COMMISSIONER OF INCOME TAX Vs. A N TIWARI

JUDGEMENT

(1.) THIS is a reference under s. 256(1) of the IT Act, 1961, referring for our answer the following questions of law :

(2.) THE relevant assessment year is 1965 -66. According to the assessee, he was an employee of the firm, U.P. Saw Mills, whereas, according to the Department, the assessee was a partner in that firm. THE assessee filed a return on 9th August, 1968, declaring an income by way of salary of Rs. 600 from the above firm. He filed another return on 12th August, 1968, declaring therein "nil" income. THE assessment was made on 6th August, 1969, on an income of Rs. 11,700 on the finding that the assesee was a partner in the firm. THE ITO initiated proceedings for imposing penalty and referred the same to the IAC as, according to him, the minimum penalty imposable exceeded Rs. 1,000. THE income of the assessee consisting of income from his share in the firm was reduced in appeal to Rs.8,150.THE IAC by an order dated 12th July,1971,imposed a penalty of Rs. 9,000 on the assessee under s. 271(1)(c) of the Act. According to the order of the IAC, the minimum penalty imposable was Rs. 8,150 and the maximum penalty imposable was Rs. 16,300 in accordance with the provisions of cl. (iii) of s. 271(1) as it stood amended w.e.f. 1st April, 1968. In the appeal filed by the assessee, the Tribunal held that s. 274(2) was amended w.e.f. 1st April, 1971, and the IAC ceased to have jurisdiction to impose penalty in cases where the amount of income concealed was less than Rs. 25,000 and as the amount of income concealed in the instant case was less than this amount, the order of the IAC imposing penalty suffered from want of jurisdiction. THE Tribunal also held that the quantum of penalty leviable should be determined in accordance with cl. (iii) of s. 271(1) as it stood in the relevant assessment year and the amendment made w.e.f. 1st April, 1968, was not applicable. On an application made by the Department, the Tribunal referred the questions which we have set out above.

(3.) BY s. 49 of the Taxation Laws (Amendment) Act, 1970, which came into force on 1st April, 1971, for the words "the minimum penalty imposable exceeds a sum of rupees one thousand" in s. 274(2), the words and brackets "the amount of income (as determined by the ITO on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty -five thousand rupees" were substituted. As a result of the substitution made by s. 49 of the Amending Act, s. 274(2) reads as follows :