Vijayvargiya, J.
1. By this reference under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as 'the Act'), the Income-tax Appellate Tribunal, Indore, has referred the following questions for our opinion :
'(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amendment made in Section 271(1)(c) which is to come into effect from April 1, 1968, has no retrospective effect ?
(ii) Whether the Tribunal was justified in reducing the quantum of penalty to 30% of the tax sought to be avoided, as against the penalty of Rs. 8,200 levied by the IAC '
2. The assessee, M/s. Hiralal Munnalal of Ujjain, an HUF, deriving income from money-lending and silver business and also from house property, filed a return of income for the assessment year 1965-66 on September 30, 1968. The assessee disclosed its income in the return at Rs. 4,096. The ITO found that the accounts of the assessee were defective. He, therefore, rejected the book version of the assessee and assessed the assessee at a total income of Rs. 17,460. On appeal by the assessee, the AAC reduced the income assessed by a sum of Rs. 5,250, Thus, as a result of the AAC's order, the income of the assessee was finally assessed at Rs. 12,210.
3. Thereafter, the ITO initiated penalty proceedings against the assessee under Section 271(1)(c) of the Act. As the minimum penalty imposable under the Act exceeded Rs. 1,000, the ITO referred the matter to the IAC who after taking into consideration the explanation of the assessee held that the assessee was guilty of concealment under the Explanation to Section 271(1)(c) of the Act and imposed upon the assessee a penalty of Rs. 8,200. Against the order of the IAC the assessee preferred an appeal before the Tribunal. The Tribunal upheld the finding of the IAC that the assessee was guilty of concealment of income as provided under Section 271(1)(c) of the Act. However, the Tribunal came to the conclusion that Section 271(1)(c) of the Act came into effect from April 1, 1968, and as the concealment related to the assessment year 1965-66, the penalty imposable could not be under the amended provision of law but had to be in accordance with the provision of law as it stood prior to the amendment because in the opinion of the Tribunal imposing the penalty in accordance with the amended provision of law in the circumstances of the case amounted to giving retrospective operation to the amended provision of law. The Tribunal, therefore, reduced the quantum of penalty to 30% of the tax sought to be avoided. On application by the department, the Tribunal has referred the questions of law mentioned above for our opinion which arose out of the order of the Tribunal.
4. The learned counsel for the department contended that in the present case although the assessment related to the assessment year 1965-66 the return was filed by the assessee on September 30, 1968, and, therefore, the concealment of the income was made by the assessee on that date. According to him, the amended Section 271(1)(c) of the Act came into force on April 1, 1968, and, therefore, the penalty was rightly imposed by the IAC in accordance with the amended provision of law and the Tribunal erred in law in holding that by imposing the penalty in accordance with the amended provision of law retrospective operation was given to it by the IAC.The learned counsel for the assessee contended that as the assessment related to the year 1965-66, the concealment will be deemed to have been made when the return for the said year became due and that if the return was not filed on the due date the act of concealment was complete and as that was prior to April 1, 1968, the penalty could not be imposed under the amended provision of law and it had to be in accordance with the provision of law prior to its amendment.
5. The proceedings under Section 271(1)(c) of the Act are penal in character. It is the basic concept of law that an act of commission or omission becomes an offence only if on the date when, it was committed the law in force declares it to be an offence and the penalty imposable under the provisions of law ordinarily can be imposed only in accordance with the law as it stands on the date when the act giving rise to the penalty is committed. The question involved in the present case is as to what is the date on which the act of concealment of income attracting the penal provisions of law was committed by the assessee. An assessee is required to file the return of his income within a particular period. If he fails to file his return within the prescribed time but files his return subsequently it cannot be said that by not filing the return within the prescribed time he has concealed his income on the last date on which the return was to be filed by him. When the assessee has filed his return at a later date and in this return he has concealed his income that will be the date on which the act of concealment was committed by the assessee. Non-filing of a return on or before the due date also attracts penalty but from the mere non-filing of the return it cannot be said that income has been concealed on the last date when the return was to be filed. In the instant case, the assessee filed its return for the assessment year 1965-66 on September 30, 1968. The amended Section 271(1)(c) of the Act came into force on April 1, 1968. In the circumstances, the act of concealment of the income for the assessment year 1965-66 was committed by the assessee on September 30, 1968, when the return was filed. It cannot be presumed that if the assessee had filed its return within the prescribed time it would have concealed its income and, therefore, the act of concealment was completed on the last date on which the return for the assessment year 1965-66 was to be filed by the assessee.
