar and CWT v. Sundarapandian had been followed in respect of proceedings for the levy of penalty under the W.T. Act. In Addl. CIT v. Medisetty Ramarao wherein the principle laid dow by this court in CGT v. C. Muthukumaraswamy Mudaliar has been applied to a case of levy of penalty under the I.T. Act. In that case, the assessee filed a return under the I.T. Act, 1961, for the assessment years 1965 -66, 1966 -67 and 1967 -68 on June 30, 1965, August 1, 1966, and September 4, 1967, repectively, and the assessments have been completed on the basis of the returns prior to April 1, 1968. Subsequently the assessee was called upon to file revised returns and the revised returns filed by the assessee disclosed certain concealed income. This led to reassessments which were completed on October 22, 1970, and for the assessee's deliberate concealment of the income penalty was levied under s. 271 (1)(c). The levy of penalty was challenged before the Tribunal and the Tribunal held on the question of quantum that the law as it stood prior to April 1, 1968, alone is applicable as the original returns concealing income were filed prior to April 1, 1968. The learned judges, after dealing with the relevant decisions on the point, held that as the concealment of income took place on the date when the return was filed by the assessee the law applicable for levy of penalty for the concealment of income under s. 271 (1)(c) is the law as it stood when the return was filed by such assessee, and, therefore, the penalty has to be levied only on the basis of the law that was in force on the date of the filing of the returns. Having regard to the facts in that case, the court had no occasion to consider the scope of s. 297(2)(f) or (g). That was a case where even the original returns were filed long after April 1, 1962, when the 1961 Act came into force. Therefore, the question of applicability of s. 297(2) did not come up for consideration. The only question that arose in that case was whether the law as on the date of the commission of the contravention of the particular provision of the statute is to be applied, or the law which came into force at a later date when the reassessments were made, is to apply. The court naturally applied the general principle of law that a penalty to be levied in respect of an offence should be as per the law which was in force on the date when the commission of the offence and not the law which was in force on the date when the offender was actually, punished for the offence. In that case also the decision of the Supreme Court in Jain Brothers v. Union of India has been distinguished on the ground that the decision in that case was with reference to s.(2)(g) of the I.T. ActCIT v. Data Ram Satpal is also on facts similar to the case in Addl. CIT v. Medisetty Ramarao In that case also returns had been filed before April 1, 1964, and the only question was whether the unamended s. 271(l)(c) before its amendment by the Finance Act of 1964, on April 1, 1964, was applicable or whether the said section as amended was to be applied in respect of concealment of income arising out of the returns filed by the assessee. The Division Bench of the Allahabad High Court held that