Khub Chand Kundanmal Vs. Union of India (Uoi) and ors. - Court Judgment

Excerpt:
- ajit kumar sengupta, j. 1. in this application under article 226 of the constitution of india, the short question which calls for determination is what would be the rate of penalty applicable to the case of the petitioner.2. shortly stated, the facts are that, for the assessment year 1964-65, the petitioner, a firm, filed its return on august 10, 1964. the income-tax officer, while making the assessment on the return filed on august 10, 1964, requested the petitioner to file a duplicate return and, accordingly, a duplicate return for the said assessment year was filed on february 12, 1969. on the said return, it was marked 'duplicate'. a disclosure petition under section 271(4a) of the income-tax act, 1961 (hereinafter referred to as 'the said act'), was filed by each of the partners of the petitioner on june 2, 1965. the assessment for the said assessment year was completed on february 14, 1969, and the total income was computed at rs. 80,731 which included the sum of rs. 40,000 being the income added by the income-tax officer under the head 'income from undisclosed sources' on the basis of peak credits as per disclosure made by the partners under section 271(4a) of the said act. the said assessment was confirmed by the appellate authority.3. in the meantime, the inspecting assistant commissioner, by an order dated february 11, 1971, imposed a penalty of rs. 50,000 under section 271(1)(c) of the said act by applying the rate of penalty under the amended provisions of section 271(1)(c)(iii) of the said act which came into effect from april 1, 1968. according to the inspecting assistant commissioner, the return was filed on february 12; 1969, and, therefore, the said amended provisions were applicable and the minimum penalty leviable would be rs. 49,970 and the maximum would be twice the amount.4. against the said order of penalty, the petitioner filed an appeal before the tribunal and the tribunal, by its order dated march 24, 1975, upheld the levy of minimum penalty. but no point was raised in respect of the rate of penalty imposable under the said amended provision.5. a reference application under section 256(1) of the said act was filed by the petitioner before the tribunal which was rejected by the tribunal on august 16, 1973. the miscellaneous application filed by the petitioner was also rejected by the tribunal by an order dated august 16, 1973.6. the petitioner thereafter filed an application under section 256(2) of the said act and a rule was issued by the high court and the said rule was ultimately discharged on the ground that the questions sought for were all questions of fact.7. thereafter, the petitioner filed the second miscellaneous application to the income-tax appellate tribunal for rectification of a mistake under section 254(2) of the said act, and the said application was rejected by the tribunal on may 31, 1975. the petitioner filed a reference application under section 256(1) to the income-tax appellate tribunal and the said application was also rejected on october 26, 1976. against the said order of the tribunal, the petitioner filed an application under section 256(2) of the said act in this court and the said application was rejected on july 11, 1977, confirming the view expressed by the tribunal. in the aforesaid proceedings, the imposition of penalty under the amended provisions was not considered as it was not raised by the petitioner.8. in this writ application, the petitioner has challenged the rate of penalty applied in computing the minimum penalty.9. mr. r. n. bajoria, learned advocate appearing for the petitioner, has contended that the amended provisions of section 271(1)(c)(iii) of the said act which came into force with effect from april 1, 1968, could not be applied in view of the fact that the original return was filed on august 10, 1964. he has drawn my attention to the receipt bearing no. a997195 dated august 10, 1964, annexed to the writ petition which shows that the return was filed on august 10, 1964. a duplicate return was filed on february 12, 1969. it is, therefore, contended that the duplicate return filed on february 12, 1969, could not be taken as the date of filing of the return for applying the rate of penalty as per the amended provisions.10. it is not in dispute that the original return was filed on august 10, 1964. but the authorities proceeded on the basis that the return was filed on february 12, 1969, which was the date of filing of the duplicate return. in the earlier proceedings, the contention was that no penalty could be imposed on the facts and in the circumstances of the case. no contention was, however, urged as to the quantum of penalty that can be levied in this case. in levying the penalty, as it appears, the authorities proceeded on the basis of the date of filing of the duplicate return. since the duplicate return was filed on february 12, 1969, and by that time, on april 1, 1968, the amended provision of section 271(1)(c)(iii) became operative, the penalty was levied on the basis of the amended provision. in my view, the authorities cannot proceed on the basis of the duplicate return filed. it is not the case that a revised return was filed by the assessee. by filing the duplicate return, the assessee did not commit a new offence. the offence had been committed while the original return was filed. there is no obligation on the part of the assessee to file a duplicate return. it is only when the return is misplaced or not available to assist the income-tax officer to complete the assessment, a duplicate return is filed. that being the position, the date of commission of the offence would be the date when the original return was filed and not when the duplicate return was filed. the division bench of this court, in cit v. champlal jain [1976] 112 itr 809, held that, in the case of an offence of concealment of income, the law applicable in regard to penalty would be the law as on the date when the act which made the offence was committed. the offence of concealment of the particulars of income was committed when the original return of total income was filed.11. the same view has been reiterated in cit v. bankim chandra dutt : [1979]118itr456(cal) . an offence of concealment of income is linked with the filing of the return and, in the case of an offence of this nature, the law applicable would be that effective on the date of the act, i.e., the filing of the return, when the offence was committed.12. the supreme court also had occasion to consider this aspect of the matter in the case of brij mohan v. cit : [1979]120itr1(sc) , where it was held that when penalty is imposed for the concealment of particulars of income, it is the law in force 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 an assessment year in the past.13. in view of the aforesaid principles laid down in respect of applicability of the rate of penalty, rate of penalty has to be applied as it stands at the date when the default which attracts penalty is committed. in other words, the crucial and relevant date is the date when an untrue return is filed involving concealment of income ; and not as it stands in the financial year for which assessment is made, nor as it stands at the time the penalty proceedings are taken. where penalty is sought to be levied for concealment of income, the law to be applied is that in force when the original return was filed and not that in force when a duplicate return with the identical concealment is filed. inasmuch as the petitioner had filed the original return on august 10, 1964, before the amendment to section 271(1)(c)(iii) of the act became effective, the rate of penalty or the quantum of penalty must be determined by reference to the law as it stood when the infringement took place. the amendment in question is not purely procedural ; it has a bearing on the quantum of penalty. in that view of the matter, the rate of penalty in this case would be in addition to any tax payable, a sum which shall not be less than twenty per cent., but which shall not exceed one and a half times the amount of tax, if any, which would have been avoided if the income as returned by the petitioner had been accepted as the correct income.14. for the reasons aforesaid, this application is allowed. the rule is made absolute.15. let appropriate writs be issued. the concerned officer is directed to recompute the penalty in accordance with the provisions existing on the date of filing of the original return, i.e., to say on august 10, 1964. it is made quite clear that the petitioner will not be entitled to prefer any further appeal or revision under the act against the recomputation to be made in terms of this order.16. there will be no order as to costs.17. let a plain copy of the operative part of this order and the judgment be given to the learned advocate for the petitioner.