Prakash Narain, C.J:— At the instance of the Commissioner, the Income-tax Appellate Tribunal (Delhi Bench “B”) has referred the following question of law to the High Court for its opinion:
“Whether, on the facts and in the circumstances of the case and having regard to the fact that a return was filed on November 22, 1967, the Tribunal was right in holding that the provisions of section 271 of the Act as they stood before the amendment in 1964 should be considered for purposes of imposing penalty under that section?”
2. The question that had been recommended by the Commissioner for being referred to the High Court was:
“On the facts and circumstances of the case, the Tribunal erred in ignoring the Explanation to section 271(1)(c) of the Income-tax Act and holding that the assessee could not be penalised for not declaring perquisite amounting to Rs. 1,500 and income from undisclosed sources amounting to Rs. 33,964?”
3. The Tribunal noticed that the Commissioner was not challenging the conclusion of the Tribunal that no penalty was imposable by reference to the addition of the property income in the assessment. It felt that the question whether a penalty was called for in respect of the addition of the perquisite was purely a question of fact and similarly the question whether a penalty could be imposed in respect of the addition of Rs. 33,964 was concluded against the Revenue by the decision of the Supreme Court in the case of CIT v. Anwar Alt, [1970] 76 ITR 696, if the provisions of s. 271(1) before the amendment of 1964 were to be considered. The Tribunal further observed that though the Revenue contended that the assessment year under consideration being 1963.64 the provisions of the Explanation introduced in 1964 should be applied and so the levy of penalty should have been sustained, (sic) raise a question of law referable to the High Court, yet this contention could not be accepted. In consequence, in the statement of case, the Tribunal has said that if the High Court is of the view that the terms of the Explanation are applicable in the present case, then the question referred will have to be decided after hearing arguments on both sides. The assessment year in which the question of penalty arose is 1963-64. The assessee filed his return on September 2, 1963, disclosing an income of Rs. 1,10,791. Before assessment he revised his return to Rs. 1,21,763. This return was accepted. It is not established on record that the revised return was filed after notice under s. 148 of the I.T Act. The assessee had shown that income-tax had been deducted at source and advance tax had been paid to the extent of income of Rs. 91,477. Another revised return had been filed by the assessee, again showing an income of Rs. 1,21,463 and the tax deducted at source and advance tax paid on income amounting to Rs. 91,477. The ITO, however, completed the assessment on March 20, 1968, determining a total income of Rs. 2,13,698. He also initiated penalty proceedings under s. 271(1)(c). As the minimum penalty leviable exceeded Rs. 1,000, the case was referred to the IAC. He took the view that inasmuch as the return had been filed by the assessee on November 22, 1967, by which time the word “deliberately” had been deleted from s. 271(1)(c) of the Act and an Explanation was added to that section, the assessee would be deemed to have concealed his income unless it was proved that the failure to return the correct income was not on account of fraud or gross or wilful neglect. Inasmuch as the assessee had failed to prove this, he was liable to pay maximum penalty amounting to Rs. 1,35,395. In the circumstances of the case, however, a penalty of only Rs. 45,000 was imposed.
4. There were three items with regard to which the question of penalty was raised. We are really not concerned with the details of those items as the short question before us is the applicability of the amended s. 271 of the Act and the Explanation added thereto in 1964. We may, however, mention that with regard to the assessment years 1958-59 to 1964-65, in respect of the same assessee in I.T References Nos. 214 to 220 of 1972, we have already held that the property income wholly or in part from property in the name of Smt. Basant Kaur, wife of the assessee, could not be added to the income of the assessee. For these years also and, in particular, for the assessment years 1958-59 and 1959-60 penalty had been imposed on the assessee. The Tribunal had held that the amendments in 1964 did not apply to these years. At the instance of the Commissioner the Tribunal has referred the following question to the High Court for being answered:
“Whether, on the facts and in the circumstances of the case and having regard to the fact that the returns of the assessee were filed on November 15, 1967, and November 22, 1967, respectively for the assessment years 1958-59 and 1959-60, the Tribunal was right in holding that the provisions of section 271 of the Act as they stood before the amendment in 1964 should be considered for the purpose of imposing a penalty under that section for both the years?”
5. As the question of law is common in all the I.T References, we are going to give only one opinion.
6. As noticed earlier, the short question is whether s. 271(1), as amended in 1964, was attracted for the assessment years 1958-59, 1959-60 and 1963-64.
7. Mr. Lalwani appearing for the Revenue contends that the offence was committed when the revised returns were filed in 1967 in pursuance of notice issued to the assessee under s. 148 of the Act. Therefore, the law in force at that point of time would be the law which would govern the levy of penalty. Mr. Sharma appearing on behalf of the assessee, on the other hand, contends that the offence, if at all, was committed when originally the concealment took place and the original returns were filed. Therefore, the law in force at that point of time alone would be the relevant law.
8. Mr. Lalwani has relied on Brij Mohan v. Cit, New Delhi, [1979] 120 ITR 1 (SC) and Addl. CIT v. Balwant Singh Sulakhanmal, [1981] 127 ITR 597 (MP). In our view none of the judgments relied upon help the Revenue.
