Commissioner Of Income Tax, Lucknow VS. Onkar Saran And Sons

Reporting JudgeRangnathan,s.

Linked as:

Summary

The respondent- Hindu Undivided Family filed returns for the assessment years 1961-62 and 1962-63 showing the income of Rs. 13,935 and Rs.24,943 respectively. The Income Tax Officer determined the income of the respondent of Rs.

28,513 and Rs. 28,463 respectively for the assessment years.

Subsequently, when the Income Tax Officer came to know that the assessee respondent had not disclosed certain income from the sale of lands in its returns. he issued notice u/s. 148 of the Income-tax Act, 1961 for the assessment years on 9.3.1965. On 27.2.1969, the assessee filed its returns disclosing the same income as in the original returns, viz. Rs. 18,935 and Rs.24,943 respectively for the two assessment years.

The I.T.O determined the income for the assessment years at Rs.52,185 and Rs. 44,017 respectively, which was reduced on further appeals to Rs.41,923 And Rs.34,547 respectively for the two assessment years.

The I.T.O. after making the re-assessment also initiated proceedings u/s.271(1)(c) of the Act, for the failure on the part on the assessee to return the income from sale of lands. Originally he was of the opinion that the income from the lands constituted "business income", but later it was held that it was assessable as "Capital Gains".

The assessee-respondents filed appeals before the Income-tax Appellate Tribunal, which reduced the penalty to 20 percent of the tax payable on the amounts of "Capital Gains" included in the assessments and not disclosed in the returns. It held that since the penalty proceedings related 188

to the assessment years 1961-62 and 1962-63 the provisions of the Income-tax Act as they stood respectively on 1.4.1961 and 1.4.1962 would be applicable to determine the penalty and not the amended provisions which came into force w.e.f.1.4.1968.

When the matter was referred to the High Court, it upheld the conclusion of the Tribunal, taking the view that the law applicable in regard to the imposition of penalty would be not the law as on the 1st April of the relevant assessment year but the law prevailing on the dates when the original returns were filed.

On the refusal of the High Court to grant a certificate of fitness to appeal to this Court, the Revenue filed these appeals by special leave.

The appellant-Revenue contended that the penalty proceedings were initiated in the course of reassessment proceedings initiated u/s. 148 of the Act; that the returns were filed after 1.4.1968, by the assessee, in response to notices u/s. 148 which were to be treated as the original returns of income filed u/s. 139(2); that the assessee had failed to disclose in these returns the income from the sale of lands, which was taxable under "Capital Gains" head; that the relevant returns, having been filed after 1.4.1968, the provisions of section 27(1)(C) as amended in 1968 were attracted.

The respondent-assessee submitted that in a case where a return filed u/s. 148 involved an element of concealment, the law applicable for imposition of penalty would be the law as in force at the time of the original return filed for the assessment year and not the law as it stood on the date on which the return in response to the notice u/s. 148 was filed.

Dismissing the appeals of the Revenue, this Court,

HELD : 1.01. In a case multiple returns, the law applicable to the penalty proceedings should be taken to be the law in force on the date of the original return, if any. [194F]

1.02. In the course of re-assessment proceedings, a penalty could be imposed with reference to the concealment in the original assessment proceedings. [195C]

1.03. Though, technically speaking, the original assessment proceedings 189

have been finalised and reassessment proceedings initiated to assess escaped income,it is only the determination of the correct total income for the assessment year in question that is being re-done. For this assessment year the assessee filed a return of income originally and in doing so effected a concealment. Finally he is being re-assessed for the same year and it is open to the Income-tax Officer to impose a penalty on him for concealment on the basis of income originally returned. If the original return could form the basis for determining the quantum of penalty impossible on the re-assessment, there is no reason why the original return should also not form the basis for determining the date on which the concealment was effected by the assessee. [195E-F]

1.04 If the contention of the Revenue is accepted, an anomalous result will follow in certain glaring cases of concealment or where no return is filed in response to the notice under S.148. [195G, 196B]

