The main legal point established in the judgment is that penalties under section 271(1)(c) of the Income-tax Act, 1961 can be imposed for assessments completed after the specified date, as interpreted in conjunction with section 297(2)(g).

RAMASWAMI J.

The following four questions are referred under section 256 of the Income-tax :

"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the penalty of Rs.12, 200 levied under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 1961-62 is illegal ?

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the penalty of Rs. 6, 404 levied under section 271(1)(c) for the assessment year 1959-60 is illegal ?

3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the penalty of Rs. 8, 700 levied under section 271(1)(c) for the assessment year 1960-61 is illegal ?

4. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the penalty of Rs. 6, 300 levied under section 271(1)(c) for the assessment year 1961-62 is illegal ?

one of the assessees is a firm of partnership and the other is a partner in the partnership. The assessment year in question in respect of the firm is 1961-62 and that for the individual partner are 1956-60, 1960-61 and 1961-62. The firm submitted a return in respect of the assessment year 1959-60, 1960-61 and 1961-62, respectively. The assessment under section 23(3) of the Indian Income-tax Act, 1922, were made on February 29, 1964. Thereafter, penalty proceeding were initiated and notice under section 274(2) of the Income-tax Act, 1961 has held that even in respect of concealment prior to the assessment year 1962-63, the provisions of section 271(1)(c) were applicable. In the words of the Supreme Courts

We are further unable to agree that the language of section 271 does not warrant the taking of proceeding under that section when a defult has been section 22(2) of the Act of 1922. It is true that clasue (a) of sub-section (1) of section 271 mention the corresponding provisions of the Act of 1961, but that will not make the part relating to payment of penalty inapplicable once it is held that section 297(2)(g) governers the case. Both section 271(1) and 297(2)(g) have to be read together and in harmony and so read the read the only conclusion possible is that for the imposition of a penalty in respect of any assessment for the year ending on March 31, 1962, or any earlier year which is complete after the first day of April, 1962, the proceeding have to be initiated and the penalty imposed in accordance with the provisions of section 271 of the Act of the Act of 1961. Thus the assessee would be liable to a penalty as provided by section 271(1) for the defult mentioned in section 28(1) of the Act of 1922 if his case falls within the terms of section 297(2)(g)."

This decision directly answers all the questions referred to us in favour of the revenue.

But the learned counsel for the assessees contended, relying on our judgment in Commissioner of Gift-tax v. Muthukumaraswami Mudaliar that in these cases the return were submitted prior to the coming into force of the Act and that, therefore, the law that was applicable on the date of filing of the return alone could be applied and not the provisions contained in the Income-tax Act, 1961. That decision related to an amendment of a particular provision and the applicability of that provision to an individual case when it was not in terms made retrospective. But the provision in section 297(2)(g) specifically mentions that the applicability of the penal provision is to be with reference to the date of assessment and not with reference to the date of filing of the returns. Therefore, the general principle decided in Muthukumaraswami Mudaliar's case is not applicable and the decision of the Supreme Court is direct authority against the contention of the assessees. We accordingly answer all the question in the negative and in favour of the revenue. Revenue will be entitled to its costs. Counsel's fee Rs. 250.