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SUPREME COURT OF INDIA
B. P. Jeevan Reddy, S. B. Majmudar
B. N. SHARMA, APPELLANT
Versus
COMMISSIONER OF INCOME TAX, ORISSA, RESPONDENT.
Civil Appeal No. 2025 of 1978,
decided on February 27, 1996.
Penalty Imposition - Income Tax Act - The court held that the amount of penalty imposable should be worked out on the basis of the law in force at the time of filing the return containing the alleged concealment or misstatement, and not the date on which the penalty proceedings are initiated.
Fact of the Case:
The appeal was allowed based on the decision in CIT v. Onkar Saran and Sons, which clarified the relevant law for determining the amount of penalty imposable under the Income Tax Act.
Finding of the Court:
The High Court had answered the question by holding that the penalty should be worked out based on the law in force at the time the Income Tax Officer directed initiation of the proceeding, but the Supreme Court held that it should be based on the law in force at the time of filing the return containing the alleged concealment or misstatement.
Issues: Interpretation of the relevant law for determining the amount of penalty imposable under the Income Tax Act.
Ratio Decidendi: The amount of penalty imposable should be worked out on the basis of the law in force at the time of filing the return containing the alleged concealment or misstatement, as clarified in the Onkar Saran case.
Final Decision: The appeal was allowed, and no costs were imposed.
ORDER
1. This appeal has to be allowed following the decision of this Court in CIT v. Onkar Saran and Sons [(1992) 2 SCC 514]. The question referred for the opinion of the High Court under Section 256(2) of the Income Tax Act, 1961 is :
"Whether the amount of penalty imposable should have been worked out on the basis of the law in force at the time the return was filed and the delinquency of excluding a part of the income had been committed ?"
The High Court has answered the said question holding :
"Our answer, therefore, to the question is :
The amount of penalty imposable is to be worked out on the basis of the law in force on the date the Income Tax Officer directed initiation of the proceeding under Section 271(1)(c) of the Act."
2. It is, however, held by this Court in Onkar Saran case [(1992) 2 SCC 514] that in such cases, it is the law obtaining on the date of the filing of the return which contains the concealment or misstatement, as the case may be, that is relevant and not the date on which the penalty proceedings are initiated. Accordingly, the question is answered in the following words :
"The amount of penalty imposable should be worked out on the basis of the law in force at the time of filing of the return whether original and/or revised which contained the alleged concealment or misstatement, was filed."
3. The appeal is allowed in the above terms. No costs.
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