COMMISSIONER OF INCOME TAX Vs. R V DONDE

JUDGEMENT

(1.) THE following question has been referred to us for determination in this reference and the said question reads as follows :

(2.) THE assessment year with which we are concerned is the asst. year 1961 62, the corresponding accounting period being the year ending March 31, 1961. Pursuant to a notice issued by the ITO under S. 148 of the IT Act, 1961, the assessee filed a "nil" return of income. The business of the assessee was manufacture of plastic and wax models which were purchased by the Government and certain other institutions for advertisement for the purposes of family planning. On investigation of facts, the ITO estimated that the assessee had a turnover of Rs. 60,000 and estimated the total income of the assessee at Rs. 21,000. On January 18, 1969, the ITO made the assessment as aforesaid under S. 143(3) of the IT Act, 1961. On an appeal by the assessee, the AAC reduced the estimate of profits to 30 per cent. and determined the total income at Rs. 17,091. The IAC levied a penalty on the assessee of Rs. 17,091 under the provisions of S. 271(1)(c) of the IT Act, 1961, r/w the Explanation thereto. It is common ground that up to March 31, 1968, the minimum quantum of penalty which could be levied in a case of concealment of particulars of income by an assessee falling within S. 271(1)(c) was 20 per cent of the tax sought to be avoided. From April 1, 1968, cl. (iii) of Sub S. (1) of S. 271 was amended by the Finance Act, 1968, and the minimum penalty was fixed at not less than the amount of concealment. The IAC levied penalty as aforesaid under the provisions of S. 271(1)(c) as amended from April 1, 1968. On appeal by the assessee to the Tribunal, the Tribunal upheld the penalty but reduced the quantum of penalty to Rs. 1,500 on the ground that the minimum penalty was to be calculated according to the provisions of cl. (c) of Sub S. (1) of S. 271 as they stood before April 1, 1968. It is from this decision of the Tribunal that the aforesaid question has been referred to us. It is not disputed before us that in view of the decision of the Supreme Court in Brij Mohan vs. CIT (1979) 12 CTR (SC) 1 : (1979) 120 ITR 1 (SC), the penalty in this case will have to be calculated in accordance with the provisions of the said cl. (c) as amended w.e.f. April 1, 1968. It may be mentioned that by the said decision, the Supreme Court held that when penalty is imposed for the concealment of particulars of income, it is the law ruling at the date on which the act of concealment takes place which is relevant. It is wholly immaterial that the income concealed was to be assessed in relation to the assessment year in the past. In view of what we have pointed out above, the question referred to us will have to be answered as follows :

(3.) CONSIDERING all the facts and circumstances of the case, there will be no order as to the costs of this reference.