9. In Brij Mohan's case, [1979] 120 ITR 1 (SC), the Supreme Court held that penalty for concealment of particulars of income is to be imposed with reference to the law in force on the date on which the act of concealment took place. The year of assessment, the income whereof was to be assessed, was not relevant. In this case the assessee filed his return on April 24, 1968, of his income for the assessment year 1964-65. He disclosed only his share in the profits of one of the firms in which he was a partner and had not disclosed his share of profit in another firm of which also he was a partner. The concealment took place in the very first return that the assessee filed. At that point of time the amended s. 271 with the Explanation was in force. It was held that inasmuch as the offence was committed on April 24, 1968, the amended provisions were applicable. Therefore, the principle deduced is that the law ruling on the date of the commission of the offence would be applicable. This is in consonance with the general law of the land that a person can be punished only for that offence which was an offence under law on the date when the alleged offence was committed.
10. In Balwant Singh's case, [1981] 127 ITR 597 (MP), a Bench of the Madhya Pradesh High Court at Indore also took the same view. In this case the assessment year was 1959-60. The assessee had filed his return and the assessment had been completed. The ITO reopened the assessment for that year and issued notice to the assessee under s. 148 of the Act. In response to that notice the assessee filed another return on December 21, 1969, declaring an income of Rs. 5,000. The ITO, however, added an amount of Rs. 20,000 as the assessee's income from undisclosed sources. On appeal, the AAC reduced the addition to Rs. 11,000. Penalty proceedings were initiated against the assessee and the IAC imposed a penalty of Rs. 11,000. The Tribunal held that the default of the assessee was attributable to the return filed in the original assessment proceedings and that the law applicable to the assessment year 1959-60 was applicable and reduced the amount of penalty. On a reference to the High Court, it was held that the proceedings giving rise to the reference were initiated in connection with the return filed in response to the notice under s. 148 of the Act. Therefore, the Tribunal Was not right in holding that the default was attributable to the return filed in the original assessment proceedings when the concealment was in the revised return. The wrongful act took place on December 21, 1969, when the amended law had come into force. Thus, the principle deduced is the same as was laid down by the Supreme Court. The difference between the Madhya Pradesh case and the Supreme Court decision was that in the former notice under s. 148 of the Act had been issued and the return filed was in response to the said notice.
11. In Addl. CIT v. Krishna Subh Karan, [1977] 108 ITR 271, a Bench of the Allahabad High Court has taken a different view, contrary to the view expressed by the Madhya Pradesh High Court. In this case the relevant assessment years were 1960-61 and 1961-62. The assessee had filed returns and assessments were completed. Subsequently, in response to notices under s. 148 of the Act, the assessee filed fresh returns on April 17, 1968. Penalties were imposed by the IAC for both the assessment years as returns filed even after notice under s. 148 were not accepted and assessments were made at higher figures. The Tribunal took the view on appeals by the assessee that the amending Act was not retrospective and that penalties could only be imposed on the basis of the default committed in the original return. The High Court on reference upheld this view.
12. In CIT v. A. Rahman, [1979] 119 ITR 475, a Bench of the Patna High Court took the same view as the Allahabad High Court that concealment occurred at the time when the original returns were filed and the relevant law would be the law in force at that time. Service of notice under s. 148 of the Act was immaterial. Therefore, if at the time when the original return was filed the law in force was not as was amended, that law alone would be relevant and not the law in force when either s. 148 notice is issued or when the assessment is completed.
13. We are in respectful agreement with the views expressed by the Allahabad High Court and the Patna High Court. The offence of concealment takes place when the first return is filed. The law applicable for imposing penalty would be the law in force when the offence is committed. The discovery of concealment amounting to not filing a proper return does not change the date of the commission of the offence. Therefore, whether a notice under s. 148 is given or not given is hardly relevant. The addition to the income of the assessee was made during the course of the assessment proceedings. The return made by him was not accepted by the Revenue. Assuming that the additions were rightly made, it only means that the commission of the offence is discovered by the Revenue on the date when the assessment is completed. It does not change the date of the commission of the offence. We may examine this question from yet another angle. The return of income is required to be filed by virtue of s. 139(1) or s. 139(2) of the Act. It is provided in s. 139(5) of the Act that if any person having furnished a return under sub-s. (1) or (2) discovers any omission or wrong statement therein, he may furnish a revised return at any time before the assessment is made. Therefore, the law visualises filing of more than one return prior to the completion of assessment if such an occasion arises. If the subsequent return/returns filed by the assessee only correct some omission or wrong statement inadvertently made or not made deliberately in the first return, it is the return on which the assessment is completed which would be relevant for the purpose of applicability of the relevant law for imposition of penalty. Otherwise, if there is any deliberate omission or misstatement, it will be the very first return which would be relevant for imposition of penalty. We are fortified in taking this view by the decision in Amjad Ali Nazir Alt v. CIT, [1977] 110 ITR 419 (All).
14. In the present case, the assessee maintained that the return filed by him was correct. That his return was not accepted is a different matter. It cannot be said that because there was a difference in the returns filed on September 2, 1963, and November 22, 1967, the offence was committed on November 22, 1967. The relevant law would be the law applicable on the date when the original return was filed. The references are answered, accordingly, in favour of the assessee.