1.05 The matter should not be decided on the basis of the consideration that the measure of penalty w.e.f.1.4.68 has been changed over to the quantum of concealed and that by, accepting the assessee's interpretation, the court will be allowing an assessee to get away with a smaller penalty merely because the original returns had been filed before 1.4.68. While this may no doubt be the position between 1968 and 1975, the situation will be different w.e.f 1.4.1976. With effect from that date, the measure of penalty will be the one that prevailed prior to 1.4.68 namely, on the basis of the amount of tax sought to be evaded. In other words, from 1.4.1976, one will find the revenue and the assessee taking stands exactly contrary to the ones which they are taking at present. [196C-E]

Commissioner of Income-tax v. Ram Achal Ram Sewak,

[1977] 106 ITR 144(AII);CIT v. Gopal Krishan Singhania,

[1973] 89 ITR 27 (AII);CIT v. Krishna Subhkaran, [1977] 108

ITR 271 (AII);CIT v. Jiwanlal Shah, [1977] 109 ITR 474 (AII); CIT v. Onkar Saran, [1979] 116 ITR 317 (AII); Addl.

CIT v. Mewalal Sankatha Prasad,[1979] 116 ITR 356 (AII); CIT

v. Rahman,[1979] 119 ITR 475 (Pat); C.W.T. v. Rajamma,

[1979] 120 ITR 132 (Mad);Addl. CIT v. Atma Singh Steel Rolling Mills, [1979] 120 ITR 59 (AII); CIT v. Ram Singh Harmohan Singh, [1980] 121 ITR 381 (P & H) (F.B.); CIT v.

Sucha Singh Anand, [1984]149 ITR 143 (Del); CIT v. Antony,

[1985] 155 ITR 467 (Ker) (F.B.);Addl. CIT v. Gurbachan Singh, [1985]156 ITR 74 (Del); CIT v. Kanhaiyalal Ghatiwala,

[1989] 180 ITR 338 (RAJ);

190 Chowgule & Co (Hindi) P. Ltd v. CIT, [1990] 182 ITR 189 (Bom);Addl. CIT v. Balwant Singh Sulakhanmal, [1981] 127 ITR 597 (M.P.); Addl. CIT v. Ratan Chand Sewakram, [1985] 151

ITR 112 ] (M.P.); Addl. CIT v. Gopaldas Amarnomal, [1985]

151 ITR 114 (M.P.); Addl. CIT v. Brijmohan Jaiswal, [1983]

139 ITR 568 (M.P.); CIT v. Bihar Cotton Mills Ltd., [1988]

170 ITR 290 (pat.); Brijmohan v. CIT, [1979] 120 ITR 1;

Malbary and Bros.,[1964] 51 ITR 295 (S.C.); Govindarajulu Iyer v. CIT, [1948] 16 ITR 391 & Jagan Mohan Rao's Case,

[1970] 75 ITR 373 (S.C.), referred to.

CIT v. S.S.K.G. Arthanariswamy Chettiar, [1982] 136 ITR 145 & Addl. CIT v. Joginder Singh, [1985] 151 ITR 93, approved.

See the full content of this document

Extract

Commissioner Of Income Tax, Lucknow VS. Onkar Saran And Sons

PETITIONER: COMMISSIONER OF INCOME TAX, LUCKNOW Vs.

RESPONDENT: ONKAR SARAN AND SONS

DATE OF JUDGMENT13/03/1992

BENCH: RANGNATHAN, S.

RAMASWAMI, V. (J) II

ANAND, A.S. (J)

CITATION: 1992 AIR 1139 1992 SCR (2) 185 1992 SCC (2) 514 JT 1992 (2) 567 1992 SCALE (1)651

ACT: Income-tax, 1961-Sections 271(1)(c), 148, 139(2)- Imposition of penalty of concealment of income in the return-Whether the law as it stands on the date of filing of the original return applicable or the law as it stands on the date of filing of return in response to notice u/s. 148 applicable.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 678 & 679 of 1977.

From the Judgement and Order dated 21.3.1973 of the Allahabad High Court in Income Tax Reference No. 492 of 1973.

B.B. Ahuja, S.Rajappa, P. Parmeswaran and Ms. A.

Subhashini f...

See the full content of this document