6. In CIT v. Ramchand Kundanlal Saraf : [1975]98ITR474(MP) , the assessee filed his return for the assessment years 1961-62 and 1962-63 before April 1, 1968, in which his income was concealed. The assessee filed fresh returns after April 1, 1968. The department imposed penalty upon the assessee in accordance with the, amended Section 271(1)(c) of the Act. On these facts, this court held that the provisions relating to penalty are of penal character and their object is to punish the assessee so as to deter him from concealing his inc'ome in future. Penalty is in the nature of a punishment for the act of concealment and, therefore, the quantum of penalty must be determined with reference to the law prevailing on the day when the act of concealment was committed and not when the penalty proceedings are initiated or the order imposing penalty is passed, unlike proceedings for assessment of tax which are governed by the law prevailing during the assessment year. Therefore, where the concealment of income took place when the returns for the assessment years 1961-62 and 1962-63 were filed, long before the amendment of Section 271 of the I.T. Act, 1961, on April 1, 1968, penalty for such concealment of income would be leviable in accordance with the provisions of Section 271 of the Act as they stood prior to the amendment and not after the amendment, even where the penalty proceedings have been initiated after the amendment came into force. Thus, according to this decision also the act of concealment of income is committed by the assessee when the return of the income is filed.
7. In Addl.CIT v. C.V. Bagalkoti & Sons : [1978]115ITR131(KAR) , it has been held by the Karnataka High Court that a concealment of income which attracts Section 271(1)(c) of the Act in the absence of any other statutory provision compelling the court to take a contrary view, takes place when the return is filed and that the quantum of penalty imposable in respect of such concealment would be that prescribed by law as in force on the date on which the act of concealment is committed. In Sulemanji Gambhai v. CIT : [1980]121ITR373(MP) , the assessee had filed his return for the assessment years 1966-67 on 4-6-66. In this return, he did not disclose any income from truck business. On 20-2-69, he filed his revised return showing his income from truck business. On these facts, the department sought to impose penalty under the provisions of Section 271(1)(c) of the Act as amended by the Finance Act, 1968. This court held that the act of concealment was committed by the assessee on 4-7-66 when he filed his original return and, therefore, the penalty was imposable under the provisions of law as it stood on that date.
8. It is thus clear that in the present case, the assessee concealed its income for the assessment year 1965-66 on 30-9-68 when it filed its return of income for that year and as the amended Section 271(1)(c) of the Act had come into force on that date the IAC was fully justified in imposing the penalty on the assessee in accordance with the amended provisions of law. By so doing the IAC did not give retrospective operation to the provisions of the amended law. The act giving rise to the penalty was committed after the amended law came into force and, therefore, there was no question of giving retrospective effect to the amended Section 271(1)(c) of the Act in the present case. In the circumstances, the Tribunal was not justified in reducing the penalty to 30% of the tax avoided applying the law as it stood prior to the amendment.
9. In the light of the discussion aforesaid our answer to question No. 1 is that the provisions of Section 271(1)(c) of the Act have no retrospective effect but in the present case by imposing the penalty under the amended provisions retrospective effect was not given to the same by the IAC. Our answer to question No. 2 referred to us is in the negative.
10. In the circumstances of the case, we make no order as to costs of this reference.