COMMISSIONER OF INCOME TAX Vs. MANILAL TRIBHUWANDAS

JUDGEMENT

(1.) THIS is an application under S. 256(2) of the IT Act, 1961 (hereinafter referred to as "the Act").

(2.) THE material facts giving rise to this application, briefly, are as follows : The assessee is a registered firm deriving income from Kirana, Ciarettes, etc. The assessment year in question is 1965-66. The return of income for this year initially was filed on 31st Dec., 1965 showing income of Rs. 17,677. The return was purported to have been signed by one Tribhuwandas. Thereafter another return of income was filed on 23rd Jan., 1969 disclosing a total income of Rs. 14,634. This return was signed by one Ambalal, another partner of the firm. The ITO, while framing assessment, found that the assessee had inflated its purchases in order to show less profit. The ITO, therefore, initiated penalty proceedings against the assessee and as the minimum penalty impossible under the Act exceeded Rs. 1,000, the ITO referred to matter to the IAC. The IAC found that the assessee was guilty of concealment of income and he accordingly imposed a penalty of Rs. 6,500. On appeal, the Tribunal held that the quantum of penalty would have to be determined in accordance with the law in force in the asst. yr. 1965-66.

(3.) On a reference made at the instance of the Department the High Court held that the Tribunal had not recorded any finding on the question as to when the wrongful Act was committed by the assessee and that the said question will have to be decided by the Tribunal. The Tribunal thereafter held that the return filed by the assessee on 31st Dec., 1965 was a valid return, that it was so treated by the ITO and that the quantum of penalty would have to be calculated on the basis of the law in force on 31st Dec., 1965 when the original return was filed by the assessee. Aggrieved by that order, the Department submitted an application for making a reference but that application was rejected by the Tribunal. Hence, the Department has filed this application under S. 256(2) of the Act.