GANGA PRASAD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has referred the following question of law for our opinion :

(2.) THE assessee was a commission agent and a dealer in silver ornaments, in Agra, the business being carried on in the name and style of M/s. Verma Silver Ornaments. For the assessment year 1967-68, a return showing an income of Rs. 5,734 was filed on the 3rd October, 1967. On the 25th May, 1970, a revised return was filed showing an income of Rs. 3,246. In the course of the previous year, assessee's premises had been searched by the Central Excise Department, and certain goods comprising gold, silver, silver ornaments and cash were recovered from the premises. On enquiry being made by the ITO regarding the search it was stated by the assessee that the articles had been sent to him for sale by one Jagdish Prasad, and that out of Rs. 14,325, recovered from the premises, only Rs. 1,325 belonged to him. In the course of the raid, gold biscuits of the value of Rs. 12,000 had also been seized, which according to the assessee was worth Rs. 10,000. THE assessee denied the ownership of the biscuits but later on surrendered the amount of Rs. 10,000, and also agreed to an addition of Rs. 3,000 representing the value of silver ornaments in his possession over and above that which was shown in his books. He then filed another revised return on April 1, 1971, showing his income at Rs. 19,734, which included the sum of Rs. 13,000 surrendered as above. On the basis of this return, the assessment was completed at Rs. 20,000, and proceedings under Section 271(1)(c) were initiated on 30th June, 1971. THE ITO imposed a penalty of Rs. 13,000. An appeal filed against this order failed as also a further appeal to the Tribunal. THEre is no dispute that penalty was exigible. THE only dispute is as to whether the provisions of Section 271(1)(c) as amended from April 1, 1978, would be applicable or the penalty had to be imposed by reference to the law as existing on the date when the assessee filed his original return, i.e., on 3rd October, 1967,

(3.) WE, therefore, following the earlier decisions of this court answer the question in the negative in favour of the assessee, and against the department. The assessee is entitled to its costs, which are assessed at Rs. 200. Counsel fee is assessed at the same figure.