The quantum of penalty imposable for concealment of income under Sec. 271(1)(c) of the Income Tax Act, 1961 is to be determined by reference to the law as it stood when the infringement took place, namely, as to when the return was actually filed.

1. In an application for reference under Sec.256(1) of the I.T. Act, 1961 (hereinafter to be referred to as "the Act"), the Income-tax Appellate Tribunal, Patna Bench A, has submitted the statement of case and referred the following question of law for the opinion of this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the quantum of penalty imposable in this case was to be governed by the law which was in force on the first day of the assessment year and not the amended law which came into effect from April 1, 1968?"

2. The facts are absolutely beyond controversy. Shortly speaking, the statement of the case submitted to this court represents a full statement of facts which are in respect of the assessment year 1967-68. The assessee filed a return showing an income of Rs. 2,477. The assessment was made on an income of Rs. 22,844 but this was ultimately reduced to Rs. 15,525 in appeal. A copy of the assessment order passed by the ITO has been marked annex. A and forms part of the statement of case.

3. The main additions made in this case were in respect of the cash credit of Rs. 4,676 and disallowance of personal home expenses to the extent of Rs. 7,031. In view of the difference between the returned income and the assessed income, the ITO held that the assessee had concealed the particulars of income within the meaning of the Explanation to Sec.271(1)(c) of the Act, as it then stood. The IAC imposed the penalty after referring to the fact that the cash credits were not properly explained and also the fact that the assessee had debited the profit and loss account with his personal home expenses. The IAC further held that the assessee had been assessed for the last several years and while filing the return, he had claimed his personal home expenses as a deduction and had not made any adjustment for this purpose. According to the IAC, this was a case of gross neglect on the part of the assessee. He, therefore, held that the penalty was imposable and, as the return of the income had been filed after April 1, 1968, the penalty imposable was to be governed by the Act, as amended, as applicable on April 1, 1968. He, accordingly, imposed a penalty of Rs. 13,450. A copy of the order of the IAC has been annexed as annex. B forming a part of the statement of case.

4. The assessee appealed to the Tribunal. The Tribunal finding the facts against the assessee held that the quantum of penalty imposable was not justified, as the assessment year to which the case related was the year 1967-68. The Tribunal held that, although the penalty was imposable, since it was for the assessment year 1967-68, in respect of this assessment year, the quantum of penalty should have been governed by the law which was in force on April 1, 1967, and not in accordance with the law which came into force from April 1, 1968.

5. The sole question, therefore, that arises for our consideration in this case is as to whether the quantum of penalty imposable for the assessment year 1967-68 would be governed by the law as it stood in force from April 1, 1967, which was the beginning of the assessment year in question or from April 1, 1968, which was the date from which the amended law, namely, Clause (iii) of Sec.271(1)(c) which was substituted by the Finance Act, 1968 , with effect from April 1, 1968. That being the sole question for consideration in this case, it would bear repetition to say that Clause (iii) substituted the old Clause (iii) by the Finance Act, 1968 , with effect from April 1, 1968, and became effective from April 1, 1968. On the admitted facts, although the return for the assessment year 1967-68 was filed after the amendment came into force, namely, after April 1, 1968, the law is well settled by now that Sec.271(1)(c) of the Act has to be applied as it stands at the date when the default, which attracts penalty, is committed. To be more illustrative, the crucial date would be as to